PIVOT RULES INC, SB-2/A, 1997-05-05

PIVOT RULES INC
SB-2/A, 1997-05-05
APPAREL, PIECE GOODS & NOTIONS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 5, 1997.

REGISTRATION NO. 333-22895
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------

AMENDMENT NO. 2

TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------
PIVOT RULES, INC.
(Name of small business issuer in its charter)
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
NEW YORK 5136 13-3612110
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

80 WEST 40TH STREET
NEW YORK, NEW YORK 10018
(212) 944-8000

(Address and telephone number of principal executive offices)
-----------------
E. KENNETH SEIFF, CHIEF EXECUTIVE OFFICER
PIVOT RULES, INC.
80 WEST 40TH STREET
NEW YORK, NEW YORK 10018
(212) 944-8000

(Name, address and telephone number of agent for service)
-----------------
Copies to:

RICHARD A. GOLDBERG, ESQ. DAVID ALAN MILLER, ESQ.
Shereff, Friedman, Hoffman & Goodman, LLP Graubard Mollen & Miller
919 Third Avenue 600 Third Avenue
New York, New York 10022 New York, New York 10016
(212) 758-9500 (212) 818-8800

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

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, 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>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TO BE OFFERING PRICE OFFERING REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
- ---------------------------------------------------------------------------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Units, each consisting of one share of Common Stock ("Common Stock") and one
Redeemable Common Stock Purchase Warrant ("Warrant")(2)..................... 1,725,000 $6.10 $10,522,500 $3,188.64
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
Shares of Common Stock included as part of the Units(2)...................... 1,725,000 -- -- --
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
Warrants included as part of the Units(2).................................... 1,725,000 -- -- --
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
Shares of Common Stock underlying the Warrants included in the Units(3)(4) .. 2,325,000 6.10 14,182,500 4,297.73
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
Underwriter's Unit Purchase Option........................................... 1 100 100 (5)
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
Units underlying the Underwriter's Unit Purchase Option ("Underwriter's
Units")(3).................................................................. 150,000 9.76 1,464,000 443.64
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
Shares of Common Stock included as part of the Underwriter's Units(3) ....... 150,000 -- -- --
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
Warrants included as part of the Underwriter's Units(3)...................... 150,000 -- -- --
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
Shares of Common Stock underlying the Warrants included in the Underwriter's
Units(3).................................................................... 150,000 6.10 915,000 277.27
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
Warrants issued in connection with the Bridge Financing(6)................... 600,000 .10 60,000 18.18
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
Total ..................................................................... $8,225.46(7)
- ---------------------------------------------------------------------------- ---------- ----------- ----------- -----------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes 225,000 Units, 225,000 shares of Common Stock and 225,000
Warrants underlying such Units, and 225,000 shares of Common Stock
underlying such Warrants. The Units may be issued on exercise of a
45-day option granted to the Underwriter to cover over-allotments, if
any. See "Underwriting."
(3) Pursuant to Rule 416, there are also being registered such
indeterminable additional securities as may be issued as a result of
anti-dilution provisions.
(4) Includes 600,000 shares of Common Stock underlying the Warrants issued
in connection with the Bridge Financing.
(5) Pursuant to Rule 457(g) under the Securities Act of 1933, as amended,
no registration fee is payable.
(6) Such Warrants are being registered for resale by certain
securityholders on a delayed or continuous basis, pursuant to Rule 415
under the Securities Act of 1933, as amended. The Warrants were issued
to such securityholders in connection with the Bridge Financing.
(7) $8,006.81 of this amount has been previously paid. The balance of this
amount, $218.65, is being submitted with this Amendment.

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>
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.

SUBJECT TO COMPLETION, DATED MAY 5, 1997

PROSPECTUS

1,500,000 UNITS

[PIVOT RULES LOGO]

EACH UNIT CONSISTING OF ONE SHARE OF COMMON STOCK AND
ONE REDEEMABLE COMMON STOCK PURCHASE WARRANT

All of the units ("Units") offered hereby are being sold by Pivot Rules, Inc.
("Company"). Each Unit consists of one share of common stock ("Common Stock")
and one Redeemable Common Stock Purchase Warrant ("Warrant"). Each Warrant
entitles the holder to purchase one share of Common Stock for $ [100%
of the per-Unit offering price] during the four-year period commencing one
year after the date of this Prospectus. The Company may redeem the Warrants,
at any time after they become exercisable, at a price of $.01 per Warrant
upon not less than 30 days' prior written notice if the last sale price of
the Common Stock has been at least 165% of the then exercise price of the
Warrants (initially $ ) on 20 out of the 30 consecutive trading days
ending on the third day prior to the day on which such notice is given. The
Common Stock and the Warrants comprising the Units are immediately detachable
and separately transferable. See "Description of Securities."

Prior to this offering ("Offering"), there has been no public market for the
Units, Common Stock or Warrants and there can be no assurance that any such
market will develop. It is currently anticipated that the initial public
offering prices will be between $5.10 and $6.10 per Unit. See "Underwriting"
for information relating to the factors considered in determining the initial
public offering price of the Units and the exercise price of the Warrants.
The Company has applied for quotation of the Units, Common Stock and Warrants
on the Nasdaq Small Cap Market under the symbols "PVTRU," "PVTR" and "PVTRW,"
respectively, and for listing of the Units, Common Stock and Warrants on the
Boston Stock Exchange under the trading symbols "PVRU," "PVR" and "PVRW,"
respectively.

The registration statement of which this Prospectus forms a part also relates
to the offer and sale by certain persons ("Selling Securityholders") of
Warrants ("Bridge Warrants") issued to the Selling Securityholders in
connection with the Company's January 1997 bridge financing ("Bridge
Financing"). The securities offered by the Selling Securityholders are not
part of the underwritten Offering and the Company will not receive any
proceeds from the sale of the Bridge Warrants. The Selling Securityholders
may not sell such securities for a period of one year from the date of this
Prospectus.

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

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A HIGH
DEGREE OF RISK AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS" AT PAGE 8 AND
"DILUTION" AT PAGE 14.

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

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>
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- ------------- --------------- ----------------- ---------------
<S> <C> <C> <C>
Per Unit ..... $ $ $
- ------------- --------------- ----------------- ---------------
Total(3)...... $ $ $
- ------------- --------------- ----------------- ---------------
</TABLE>
===============================================================================
(1) Does not include a 3% nonaccountable expense allowance which the
Company has agreed to pay to the Underwriter. The Company has also
agreed to sell to the Underwriter an option ("Unit Purchase Option") to
purchase 150,000 Units and to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended ("Securities Act"). See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at
approximately $ .
(3) The Company has granted the Underwriter an option, exercisable within
45 days from the date of this Prospectus, to purchase up to an
additional 225,000 Units on the same terms as set forth above, solely
for the purpose of covering over-allotments, if any. If such
over-allotment option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to the Company will
be $ , $ and $ , respectively. See "Underwriting."

The Units are being offered by the Underwriter subject to prior sale, when,
as and if delivered to and accepted by the Underwriter and subject to the
approval of certain legal matters by counsel and certain other conditions.
The Underwriter reserves the right to withdraw, cancel or modify this
Offering and to reject any order in whole or in part. It is expected that
delivery of certificates representing the Units will be made against payment
therefor at the offices of the Underwriter in New York City on or about
, 1997.

[GKN SECURITIES LOGO]

, 1997

1
<PAGE>

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

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

"Pivot Rules"(Registered Trademark), "The Rules Have Changed"(Registered
Trademark), "Clothes To Play A Round In"(Registered Trademark), the "Three
Golfer" design mark and the "Three Golfer and Flag" design mark are
registered trademarks of Pivot Rules, Inc.
<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and
financial statements (including the notes thereto) appearing elsewhere in
this Prospectus. Each prospective investor is urged to read this Prospectus
in its entirety. Unless otherwise indicated, all information in this
Prospectus has been adjusted to reflect an 8,862.6292-to-1 stock split
effected on January 2, 1997.

THE COMPANY

The Company designs, sources and markets a full collection of golf
lifestyle sportswear for men under the Pivot Rules brand name and registered
trademark. Its current products include knit and woven shirts, sweaters,
sweatshirts, pants, shorts, outerwear, hats and socks, many of which carry
the Company's distinctive "Three Golfer" logo. The Company focuses its design
efforts on creating products with updated styling, innovative design and
superior comfort and fit, utilizing natural fibers and bright colors. The
Company seeks to distinguish its products from its competitors' products by
incorporating many unique details into its garments, thereby creating a
"branded" look. The Company believes that by integrating its marketing,
packaging and in-store fixturing programs, it will be able to build a
lifestyle image that consumers will link with the Pivot Rules brand name.

Historically, golf apparel has been marketed largely to avid golfers and
has been sold primarily at country clubs and pro shops. In recent years,
however, these products increasingly have appealed to a broader group of
consumers. As golf apparel has become more fashionable, a new market segment
has developed--golf lifestyle sportswear. The Company believes that this new
market segment results from the confluence of several trends, including (i)
the increased interest among the general population in quality of life and
leisure activities, (ii) the general success of lifestyle-oriented
sportswear, (iii) the increasing prominence of both professional and
celebrity golfers, (iv) the increased media coverage of golf, and (v) the
advent of "casual Fridays" and the increasing acceptance of casual apparel in
the workplace. Golf lifestyle sportswear is now sold not only to avid golfers
but also to consumers who identify with the lifestyle associated with golf
and similar leisure activities. As a result, department stores, catalogs,
sporting goods stores, discounters and specialty stores have joined country
clubs and pro shops as popular places to purchase golf apparel.

In 1991, having recognized these changes in the golf apparel market in
their incipience, the Company became one of the pioneers in selling golf
lifestyle apparel collections through these new channels of distribution.
Initially, the Company sold its products in the "upper moderate" price
segment, primarily to better department stores, specialty stores and
catalogs. Because such retailers typically purchased small quantities of a
given product style, the Company utilized small production runs and its
profitability was dependent upon high margins. Based on this strategy, the
Company's net sales grew from approximately $2.2 million in 1992 to $6.3
million in 1995.

By 1996, an increasing number of new market entrants had begun to sell
golf lifestyle apparel collections in the "upper moderate" price segment and
the Company determined that a disproportionate amount of competition existed
in this market. As a result, the Company decided to refocus its marketing
efforts on the "moderate" price segment of the golf lifestyle apparel market.
Based upon the superior design and quality of its products and its ability to
offer the fully integrated golf lifestyle concept and brand image that it had
developed in the "upper moderate" price segment of the market, the Company
believed that it could achieve significant competitive advantages by
repositioning its products into the "moderate" price segment. Accordingly,
the Company reduced its prices and redirected its sales efforts to focus on
the higher-volume retailers and other customers in the "moderate" price
segment, such as department stores, sporting goods stores, catalogs and
corporations, as well as discounters, including warehouse clubs. Based on
this new strategy, the Company's net sales increased to $8.6 million in 1996.
The Company believes that this strategy will lead to further increased sales
volume and that the increased purchasing leverage resulting from this sales
growth will allow it to reduce sourcing costs while maintaining product
quality.

3
<PAGE>
The Company's goal is to become the leading golf lifestyle apparel
collection in the "moderate" price segment. The Company has planned several
marketing and advertising initiatives in order to reinforce its strategic
shift in product positioning. These initiatives consist of a trade market
campaign that commenced in October 1996, a national consumer advertising
campaign that will be launched in the Spring of 1997, the expansion of the
categories of "Pivot Rules" products offered, and the installation of concept
shops and/or concept areas within targeted retailers' stores. The Company may
develop or acquire new labels in order to take advantage of opportunities in
a variety of other segments of the retail market.

The Company's executive offices are located at 80 West 40th Street, New
York, New York 10018 and its phone number is (212) 944-8000. The Company was
founded in 1991 as Pivot Corporation and in 1994 changed its name to Pivot
Rules, Inc.

4
<PAGE>
THE OFFERING

Securities Offered ............ 1,500,000 Units, each Unit consisting of one
share of Common Stock and one Warrant. Each
Warrant entitles the holder to purchase one
share of Common Stock for $ [100% of the
per-Unit offering price] during the four
year period commencing one year after the
date of this Prospectus. The Company may
redeem the Warrants, at any time after they
become exercisable, at a price of $.01 per
Warrant on not less than 30 days' prior
written notice if the last sale price of
Common Stock has been at least 165% of the
then exercise price of the Warrants
(initially $ ) on 20 out of the 30
consecutive trading days ending on the third
day prior to the date on which such notice
is given. The Common Stock and the Warrants
comprising the Units are immediately
detachable and separately transferable. See
"Description of Securities."

Common Stock Outstanding Prior
to the Offering .............. 1,200,000 shares

Common Stock to be Outstanding
After the Offering ........... 2,700,000 shares

Proposed Nasdaq Small Cap
Market Symbols (1) ........... Units: PVTRU
Common Stock: PVTR
Warrants: PVTRW

Proposed Boston Stock
Exchange Symbols (1) ......... Units: PVRU
Common Stock: PVR
Warrants: PVRW
- ------------
(1) The Company may voluntarily terminate the trading and/or quotation of
the Units on the Boston Stock Exchange at any time, and on the Nasdaq
Small Cap Market at any time commencing on the 30th day after the date
of this Prospectus, without notice to the Company's securityholders.
Such termination as to the Units would not affect the continued trading
and quotation on the Boston Stock Exchange and/or the Nasdaq Small
Cap Market of the Common Stock or the Warrants.

USE OF PROCEEDS

The Company intends to apply approximately $3,000,000 of the net proceeds
of this Offering to its marketing and advertising activities, approximately
$2,029,000 to repay indebtedness and obligations of the Company and
approximately $500,000 to the installation of concept shops and/or concept
areas within targeted retailers' stores. The remaining proceeds will be used
for working capital and general corporate purposes. See "Use of Proceeds."

5
<PAGE>
RISK FACTORS

An investment in the securities offered hereby involves a high degree of
risk, including, without limitation, risks related to uncertainties in
apparel retailing and unexpected changes in fashion trends; the acceptance of
the Company's efforts to reposition its products and the risk of loss of
existing and targeted retailers as a result of such repositioning; the
potential failure of the Company's advertising and marketing initiatives; and
the Company's limited working capital and possible need for additional
financing. An investment in the securities offered hereby should be
considered only by investors who can afford the loss of their entire
investment. See "Risk Factors."

6
<PAGE>
SUMMARY FINANCIAL INFORMATION

The summary financial data presented below as of and for the year ended
December 31, 1996 is derived from the financial statements audited by Grant
Thornton LLP. The summary financial data for the year ended December 31, 1995
is derived from the financial statements audited by Richard A. Eisner &
Company, LLP. The summary financial data for the years ended December 31,
1994, 1993, and 1992 are derived from the unaudited financial statements of
the Company. In the opinion of management, such unaudited financial
statements include all adjustments necessary for the fair presentation of
such data. The summary financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the audited financial statements of the Company, including
the notes thereto, appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1992 1993 1994 1995 1996
----------- ----------- ----------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales ....................... $2,247 $4,488 $6,417 $6,337 $8,596
Gross profit .................... 768 1,604 2,383 2,341 2,025
Selling, marketing, design and
administrative expenses ........ 646 1,231 1,661 2,288 1,502
Operating profit ................ 122 373 722 53 523
Net income (loss) ............... $ 41 $ 159 $ 355 $ (208) $ 135
Net earnings (loss) per share .. $ .03 $ .09 $ .22 $ (.17) $ .11
Weighted average number of
shares of Common Stock and
common stock equivalents
outstanding .................... 1,317,253 1,772,526 1,629,394 1,200,000 1,200,000
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------
PRO FORMA
ACTUAL AS ADJUSTED (1)
-------- ---------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital .... $ 175 $6,688
Total current assets 1,255 7,259
Total assets ........ 1,636 7,510
Total liabilities .. 1,227 583
Shareholders' equity $ 409 $6,927
</TABLE>

- ------------
(1) The pro forma as adjusted balance sheet information gives effect to the
(i) receipt of the $1,500,000 gross proceeds of the Bridge Financing,
(ii) the consummation of this Offering at an assumed public offering
price of $5.60 per Unit, net of underwriting discounts and commissions
and other expenses of this Offering, and the use of a portion of the
net proceeds thereof to repay approximately $2,029,000 in indebtedness
and certain other obligations, and (iii) the write-off of $138,000 of
debt discount and $287,000 of debt issuance costs incurred in
connection with the Bridge Financing.

Unless otherwise indicated, the information in this Prospectus does not
give effect to the exercise of the Warrants, the Underwriter's over-allotment
option or the Unit Purchase Option, and does not include: (i) 200,000 shares
of Common Stock reserved for issuance upon exercise of stock options which
may be granted under the Company's 1997 Stock Option Plan ("Plan"), of which
options to purchase 83,000 shares of Common Stock have been granted to date,
and (ii) 600,000 shares of Common Stock reserved for issuance upon the
exercise of the Bridge Warrants. See "Management--Executive Compensation" and
"--Stock Option Plan" and "Description of Securities--Warrants."

7
<PAGE>
RISK FACTORS

The securities offered hereby are speculative in nature and involve a high
degree of risk. Accordingly, in analyzing an investment in these securities,
prospective investors should carefully consider, along with the other matters
referred to herein, the following risk factors. No investor should
participate in this Offering unless such investor can afford a complete loss
of his or her investment.

Uncertainties in Apparel Retailing; Unexpected Changes in Fashion Trends.
The apparel industry historically has been subject to substantial cyclical
variations. The Company and other apparel manufacturers rely on the
expenditure of discretionary income for most, if not all, of their sales. Any
downturn, whether real or perceived, in economic conditions or prospects
could adversely affect consumer spending habits and the Company's business,
financial condition and operating results. In addition, some of the retailers
to whom the Company sells or may sell are highly leveraged. To date, these
developments have not had a material adverse effect on the Company. However,
any material financial or other difficulties encountered by the Company's
major customers could have a material adverse effect on the Company's
business, financial condition and operating results. Fashion trends can
change rapidly, and the Company's business is particularly sensitive to such
changes because the Company typically designs and contracts for the
manufacture of its products substantially in advance of sales. There can be
no assurance that the Company will accurately anticipate shifts in fashion
trends and adjust its merchandise mix to appeal to changing consumer tastes
in a timely manner. If the Company misjudges the market for its products or
is unsuccessful in responding to changes in fashion trends or in market
demand, the Company could experience insufficient or excess inventory levels
or higher markdowns, either of which would have a material adverse effect on
the Company's business, financial condition and operating results. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Sourcing" and "--Product and Design."

Acceptance of Repositioning. The Company has commenced a new strategy
entailing the repositioning of its products at a lower price level and the
marketing of its products to higher-volume retailers. In order for this
strategy to succeed, the Company must sell its products to several of such
retailers. The business of these retailers is extremely large in comparison
to that of the Company and there can be no assurance that the Company's
products will impact the retailers' business in a favorable manner, and,
therefore, that such retailers will continue to carry the Company's products,
even if there is a high consumer demand for such products. Accordingly, there
can be no assurance that the Company's new strategy will be successful.
Moreover, it is anticipated that, even if the strategy is successful, it will
take some time to affect the Company's operating results. See
"Business--Corporate Strategy."

Risk of Loss of Existing and Targeted Retailers. It is likely that some or
all of the Company's existing high-end retail customers will cease to do
business with the Company as it moves into the higher-volume distribution
channels. Moreover, the Company has recently begun testing the sale of its
products to certain other discounters, including warehouse clubs. While such
sales may generate significant revenue for the Company, some or all of the
Company's existing or targeted retailers may refuse to purchase the Company's
products if it sells to such discounters on a regular basis. Any such refusal
could have a material adverse effect on the Company's business, financial
condition and operating results. See "Business--Corporate Strategy."

Potential Failure of Advertising and Marketing Initiatives. In conjunction
with the Company's efforts to reposition its products, it has instituted new
advertising and marketing initiatives. These initiatives are likely to
require continuous expenditures to be effective. There can be no assurance
that such initiatives will be successful, and even if successful, it may take
some time for their effects to translate into increased sales. The failure of
these advertising and marketing initiatives could have a material adverse
effect on the Company's efforts to reposition its products and, consequently,
the Company's business, financial condition and operating results. See
"Business--Corporate Strategy."

Limited Working Capital; Possible Need for Additional
Financing. Historically, the Company has been undercapitalized. To date, the
Company has obtained working capital through cash flow from operations,
private financing and a revolving credit facility from Heller Financial, Inc.
("Heller"), to whom it has granted a senior security interest in
substantially all of its assets. The Company anticipates,

8
<PAGE>
based on current plans and assumptions relating to its operations, that the
proceeds of the Offering, together with existing resources and cash generated
from operations, should be sufficient to satisfy the Company's contemplated
cash requirements for at least 18 months after completion of the Offering.
There can be no assurance, however, that the Company will not require
additional financing during or after such 18-month period. The Company's
current borrowing arrangements substantially limit the Company's flexibility
in obtaining additional financing. There can be no assurance that any
additional financing or other sources of capital will be available to the
Company upon acceptable terms, if at all. The inability to obtain additional
financing if and when needed would have a material adverse effect on the
Company's business, financial condition and operating results. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

Risk of Retailer's Refusal to Place Concept Shops. A significant component
of the Company's corporate strategy is the installation of concept shops
and/or concept areas within stores of the Company's targeted retailers. There
can be no assurance, however, that such retailers will be willing to place
the Company's concept shops and/or concept areas in their stores, or that, if
such shops and/or areas are installed, their performance will meet the
Company's expectations. The Company's failure to persuade such retailers to
place concept shops and/or concept areas in their stores, or the failure of
such shops and/or areas to perform up to expectations, could have a material
adverse effect on the Company's future business. See "Business--Corporate
Strategy."

Significant Reduction in Sales of Women's Sportswear
Collection. Historically, the Company has experienced a significant amount of
sales of its women's sportswear collection, including approximately 33.4% of
net sales in 1995 and 12.8% of net sales in 1996. Due to limited retailer
interest in continuing to carry the women's sportswear collection on a
year-round basis, the Company has made a strategic decision to discontinue
the development of the collection and to consolidate the remainder of its
women's design operations into its men's operations. The Company may continue
to produce a limited amount of women's apparel on a contract basis as
requested by certain retailers. Although the decrease in sales of the women's
sportswear collection in 1996 was offset by increased sales of the men's
sportswear collection, there can be no assurance that sales of the men's
collection will continue to increase at a rate sufficient to offset the
reduction in sales of the women's collection. See "Management's Discussion
and Analysis of Financial Condition and Results of Operation."

Competition. The men's sportswear segment of the apparel market is highly
competitive. The Company encounters substantial competition at a variety of
price points from a number of apparel brands, including Polo, Tommy Hilfiger,
Nautica, Chaps, Izod, Gant, Dockers, Nike, Munsingwear, Grand Slam, Greg
Norman, Ashworth, Cross Creek and Jack Nicklaus. Virtually all of the
Company's targeted retailers also offer their own private label brands which
compete at significantly lower prices. Moreover, the current success of
golf-inspired lines leaves open the possibility of new entrants into the
market. For example, Nike recently signed a $40 million contract with Tiger
Woods and is developing a line of clothing under his name. In addition to
competing with golf-apparel manufacturers, the Company competes with
manufacturers of high quality men's sportswear and general leisure wear. The
Company competes primarily on the basis of design, image, value and quality.
Many of the Company's competitors are significantly larger than the Company,
have substantially greater financial, marketing and other resources and have
achieved greater recognition for their brand names than the Company. See
"Business--Competition."

Dependence on Foreign Sourcing; Future Status of Hong Kong &
China. Substantially all of the Company's products are manufactured by third
parties in the Far East and India. The use of contractors and the resulting
lack of direct control could make it difficult for the Company to obtain
timely delivery of products of acceptable quality. Delays in shipments to the
Company, inconsistent or inferior garment quality and other factors beyond
the Company's control could adversely affect the Company's relationships with
its customers, its reputation in the industry and its sales and operating
results. Moreover, foreign manufacturing is subject to numerous risks,
including work stoppages, transportation delays, political instability,
foreign currency fluctuations, the imposition of tariffs and import and
export controls, customs laws, changes in governmental policies and other
factors that could have a material adverse effect on the Company's business,
financial condition and operating results. In particular, there have been a

9
<PAGE>
number of recent trade disputes between China and the United States during
which the United States threatened to impose tariffs and duties on some
products imported from China and to withdraw China's "most favored nation"
trade status. In addition, since the Company's sourcing activities are based
in Hong Kong, such activities may be affected by the return of Hong Kong to
Chinese control in July 1997. Furthermore, because the Company's foreign
manufacturers are located at great distances from the Company, the Company
must generally allow for a significant amount of lead time for the delivery
of products. This reduces the Company's manufacturing flexibility, which
increases the risks associated with changes in fashion trends and consumer
preferences. These risks will increase as the Company seeks to source some of
its products through manufacturers in areas where labor and fabric costs are
lower than those in areas where the Company's products are currently
produced. See "Business--Sourcing."

Risk that Markdown Expenses Could Exceed Historical Levels. In the apparel
industry, the prices of products that are not sold by retailers in a timely
manner are often marked down. It is customary in the industry for the seller
of such products to share markdown costs with the retailers. The Company has
in the past shared such costs with its major customers in order to maintain
its relationships with such customers. The Company establishes reserves as a
deduction from gross sales for such markdown expenses. In 1996, markdown
expenses were approximately 2% of gross sales. Although the Company believes
that its reserves are adequate, there can be no assurance that markdown
expenses in the future will not exceed historical levels. In the event that
markdowns exceed historical levels, the Company's business, financial
condition and operating results will be adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Dependence on Limited Number of Customers; Lack of Long-Term Sales
Agreements. In 1996, the Company stopped using independent sales
representatives and consolidated all selling efforts to its New York
showroom. This consolidation, coupled with the Company's focus on
higher-volume retailers, resulted in a 44.6% concentration of gross sales
among its four largest customers in 1996, including Sam's Club, which
accounted for approximately 24.7% of the Company's gross sales during 1996.
The Company does not have long-term sales agreements with any of its
customers. The loss or significant decrease in business from any of these
customers could have a material adverse effect on the Company's business,
financial condition and operating results. See "Business--Corporate
Strategy."

Management of Growth. The Company intends to expand its operations
substantially following the completion of this Offering. This expansion may
place a significant strain on the Company's management, financial and other
resources. In order to manage its growth effectively, the Company will be
required to hire additional management personnel to improve its operational,
financial and management information systems, to accurately forecast sales
demand and calibrate manufacturing to match such demand, to improve its
design capability, to oversee the installation of concept shops and/or
concept areas, to manage its advertising and marketing programs, and to
attract, train, motivate and manage its employees effectively. If the Company
is unable to manage growth effectively, the Company's business, financial
condition and operating results will be adversely affected. See "Business"
and "Management."

Recent Loss. Although the Company was profitable in 1992, 1993, 1994 and
1996, and had operating profits in 1995, it incurred a net loss of
approximately $208,000 in 1995. The loss in 1995 was attributable primarily
to the costs associated with a test advertising campaign for the Company's
Father's Day collection which failed to have a significant effect on the
Company's sales and, to a lesser extent, to an increase in interest expense
resulting from financing the repurchase of stock from certain shareholders in
September 1994. Notwithstanding the Company's profits in 1996, there can be
no assurance that the Company will be able to maintain profitability as its
business grows. See Financial Statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

Use of Proceeds to Repay Indebtedness; Benefit to Insiders. The Company
intends to use approximately $2,029,000 of the net proceeds of this Offering
to repay indebtedness and other obligations. Approximately $75,000 of such
amount will be used to prepay the remaining outstanding indebtedness due
under a note issued by the Company in favor of Edward H. Mank ("Mank") in the
original principal amount of $240,000 ("Mank Note"). E. Kenneth Seiff, the
Company's Chief Executive Officer, has

10
<PAGE>

granted Mank a security interest in 177,253 shares of Common Stock held by
Mr. Seiff in order to secure the Company's obligations under the Mank Note.
Such security interest will be released upon the repayment of such
obligations out of the proceeds of this Offering. See "Use of Proceeds."

Broad Discretion in Application of Net Proceeds. At an assumed public
offering price of $5.60 per Unit, approximately $1,329,000, or 19.4%, of the
net proceeds of this Offering will be allocated to working capital and
general corporate purposes. Accordingly, management will have broad
discretion as to how and when such proceeds will be applied and may use a
portion of such proceeds to pay salaries, including salaries of its executive
officers. See "Use of Proceeds."

Uncertainty and Expense of Intellectual Property Litigation. The Company
currently has several registered trademarks, and has been assigned a design
patent, and may seek additional legal protection for its products and trade
names. The Company has invested substantial resources in developing several
distinctive trademarks as well as branded products and product lines. There
can be no assurance that the steps taken by the Company to protect its rights
will be sufficient to deter misappropriation. Failure to protect these
intellectual property assets could have a material adverse effect on the
Company's business operations. Moreover, although the Company is not aware of
any pending or threatened action alleging the Company's infringement of
intellectual property rights that could have a material adverse effect on the
Company's business, there can be no assurance that any such action will not
be commenced against the Company in the future or, if such action is
commenced, that the Company would ultimately prevail. See "Legal
Proceedings."

Seasonality and Quarterly Fluctuations. Historically, the Company's sales
and operating results fluctuate by quarter, with most sales occurring in the
Company's second and fourth quarters. It is in these quarters that the
Company's Father's Day and Holiday product lines, which traditionally have
had the highest volume of net sales, are shipped to customers. The Company
can exercise very little control over the timing of customer orders; thus,
orders anticipated in the second calendar quarter, for example, may fall into
the third calendar quarter, thereby affecting both quarters' results. Due to
the long manufacturing cycle of apparel (three to six months), the Company
sometimes enters into manufacturing commitments prior to having firm orders.
In any quarter in which sales fall below the Company's expectations, the
Company's financial results will be negatively impacted because certain costs
will have been incurred in advance of actual receipt of orders. As a result,
there can be no assurance that the Company can maintain sufficient
flexibility with respect to its working capital needs and its ability to
arrange for the manufacture of products to be able to minimize the adverse
effects of an unanticipated shortfall or increase in the demand for its
products. Failure to predict accurately and respond to consumer demand may
reduce profitability. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Dependence on Key Personnel. The Company believes its success will depend
to a significant extent on the efforts and abilities of E. Kenneth Seiff, its
Chief Executive Officer. The Company has entered into an employment agreement
with Mr. Seiff which expires on January 1, 2000. The loss of the services of
Mr. Seiff could have a material adverse effect on the Company. The Company
maintains a $1.2 million key person life insurance policy on the life of Mr.
Seiff. See "Management."

Immediate and Substantial Dilution. Purchasers of the securities offered
hereby will incur an immediate and substantial dilution of approximately 56%
of their investment in the Common Stock because the net tangible book value
of the Common Stock after the Offering will be approximately $2.48 per share
as compared with the assumed initial public offering price of $5.60 per Unit.
See "Dilution."

Dividends Unlikely. The Company has never declared or paid cash dividends
on its Common Stock and does not intend to pay such dividends in the
foreseeable future. The payment of dividends in the future will be at the
discretion of the Company's Board of Directors. See "Dividend Policy."

No Prior Market; Potentially Limited Trading Market; Potential Effects of
"Penny Stock" Rules. There has been no prior market for the Units, Common
Stock or Warrants and there can be no assurance that a public market for the
Units, Common Stock or Warrants will develop or be sustained after the
Offering. Although the Company has applied to have the Units, Common Stock
and Warrants approved

11
<PAGE>

for quotation on the Nasdaq SmallCap Market, in order to maintain such
quotation, the Company must satisfy certain maintenance criteria. The failure
to meet these maintenance criteria may result in the Units, Common Stock and
Warrants no longer being eligible for quotation on Nasdaq and trading, if
any, of the Units, Common Stock and Warrants would thereafter be conducted in
the non-Nasdaq over-the-counter market. As a result of such delisting, an
investor may find it more difficult to dispose of or to obtain accurate
quotations as to the market value of the Company's securities. If the Units,
Common Stock and/or Warrants were to become delisted from trading on Nasdaq
and the trading prices of the Units, Common Stock and/or Warrants were less
than $5.00 per Unit, share or Warrant, trading in the Units, Common Stock
and/or Warrants, as the case may be, would also be subject to the
requirements of certain rules promulgated under the Securities Exchange Act
of 1934, as amended ("Exchange Act"), which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
penny stock (generally, any non-Nasdaq equity security that has a market
price of less than $5.00 per share, subject to certain exceptions). Such
rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks
associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established
customers and accredited investors (generally institutions). For these types
of transactions, the broker-dealer must make a special suitability
determination for the purchaser and must have received the purchaser's
written consent to the transaction prior to the sale. The additional burdens
imposed upon broker-dealers by such requirements may discourage them from
effecting transactions in the Units, Common Stock and Warrants, which could
severely limit the liquidity of the Units, Common Stock and Warrants and the
ability of purchasers in this Offering to sell the Units, Common Stock and
Warrants in the secondary market. See "Underwriting."

Possible Termination of Separate Quotation/Trading of Units. The Company
may voluntarily terminate the trading and/or quotation of the Units on the
Boston Stock Exchange at any time, and on the Nasdaq Small Cap Market at any
time commencing on the 30th day after the date of this Prospectus, without
notice to the Company's securityholders. The termination of trading and/or
quotation of the Units would result in a securityholder having to sell the
Common Stock and Warrants separately, thereby possibly resulting in increased
brokerage commissions as contrasted with selling the Units separately. See
"Description of Securities."

Possible Volatility of Stock Price. The public offering prices of the
Units and the exercise price and other terms of the Warrants being offered
hereby were established by negotiation between the Company and the
Underwriter and may not be indicative of prices that will prevail in the
trading market. In the absence of an active trading market, purchasers of the
Units may experience substantial difficulty in selling their securities. The
trading prices of the Company's Units, Common Stock and Warrants are expected
to be subject to significant fluctuations in response to variations in
quarterly operating results, changes in analysts' earnings estimates, general
conditions in the general retail apparel and golf apparel industries and
other factors. In addition, the stock market is subject to price and volume
fluctuations that affect the market prices for companies and that are often
unrelated to operating performance. See "Underwriting."

Shares Eligible for Future Sale. Sales of the Company's Common Stock in
the public market after this Offering could adversely affect the market price
of the Units, Common Stock or Warrants. See "Securities Eligible for Future
Sale."

Current Prospectus and State Blue Sky Registration Required to Exercise
Warrants. The Company will be able to issue shares of its Common Stock upon
exercise of the Warrants only if there is then a current prospectus relating
to such Common Stock and only if such Common Stock is qualified for sale or
exempt from qualification under applicable state securities laws of the
jurisdictions in which the various holders of the Warrants reside. The
Company has undertaken to file and keep current a prospectus which will
permit the purchase and sale of the Common Stock underlying the Warrants, but
there can be no assurance that the Company will be able to do so. Although
the Company intends to seek to qualify for sale the shares of Common Stock
underlying the Warrants in those states in which the securities are to be
offered, no assurance can be given that such qualification will occur. The
Warrants may be deprived of any

12
<PAGE>
value and the market for the Warrants may be limited if a current prospectus
covering the Common Stock issuable upon the exercise of the Warrants is not
kept effective or if such Common Stock is not qualified or exempt from
qualification in the jurisdictions in which the holders of the Warrants then
reside. See "Underwriting."

Potential Adverse Effect of Redemption of Warrants. The Warrants may be
redeemed by the Company at any time after they become exercisable for a
redemption price of $.01 per Warrant on not less than 30 days' prior written
notice if the last sale price of the Common Stock has been at least 165% of
the then exercise price of the Warrants (initially $ ) on 20 out of the
30 consecutive trading days ending on the third day prior to the day on which
such notice is given. Notice of a redemption of the Warrants could force the
holders thereof to exercise the Warrants and pay the exercise price at a time
when it may be disadvantageous for them to do so, to sell the Warrants at the
current market price when they might otherwise wish to hold the Warrants, or
to accept the redemption price which would be substantially less than the
market value of the Warrants at the time of redemption. See "Description of
Securities--Warrants."

Effect of Outstanding Warrants and Options. As of the date of this
Prospectus, there are outstanding Bridge Warrants to purchase 600,000 shares
of Common Stock and options to purchase 83,000 shares of Common Stock issued
under the Plan. In addition, in connection with this Offering, the Company
will issue the Warrants and the Unit Purchase Option. The exercise of such
outstanding warrants and options would dilute the then-existing shareholders'
percentage ownership of the Company's stock, and any sales in the public
market of Common Stock underlying such securities could adversely affect
prevailing market prices for the Common Stock. Moreover, the terms upon which
the Company would be able to obtain additional equity capital could be
adversely affected since the holders of such securities can be expected to
exercise them at a time when the Company would, in all likelihood, be able to
obtain any needed capital on terms more favorable to the Company than those
provided by such securities. See "Description of Securities" and
"Underwriting."

Anti-takeover Matters; Potential Adverse Effect of Future Issuances of
Authorized Preferred Stock. The Company's certificate of incorporation, as
restated ("Restated Certificate"), and by-laws, as amended and restated
("Restated By-Laws"), will contain certain provisions that may delay, defer
or prevent a takeover of the Company. The Company's Board of Directors will
have the authority to issue up to 2,000,000 shares of preferred stock, par
value $.01 per share ("Preferred Stock"), and to determine the price, rights,
preferences and restrictions, including voting rights, of those shares,
without any further vote or action by the shareholders. Accordingly, the
Board of Directors will be empowered, without shareholder approval, to issue
Preferred Stock, for any reason and at any time, with such rates of
dividends, redemption provisions, liquidation preferences, voting rights,
conversion privileges and other characteristics as the Board of Directors may
deem necessary. The rights of holders of Common Stock will be subject to, and
may be adversely affected by, the rights of holders of any Preferred Stock
that may be issued in the future. In addition, the Company's Restated
Certificate and Restated By-Laws will include provisions establishing a
classified Board of Directors. Until October 22, 1998, the Company will also
be subject to the anti-takeover provisions of Section 912 of the Business
Corporation Law of the State of New York ("BCL"), which could have the effect
of delaying or preventing a change of control of the Company. See
"Description of Securities."

Limited Liability of Directors. As permitted by the BCL, the Restated
Certificate limits the personal liability of a director to the Company and
its shareholders for monetary damages for breach of duty as a director except
in certain circumstances. Accordingly, except in such circumstances, the
Company's directors will not be liable to the Company or its shareholders for
breach of such duty. See "Description of Securities--Limitation of Liability
of Directors."

13
<PAGE>
DILUTION

The difference between the initial public offering price per share of
Common Stock (attributing no value to the Warrants) and the pro forma net
tangible book value per share of Common Stock after the Offering constitutes
the dilution per share of Common Stock to investors in the Offering. Net
tangible book value per share is determined by dividing the net tangible book
value (total tangible assets less total liabilities) by the number of
outstanding shares of Common Stock. As of December 31, 1996, based on
1,200,000 shares of Common Stock outstanding, the Company had a pro forma net
tangible book value of $40,000, or approximately $.03 per share of Common
Stock. After giving effect to the sale of the Units offered hereby at an
assumed initial offering price of $5.60 per Unit (less underwriting discounts
and estimated expenses of this Offering) and the application of the net
proceeds therefrom, the pro forma net tangible book value at that date would
have been $6,687,000, or approximately $2.48 per share of Common Stock. This
represents an immediate increase in net tangible book value of approximately
$2.45 per share to existing shareholders and an immediate dilution of
approximately $3.12 per share or approximately 56% to investors in this
Offering.

The following table illustrates the per share dilution without giving
effect to operating results of the Company subsequent to December 31, 1996.

<TABLE>
<CAPTION>
<S> <C> <C>
Assumed public offering price ........................ $5.60
Pro forma net tangible book value before Offering .. $ .03
Increase attributable to investors in this Offering $2.45
-------

Pro forma net tangible book value after Offering .... 2.48
-------
Dilution to investors in this Offering ............... $3.12
=======
</TABLE>

The following table summarizes the number and percentage of shares of
Common Stock purchased from the Company, the amount and percentage of
consideration paid, and the average price per share paid by existing
shareholders and by investors pursuant to this Offering.

<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED TOTAL CONSIDERATION PRICE
--------------------- ----------------------- PER SHARE
NUMBER PERCENT AMOUNT PERCENT
----------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders 1,200,000 44.4% $ 629,874 7.0% $ .52
New investors ......... 1,500,000 55.6% 8,400,000 93.0% $5.60
----------- --------- ------------- ---------
Total ................ 2,700,000 100.0% $9,029,874 100.0%
=========== ========= ============= =========
</TABLE>

The foregoing analysis assumes no exercise of the Bridge Warrants, the
Warrants, outstanding options, the Unit Purchase Option or the Warrants
included in the Unit Purchase Option. In the event any such securities are
exercised, the percentage ownership of the investors in this Offering will be
reduced and the dilution per share of Common Stock to investors in this
Offering may increase.

14
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the Units offered hereby,
after deducting underwriting discounts and commissions and estimated expenses
payable by the Company in connection with this Offering (assuming an initial
public offering price of $5.60 per Unit), are estimated to be approximately
$6,858,000 (approximately $7,954,200 if the Underwriter's over-allotment
option is exercised in full). The Company intends to apply the net proceeds
approximately as follows:

<TABLE>
<CAPTION>
APPLICATION OF PROCEEDS AMOUNT PERCENT
- ------------------------------------- ------------ ---------
<S> <C> <C>
Marketing and advertising ............ $3,000,000 43.7%
Repayment of indebtedness and other
obligations ......................... 2,029,000 29.6
Installation of concept shops and/or
concept areas ....................... 500,000 7.3
Working capital and general corporate
purposes ............................ 1,329,000 19.4
------------ ---------
Total .............................. $6,858,000 100.0%
============ =========
</TABLE>

Approximately $3,000,000 of the net proceeds will be used for marketing
and advertising purposes, including the continued implementation of the
Company's national advertising campaign. Such expenses may include costs
relating to consumer research, the development and placement of
advertisements in various forms of media including print and direct mail, and
payments to professional and/or celebrity golfers in consideration of their
endorsement of the Company's products. See "Business--Corporate Strategy."

Approximately $2,029,000 of the net proceeds will be used to repay
indebtedness and other obligations of the Company, as follows:

Approximately $1,550,000 of the net proceeds will be used to repay the
notes issued by the Company in connection with the Bridge Financing in
January 1997 ("Bridge Notes"). The Bridge Notes consist of 45 notes in the
aggregate principal amount of $1,500,000, bearing interest at the rate of 10%
per annum through April 30, 1997 and 12% per annum thereafter, and are
payable upon the consummation of this Offering. Assuming the Offering is
consummated by April 30, 1997, the interest to be paid on the Bridge Notes
will be approximately $50,000. The net proceeds from the sale of the Bridge
Notes are being used for the development of a national advertising campaign
and the continuation of the Company's trade campaign, the hiring of key
personnel, the development and installation of concept shops and/or concept
areas in various targeted retail stores, the payment of expenses in
connection with this Offering, the payment of approximately $60,000 to
Leisure Wear Inc., David M. Goldblatt Inc. Profit Sharing Plan, David
Goldblatt, Anita Goldblatt and Jeffrey Goldstein (collectively, the "Leisure
Wear Group") in accordance with the terms of a Stock Purchase Agreement by
and between the Leisure Wear Group and the Company dated September 30, 1994
and an amendment to such agreement dated September 24, 1996 (collectively,
the "Stock Purchase Agreement"), pursuant to which the Company repurchased
572,526 shares of Common Stock from the Leisure Wear Group, and for working
capital and general corporate purposes. See "Certain Transactions."

Approximately $219,000 of the net proceeds will be paid to the Leisure
Wear Group pursuant to the terms of the Stock Purchase Agreement, which
obligates the Company to make certain cash incentive payments to the Leisure
Wear Group, including, but not limited to, payments equal to 5% of the net
cash proceeds to the Company resulting from the issuance of securities of the
Company in any public offering or private placement, up to an aggregate of
$279,000. The Company paid the Leisure Wear Group cash incentive payments
equal to approximately $60,000 of the net cash proceeds of the Bridge
Financing. Under the terms of the Stock Purchase Agreement, the Company is
also obligated to use its best efforts to allow the Leisure Wear Group to
invest an amount equal to the cash incentive payments to be paid as a result
of the Bridge Financing and this Offering in the Units to be sold in this
Offering. The Company has been informed by the Underwriter that the Leisure
Wear Group intends to purchase 7,500 shares of Common Stock and 7,500
Warrants in the Offering. The Leisure Wear Group has no legal obligation to
purchase any Units in the Offering.

15
<PAGE>
Approximately $185,000 of the net proceeds will be used to prepay the
remaining outstanding indebtedness under a term loan in the principal amount
of $325,000 from Heller to the Company, dated December 8, 1994 ("Heller Term
Loan"). Principal on the Heller Term Loan is payable in monthly installments
of $5,420 through and including December 1997 and a balloon payment of
$135,300 is due on January 1, 1998. Interest on the unpaid principal of the
Heller Term Loan is payable monthly in arrears at 2% above the prime rate.
The proceeds of the Heller Term Loan were used to make certain payments to
the Leisure Wear Group pursuant to the Stock Purchase Agreement.

Approximately $75,000 of the net proceeds will be used to prepay the
remaining outstanding indebtedness under the Mank Note. Interest on the
unpaid principal of the Mank Note accrues at the rate of 12% per year.
Principal and interest under the Mank Note are payable in monthly
installments of $25,339.70 through and including July 1997. The proceeds of
the Mank Note were used to make certain payments to the Leisure Wear Group
pursuant to the Stock Purchase Agreement.

Approximately $500,000 of the net proceeds will be used for the
installation of concept shops and/or concept areas within targeted retailers'
stores. The Company anticipates that the cost of installing a typical concept
area will be approximately $15,000. Initial installation costs will be paid
by the Company and subsequent installation costs may be shared by the
retailer and the Company.

The balance of the net proceeds of this Offering will be used for working
capital and general corporate purposes, which may include, among other
things, payment of expenses incurred or to be incurred by the Company in
connection with its operations and the payment of general corporate expenses,
including the costs of being a publicly-held company, consulting fees and
salaries payable to additional officers and financial and management
personnel and the costs incurred by the Company in moving to larger office
space. See "Business--Properties." If the Underwriter exercises the
over-allotment option in full the Company will realize additional net
proceeds of approximately $1,096,000 which also will be added to working
capital.

The foregoing represents the Company's best estimate of the allocation of
the net proceeds of this Offering based upon the Company's currently
contemplated operations and business plans, as well as current economic and
industry conditions, and is subject to reapportionment among the categories
listed above in response to, among other things, changes in the Company's
plans, unanticipated future revenues and expenditures, and unanticipated
industry conditions. The amount and timing of expenditures will vary
depending on a number of factors, including, without limitation, the results
of operations and changing industry conditions. To the extent deemed
appropriate by management, the Company may acquire fully developed products
or businesses which, in the opinion of management, facilitate the growth of
the Company and/or enhance the market penetration or reputation of its
products. To the extent that the Company identifies any such opportunities,
an acquisition may involve the expenditure of significant cash and/or the
issuance of capital stock of the Company. Any expenditure of cash will reduce
the amount of cash available for working capital or marketing and advertising
purposes. The Company currently has no commitments, understandings or
arrangements with respect to any such acquisition.

Proceeds not immediately required for the purposes described above will be
invested in United States government securities, short-term certificates of
deposit, money market funds or other investment grade short-term
interest-bearing investments.

16
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company (i) as of
December 31, 1996, and (ii) pro forma as adjusted to give effect to the sale
of the Units offered hereby and the application of the estimated net proceeds
therefrom. See "Use of Proceeds." This table should be read in conjunction
with the audited financial statements of the Company, including the notes
thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
-----------------------
PRO FORMA
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
Notes payable, current portion . . . . . . . . . . $230 $ --
Short-term debt .................................... 279 --
-------- --------------
Total short-term debt ............................ $509 $ --
======== ==============
Notes payable, less current portion ................ 135 --
-------- --------------
Shareholders' equity:
Preferred Stock: $.01 par value, 2,000,000 shares
authorized, pro forma, as adjusted
Common Stock: $.01 par value, 10,000,000 shares
authorized; 15,000,000 shares authorized, pro
forma, as adjusted; 1,200,000 shares issued and
outstanding, actual; 2,700,000 shares issued and
outstanding, pro forma, as adjusted .............. 12 27
Additional paid-in capital ......................... 397 7,325
Accumulated deficit ................................ -- (425)
-------- --------------
Total shareholders' equity ......................... 409 6,927
-------- --------------
Total capitalization ............................. $544 $6,927
======== ==============
</TABLE>

DIVIDEND POLICY

The Company has never declared or paid any cash dividends on its Common
Stock and it is currently the intention of the Company not to pay cash
dividends on its Common Stock in the foreseeable future. Management intends
to reinvest earnings, if any, in the development and expansion of the
Company's business. Any future declaration of cash dividends will be at the
discretion of the Board of Directors and will depend upon the earnings,
capital requirements and financial position of the Company, general economic
conditions and other pertinent factors.

17
<PAGE>
SELECTED FINANCIAL DATA

The selected financial data presented below as of and for the year ended
December 31, 1996 is derived from the financial statements audited by Grant
Thornton LLP. The selected financial data for the year ended December 31,
1995 is derived from the financial statements audited by Richard A. Eisner &
Company, LLP. The selected financial data for the years ended December 31,
1994, 1993, and 1992 are derived from the unaudited financial statements of
the Company. In the opinion of management, such unaudited financial
statements include all adjustments necessary for the fair presentation of
such data. The selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the audited financial statements of the Company, including
the notes thereto, appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1992 1993 1994 1995 1996
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales ............................ $2,247 $4,488 $6,417 $6,337 $8,596
Cost of sales ........................ 1,479 2,884 4,034 3,996 6,571
----------- ----------- ----------- ----------- -----------
Gross profit ......................... 768 1,604 2,383 2,341 2,025
Selling, marketing, design and
administrative expenses ............. 646 1,231 1,661 2,288 1,502
----------- ----------- ----------- ----------- -----------
Operating profit ..................... 122 373 722 53 523
Other income ......................... -- -- -- 68 125
Interest expense and factoring
charges.............................. (78) (108) (176) (418) (443)
----------- ----------- ----------- ----------- -----------
Income (loss) before taxes ........... 44 265 546 (297) 205
Net income (loss) .................... $ 41 $ 159 $ 355 $ (208) $ 135
Net earnings (loss) per share ....... $ .03 $ .09 $ .22 $ (.17) $ .11
Weighted average number of shares of
Common Stock and Common Stock
equivalents outstanding ............. 1,317,253 1,772,526 1,629,394 1,200,000 1,200,000

</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
PRO FORMA
1992 1993 1994 1995 1996 AS ADJUSTED (1)
------- ------- ------- ------- ------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital .... $ 747 $ 919 $ 974 $ 620 $ 175 $6,688
Total assets ........ 1,071 1,472 2,232 2,287 1,636 7,510
Long-term debt ...... -- -- 745 608 135 --
Shareholders' equity $ 840 $ 999 $ 482 $ 274 $ 409 $6,927
</TABLE>

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial
statements, including the notes thereto, and the Selected Financial Data
included elsewhere in this Prospectus.

OVERVIEW

Although the Company was increasingly profitable during 1992, 1993 and
1994, it had losses of approximately $208,000 in 1995. In September 1996, as
a result of increasing competition in the "upper moderate" price segment of
the golf lifestyle apparel market, the Company initiated a strategy of
repositioning its products into the "moderate" price segment and expanding
distribution to focus on higher-volume retailers. As a result of this new
strategy, net sales increased by approximately $2,259,000, or 35.6%, from
approximately $6,337,000 in 1995 to approximately $8,596,000 in 1996. The
Company recorded net income of approximately $135,000 during the fiscal year
ended December 31, 1996.

Historically, the Company sold its products in the "upper moderate" price
segment, to better department stores, specialty stores and catalogs. Because
such retailers typically purchased small quantities of a given product style,
the Company utilized small production runs and its profitability was
dependent upon high margins. By refocusing its marketing efforts on the
"moderate" price segment of the golf lifestyle apparel market, the Company is
taking advantage of the greater distribution opportunities available and the
resulting larger order sizes to increase profitability through improved
sourcing. The Company is also seeking to reduce sourcing costs in some cases
by sourcing materials for a garment separately from the production of the
garment. The Company retained an experienced sourcing director to capitalize
on this opportunity. For example, since the beginning of 1996, the Company
has reduced the sourcing costs of its largest volume product style by
approximately 20%, and reduced the average selling price of this product by
approximately 29%.

The Company has not historically incurred significant marketing and
advertising expenditures with the exception of the Company's test campaign in
1995. Although the Company believes the test campaign generated a higher
level of awareness in its target market area, the campaign's duration and
geographic scope were too limited to impact the Company's financial
performance favorably. The Company has instituted new advertising and
marketing initiatives that will require increased and continuous expenditures
to be effective. If sales do not increase in proportion to the costs of the
Company's new marketing and advertising initiatives, these increased
expenditures could have a material adverse effect on the Company's business,
financial condition and operating results.

The Company's net sales consist of gross sales less the amount of returns,
allowances and markdowns. It is customary in the industry for the producer of
apparel to share markdown costs with the retailers.

RESULTS OF OPERATIONS

1996 COMPARED TO 1995

The Company's net sales increased by $2,259,000, or 35.6%, from $6,337,000
in 1995 to $8,596,000 in 1996 due to an increase in unit volume of its men's
sportswear collection of approximately 86%, which more than offset the
decrease in the Company's average prices of approximately 30%. Net sales
attributable to the men's sportswear collection increased by 77.5%, primarily
due to purchases by new customers, while net sales attributable to the
women's sportswear collection decreased by 47.9%. This decrease resulted from
the Company's decision to discontinue development of its women's sportswear
collection. The Company continues to sell a limited amount of women's apparel
on a contract basis.

19
<PAGE>
Returns and allowances decreased by $91,000, or 11.6%, from $787,000 in
1995 to $696,000 in 1996. Returns and allowances represented 11% of gross
sales in 1995 as compared to 7.5% in 1996. This improvement resulted
principally from a shift in sales to larger volume retailers who had lower
return and discount rates, and the policy established by the Company limiting
returns to defective and damaged goods.

Gross profit decreased by $316,000, or 13.5%, from $2,341,000 in 1995 to
$2,025,000 in 1996. Consistent with the change in strategy, gross margin as a
percentage of net sales decreased from 36.9% in 1995 to 23.6% in 1996,
primarily due to the decrease in average sales prices of approximately 30%,
which was partially offset by a decrease in the average cost of sales of
approximately 12%. In addition, gross profit was impacted by approximately
$112,000 of commissions incurred pursuant to a contract with a purchasing
agent as well as the close-out of women's sportswear inventory.

Selling, marketing, design and administrative expenses decreased by
$786,000, or 34.3%, from $2,288,000 in 1995 to $1,502,000 in 1996. As a
percentage of net sales, selling, marketing, design and administrative
expenses declined from 36.1% in 1995 to 17.5% in 1996. This decrease was due
in part to a reduction of $472,000, or 72.8%, in advertising expense,
primarily as a result of the costs of a test advertising campaign conducted
in 1995. In addition, salaries and sales commissions decreased by $196,000,
or 20.9%, due primarily to the discontinuation of the women's sportswear
collection.

Net interest expense and bank fees increased by $25,000, or 6.0%, from
$418,000 in 1995 to $443,000 in 1996, as a result of the Company's increased
working capital requirements.

Other income increased by $57,000, or 83.8%, from $68,000 in 1995 to
$125,000 in 1996, primarily as a result of an increase in licensing royalties
received by the Company and proceeds from lawsuit settlements, net of related
costs.

Net income increased by $343,000 from a loss of $208,000 for 1995 to net
income of $135,000 in 1996. The loss in 1995 was attributable primarily to
the costs associated with a test advertising campaign for the 1995 Father's
Day collection which failed to have a significant effect on the Company's
sales. The Company believes that the 1995 test advertising campaign failed
because its duration and geographic scope were too limited to impact the
Company's financial performance favorably. Management intends to take these
factors into consideration for all future advertising campaigns. The loss in
1995 was also due, to a lesser extent, to an increase in interest expense
from financing the payments made to the Leisure Wear Group pursuant to the
Stock Purchase Agreement and to higher markdown expenses resulting from
increased competition.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has been undercapitalized. The Company expends
significant amounts of working capital for advertising and inventory in
advance of revenues generated by these items. To date, the Company has
obtained working capital through cash flow from operations, private financing
and a revolving credit facility from Heller, to whom it has granted a senior
security interest in substantially all of its assets. The Company
anticipates, based on current plans and assumptions relating to its
operations, that the proceeds of the Offering, together with existing
resources and cash generated from operations, should be sufficient to satisfy
the Company's contemplated cash requirements for at least 18 months after
completion of the Offering. There can be no assurance, however, that the
Company will not require additional cash during or after such 18-month
period.

During 1996, net cash provided by operating activities was $1,406,000,
compared to net cash used in operations of $362,000 in 1995. The increase in
cash provided by operations was primarily a result of an increase in sales
and a reduction in inventory.

During 1996, the net cash used in investing activities was $42,000,
compared to $101,000 in 1995. The cash used in 1996 and 1995 was for purchase
of property and equipment. The cash used in 1995 was also attributable to
costs associated with the registration of several trademarks in the United
States and foreign countries.

20
<PAGE>
During 1996, the cash used in financing activities was $1,385,000,
compared to cash provided by financing activities of $397,000 in 1995. This
change was primarily attributable to an increase in receivables factored in
excess of advances received from Heller.

Factoring Agreement. The Company is party to a Retail Collection Factoring
Agreement ("Factoring Agreement") with Heller pursuant to which the Company
sells all of its eligible accounts receivable to Heller. The Company may take
advances from Heller, at Heller's discretion, for up to 80% of the net
balance due on eligible accounts receivable. At December 31, 1996 there were
approximately $3,025,000 of outstanding advances under the Factoring
Agreement, offset by $3,732,000 in gross receivables. Interest on such
advances is payable monthly in arrears at the rate of 2% above the Chase
Manhattan Bank, N.A. prime rate. The Company paid interest under the
Factoring Agreement at an average rate of 10.28% per annum in 1996.

Bridge Financing. In January 1997, in connection with the Bridge
Financing, the Company issued Bridge Notes in the aggregate principal amount
of $1,500,000, bearing interest at the rate of 10% per annum through April
30, 1997 and 12% per annum thereafter, and Bridge Warrants to purchase an
aggregate of 600,000 shares of the Company's Common Stock at an exercise
price equal to the initial public offering price per share. The proceeds of
the Bridge Financing were used (i) to repay approximately $183,000 of
indebtedness, including principal and interest, consisting of $101,000 to
Mank, $22,000 to pay a portion of the Heller Term Loan and $60,000 to the
Leisure Wear Group, (ii) to pay approximately $450,000 to commence the
national advertising campaign, (iii) to pay approximately $102,000 to hire
key personnel, (iv) to pay approximately $25,000 to construct fixtures to be
used in the installation of concept shops and concept areas and (v) for
general working capital purposes. All amounts due under the Bridge Notes will
be paid out of the proceeds of this Offering. After giving effect to debt
issuance costs of approximately $287,000 and a debt discount of $138,000, the
effective annual interest rate on the Bridge Notes was approximately 115%.
Upon the date of this Prospectus, the Bridge Warrants will be automatically
converted into Warrants on a one-for-one basis. Upon repayment of the amounts
due under the Bridge Notes, the related unamortized debt issuance cost and
debt discount of approximately $425,000 will be expensed.

The Company estimates that it will incur additional capital expenditures
of approximately $500,000 during the twelve months following consummation of
this Offering in connection with the installation of concept shops and/or
concept areas, expansion of office and warehouse facilities and procurement
of computer systems. See "Business--Corporate Strategy."

SEASONALITY

The apparel industry is seasonal in nature and, as a result, the Company
experiences significant variability in its quarterly results and working
capital requirements. A significant portion of the Company's sales occur
during the quarters in which the Father's Day and Holiday lines are shipped.
In addition, quarterly results may vary from year to year due to the timing
of new product introductions, orders and sales, advertising expenditures,
promotional periods and shipments.

21
<PAGE>
BUSINESS

GENERAL

CORPORATE STRATEGY

The Company's goal is to become the leading golf lifestyle apparel
collection in the "moderate" price segment. The Company has planned several
marketing, advertising and management initiatives in order to reinforce its
strategic shift in product positioning. The following discussion summarizes
the major aspects of the Company's corporate strategy:

22
<PAGE>
Gain Access to High Volume Distribution Channels. The Company has
refocused its marketing strategy to concentrate its sales efforts on high
volume retailers. The Company believes that it has the opportunity to
increase sales substantially by marketing its products to such retailers.
Although this entails a reduction of the wholesale and retail prices of its
products, the Company believes that it can maintain product quality through
the additional purchasing leverage gained through larger production runs and
more efficient sourcing it expects to obtain.

Increase Trade Market Support. Historically, the Company has had a limited
budget to build trade and consumer awareness of its products. In October
1996, the Company launched a marketing initiative aimed at members of the
apparel trade consisting of full-page black and white advertisements in the
trade paper, the Daily News Record. These advertisements ran approximately 20
times during the important October and November selling periods. The Company
expects that the trade campaign will serve to educate targeted retailers
about the Company's products and, therefore, support the Company's overall
business strategy. The Company intends to continue running trade
advertisements frequently during key selling periods and less frequently at
other times. The Company plans to expand its trade marketing campaign in 1997
and beyond.

National Consumer Advertising Campaign. The Company is developing a
national consumer advertising print campaign built around its trademarked
slogan "The Rules Have Changed." The first two advertisements in this
campaign have already been created. The Company anticipates launching this
campaign in May 1997. The Company believes that its brand name recognition
will be significantly enhanced by its first national advertising campaign,
although there can be no assurance that the campaign will be successful.

Install Concept Shops and/or Concept Areas. The Company believes that a
key to growth in the Company's sales will be the installation of Pivot Rules
concept shops and/or concept areas within targeted retailers' stores in order
to draw greater attention to the Company's products. Concept shops and
concept areas enable the retailer to create an environment consistent with
the Company's image and encourages the retailer to display and stock a
greater volume of the Company's products. Such shops and areas foster
long-term commitment by the retailer to the Company's products. These shops
also increase consumer product recognition and loyalty because they
facilitate the retail customer's familiarity with the location of the
Company's products in the store. The Company plans to install between 10 and
20 of such concept areas during 1997. The Company anticipates that the cost
of installing a typical concept area will be approximately $15,000. Initial
installation costs will be paid by the Company and subsequent installation
costs may be shared by the retailer and the Company. In order to introduce
the design of the concept shops to targeted retailers, the Company intends to
build a prototype concept shop in its showroom.

Expand Products Offered through the Company and its Licensees. The Company
seeks to expand the types of products offered under the Pivot Rules brand
name both through its own design and sales operations and through licensing
agreements with third parties. The Company believes that the broadening of
the Company's product line will build consumer awareness, make the Company's
product line more meaningful to its targeted retailers' business operations
and enhance the Company's reputation as a leading marketer of golf lifestyle
sportswear. Moreover, to the extent that any potential licensees of the
Company advertise their products, the Company anticipates that such
advertising will augment its own advertising efforts. See
"Business--Licensing."

The Company believes that, as the appeal of golf lifestyle sportswear has
broadened to include virtually all demographic segments of the market,
opportunities will exist to increase its revenues and retail customer base
through the development or acquisition of additional labels. To take
advantage of such opportunities the Company may offer products under one or
more new labels to selected retailers.

Expand Management Team. The Company is seeking to strengthen its
management team by recruiting seasoned industry professionals. The Company
has recently hired a Chief Financial Officer, a Vice President of Operations
and a Director of Design and is seeking to hire a Director of Sales. See
"Management" and "Business--Product and Design."

Introduce Quick Response Inventory Replenishment to Targeted Retailers.
The Company is equipped to offer quick response inventory replenishment to
retailers for certain of the Company's most

23
<PAGE>
popular products. This program is designed to keep key items in stock on a
year-round basis without the need for the retailer to place advance purchase
orders. Quick response inventory allows the retailer to improve margins by
decreasing markdowns that might otherwise occur when items do not sell on a
timely basis. Because this program is offered only for the Company's most
popular items, inventory increases can be limited to products that have a
proven sales history. The Company believes that its ability to make this
program available to retailers will increase revenues and improve the
Company's ability to forecast its sales for these key items. The Company is
working with its retailers to place key items, including short-sleeve shirts,
shorts and hats, on its quick response inventory program.

PRODUCT AND DESIGN

The Company offers a full collection of golf lifestyle sportswear for men,
including knit and woven shirts, sweaters, sweatshirts, pants, shorts,
outerwear, hats and socks. The Company focuses its design efforts on creating
products with updated styling, innovative design and superior comfort and
fit, utilizing natural fibers and bright colors. The Company aims to
incorporate the newest fabrics and styles into its products. Each season, the
Company designs its products from a single color palette to enhance
retailers' presentations of the product as a "collection" and encourage the
consumer to purchase well-coordinated outfits rather than a single item. The
Company seeks to distinguish its products from its competitors' products by
incorporating many unique details into its garments in order to create a
"branded" look. For example, a cotton tape of the Company's slogan is sewn
into the neck and tail of every shirt, pants and shirts have a spare logoed
button sewn into the seam and hangtags are printed with one of several
different messages designed to convey the Company's spirit. Additionally, the
Company incorporates its trademarked and patented "Three Golfer" logo into
most of its products.

The Company recently hired Christopher Dioguardi to head its Design
Department. Mr. Dioguardi is a former Senior Menswear Designer for Izod Golf
and the U.S. Open Golf Collection, both divisions of Crystal Brands, Inc.
Prior to that, Mr. Dioguardi worked in menswear product development and
design research for Nautica International. Mr. Dioguardi and Mr. Seiff work
with freelance designers to create the Company's products.

SOURCING

Substantially all of the Company's products are manufactured by third
parties in the Far East and India. The Company sources substantially all of
its products through Textiles Network, Ltd. ("Textiles Network"), a Hong Kong
agency that oversees production and quality control. Textiles Network
negotiates prices, identifies factories to manufacture the products and
conducts quality control on the Company's behalf. The Company works closely
with Textiles Network to monitor each of these phases of the production
process. The Company makes substantially all final decisions with regard to
pricing and the selection of factories. Additionally, the Company approves
samples of each garment prior to the commencement of production. The Company
pays Textiles Network an 8% commission on the first $1.5 million of goods
shipped to the Company and 7% thereafter.

In May 1996, the Company entered into a purchase management agreement with
IDL International, LLC ("IDL"). David Lewis is the President and principal
owner of IDL. Under the agreement, as amended in July 1996 ("IDL Agreement"),
the Company has paid IDL a commission of 5% on the first $1 million of goods
shipped to the Company in a given year and 2.5% thereafter. In addition, IDL
received a bonus based on the Company's gross margins. The IDL Agreement has
been terminated effective as of March 1, 1997 in connection with the hiring
of David Lewis as Vice President of Operations. See "Management" and "Certain
Transactions."

The Company is not obligated to source its products at any particular
factory. However, the Company maintains consistent orders with a number of
different factories in order to encourage competitive pricing and delivery.

The Company is seeking to source some of its products through
manufacturers in areas where labor and fabric costs are lower than those in
areas where the Company's products are currently manufactured. The Company is
also seeking to reduce sourcing costs in some cases by sourcing materials for
a garment

24
<PAGE>
separately from the production of the garment. These strategies, together
with increased purchasing leverage from selling to high-volume retailers,
have enabled the Company to reduce the sourcing costs of its largest volume
product style by approximately 20% since the beginning of 1996.

PATENTS AND TRADEMARKS

The Company has trademarked many of its brand names and slogans in the
United States and in numerous countries worldwide. In the United States, the
Company owns a variety of trademarks, including "Pivot Rules," "The Rules
Have Changed" and "Clothes To Play A Round In," as well as its "Three Golfer"
design mark and "Three Golfer and Flag" design mark. The Company has also
been assigned a design patent for its Three Golfer and Flag design mark
("Design Patent"). The Design Patent covers the interaction between an
element on the chest of a garment, for example, a golfer, and a separate
related element on the sleeve of the garment, for example, a putting green.

WAREHOUSING/DISTRIBUTION

The Company leases 18,000 square feet of warehouse space in Tukwila,
Washington. The Company selected Tukwila as the site for the warehouse
because of its proximity to ports from which the Company receives shipments
from its manufacturers in the Far East. The warehouse is staffed by two full
time employees and is managed by Dean Seiff (brother of E. Kenneth Seiff).
Additional temporary personnel are hired during peak shipping periods. The
Company is linked by Electronic Data Interchange ("EDI") to several of its
largest customers and, as a result, can receive orders via computer. During
key holiday periods, the warehouse maintains a same day shipping policy for
orders received before 3:00 p.m., Eastern Standard Time. See
"Business--Properties."

MANAGEMENT INFORMATION SYSTEM

The Company utilizes a management information system designed for the
apparel industry which facilitates planning, production scheduling, product
tracking and standard cost control, and which provides a perpetual inventory
record. The management information system also permits the Company's customer
service personnel to have access to real-time inventory availability.

LICENSING

The Company has licensing agreements with foreign licensees for the sale
of its sportswear products in a number of countries, including Japan,
Thailand, Singapore, Malaysia, Indonesia and Brunei. Although revenues from
licensing arrangements have not been material to date (approximately $58,000
in 1995 and $90,000 in 1996), the Company believes that both domestic and
foreign licensing revenues can become significant within the next several
years.

The Company has entered into a worldwide representation agreement
("Representation Agreement") with International Management Corporation
("IMC"), a member company of International Management Group ("IMG"), under
which IMC has been retained as the Company's sole and exclusive agent to
identify, qualify and negotiate with prospective international licensing
partners. IMG is a worldwide sports representation and marketing organization
with offices in 74 countries worldwide. Under the terms of the Representation
Agreement, IMC receives commissions from the Company equal to 30% of gross
income for the first $1 million of gross income covered by the agreement and
35% thereafter on all international licensing revenues generated by the
Company through licensing agreements negotiated or entered into while the
Representation Agreement remains in effect. The Representation Agreement
provides for an original term expiring on June 30, 1997, with automatic one
year renewal periods. The Company has identified several targeted categories
for future domestic licensing deals, including socks, hats, belts, cologne,
underwear, robes, golf clubs, golf accessories and eyeglasses. However, there
can be no assurance that licensing revenues will increase during this time
period or that the Company will continue to receive any licensing revenue at
all.

COMPETITION

The men's sportswear segment of the apparel market is highly competitive.
The Company encounters substantial competition at a variety of price points
from a number of apparel brands including Polo,

25
<PAGE>
Tommy Hilfiger, Nautica, Chaps, Izod, Gant, Dockers, Nike, Munsingwear, Grand
Slam, Greg Norman, Ashworth, Cross Creek and Jack Nicklaus. The Company
competes primarily on the basis of design, image, value and quality. Many of
the companies selling such brands are significantly larger than the Company,
have substantially greater financial, marketing and other resources and have
achieved greater recognition for their brand names than the Company. The
Company believes that its competitive position depends upon its ability to
anticipate and respond effectively to changing consumer demands and to offer
quality conscious sportswear at competitive prices. Virtually all of the
Company's targeted retailers also offer their own private label brands which
compete at significantly lower prices. In addition, the current success of
golf-inspired lines leaves open the possibility of new entrants into the
market. For example, Nike recently signed a $40 million contract with Tiger
Woods and is developing a line of clothing under his name. Increased
competition in the golf apparel and general sportswear apparel markets could
result in price reductions, reduced margins or loss of market share, all of
which could have a material adverse effect on the Company's business,
financial condition and operating results.

EMPLOYEES

As of March 5, 1997, the Company had nine full-time and two part-time
employees, of whom three were in management, two were in the sales
department, two were in the design department, two were in the warehouse
department, one was in the production department and one was in the finance
department. None of the Company's employees are represented by a labor union
and the Company considers its relations with its employees to be good.

PROPERTIES

The Company leases 2,400 square feet of office space in New York City and
18,000 square feet of warehouse space in Tukwila, Washington under
noncancelable operating leases. The New York City lease expires in October
1998 and the Tukwila lease expires in August 1999. The Company's total lease
payments under both leases for the current fiscal year will be approximately
$123,000. The Company anticipates either subleasing its office or reaching
some other arrangement with the landlord and moving to larger office space
sometime in 1997. The costs associated with moving to such larger office
space are expected to be approximately $250,000.

LEGAL PROCEEDINGS

The Company is, from time to time, a party to routine litigation arising
in the normal course of its business. The Company believes that none of these
actions will have a material adverse effect on the business, financial
condition or operating results of the Company.

The Company currently has several registered trademarks, and has been
assigned a design patent, and may seek additional legal protection for its
products and trade names. The Company has invested substantial resources in
registering the trademarks and developing branded products and product lines.
There can be no assurance that the steps taken by the Company to protect
these intellectual property assets will be sufficient to deter
misappropriation. Failure to protect these intellectual property assets could
have a material adverse effect on the Company's business operations.
Moreover, although the Company is not aware of any lawsuit alleging the
Company's infringement of intellectual property rights that could have a
material adverse effect on the Company's business, there can be no assurance
that any such lawsuit will not be filed against the Company in the future or,
if such a lawsuit is filed, that the Company would ultimately prevail.

26
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

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

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------- ----- ---------------------------------------------------
<S> <C> <C>

E. Kenneth Seiff .. 32 Chairman of the Board of Directors, Chief Executive
Officer, President and Treasurer
William T. McLoone 41 Executive Vice President of Sales
David Lewis ........ 44 Vice President of Operations
Meena N. Bhatia ... 29 Chief Financial Officer
Martin Miller ...... 66 Director
Alan G. Millstein . 53 Director
Fred Rosenfeld ..... 51 Director
Robert G. Stevens . 43 Director
</TABLE>

E. KENNETH SEIFF, the founder of the Company, has served as the Company's
Chairman of the Board, Chief Executive Officer and Treasurer since its
inception in April 1991. He became President of the Company in October 1996.
From 1989 to 1991, Mr. Seiff was a Vice President of Founders Equity, a New
York based leveraged buyout firm. From 1988 to 1989, he was the President and
sole shareholder of EKS Capital Corp., a leveraged buyout firm. Mr. Seiff was
an associate at Lorne Weil, Inc., a New York based strategic planning and
corporate development consulting firm, from 1986 until 1988.

WILLIAM T. MCLOONE has served as Executive Vice President of Sales of the
Company since March 1997. From July 1996 to February 1997, Mr. McLoone was
unemployed. From July 1993 to June 1996, Mr. McLoone was Executive Vice
President of Sales and Marketing of Salant Corporation, a New York based
wholesaler. From September 1991 to July 1993, Mr. McLoone was Executive Vice
President of Sales and Marketing of Warnaco Inc., a New York based
wholesaler.

DAVID LEWIS has served as Vice President of Operations of the Company
since March 1997. From March 1996 to March 1997, Mr. Lewis was President of
IDL, a principal consultant to the Company. From March 1991 to March 1996,
Mr. Lewis was Vice President of Production and Sourcing at Baxter
International, Inc. ("Baxter"), a New York based apparel wholesaler. From
1987 to 1991, Mr. Lewis was a Divisional Product Manager at Federated Allied
Merchandising Services.

MEENA N. BHATIA has served as Chief Financial Officer of the Company since
January 1997. From June 1995 to January 1997, Ms. Bhatia was the Assistant
Treasurer of DVL, Inc. ("DVL"), a publicly-traded commercial real estate and
finance company, and from June 1993 to January 1997, she was the Controller
of DVL. From November 1990 to June 1993, Ms. Bhatia was a member of the audit
staff at Richard A. Eisner & Company, LLP, the Company's former accounting
firm. Ms. Bhatia is a Certified Public Accountant.

MARTIN MILLER has served as a director of the Company since July 1991.
Since September 1986, Mr. Miller has been President and a director of Baxter.
From January 1990 to April 1996, Mr. Miller was Chairman of Ocean Apparel,
Inc., a Florida based sportswear firm. From 1970 to 1986, Mr. Miller was the
President and Chief Executive Officer of RPM, Inc., a New York based apparel
wholesaler.

ALAN G. MILLSTEIN has served as a director of the Company since December
1996. Since 1979, Mr. Millstein has been a retail consultant and the Chairman
of the Board of Fashion Network, Inc., a consulting organization specializing
in marketing communications and the publisher of Fashion Network Report, a
monthly retail and fashion newsletter.

FRED ROSENFELD has served as a director of the Company since July 1991.
Mr. Rosenfeld currently works as a consultant in the apparel industry. From
October 1993 to December 1995, Mr. Rosenfeld was President of the Jockey
Sportswear Division of Baxter. From October 1991 to October 1993, he was a
consultant in the apparel industry. Mr. Rosenfeld was Chief Operating Officer
of Collections Clothing Corporation, a company engaged in the manufacture of
men's sportswear, from March 1990 to March 1991.

27
<PAGE>
ROBERT G. STEVENS has served as a director of the Company since December
1996. Since December 1994, Mr. Stevens has been a Vice President of Mercer
Management Consulting, Inc. ("Mercer"), a management consulting firm. From
November 1992 to December 1994, Mr. Stevens was a Principal at Mercer. From
1983 to November 1992, Mr. Stevens was a consultant at Lorne Weil, Inc.

The Board of Directors has established an Audit Committee comprised of
Alan Millstein, Fred Rosenfeld and Martin Miller. Mr. Millstein serves as
chairman of the committee. The Audit Committee is responsible for
recommending to the Board of Directors the appointment of the Company's
outside auditors, examining the results of audits, reviewing internal
accounting controls and reviewing related party transactions.

The Board of Directors has also established an Option Plan/Compensation
Committee ("Option Plan/Compensation Committee") consisting of Messrs.
Stevens, Millstein and Rosenfeld. Mr. Stevens serves as chairman of this
committee. The Option Plan/Compensation Committee administers the Plan,
establishes the compensation levels for executive officers and key personnel
and oversees the Company's bonus plans. See "--Stock Option Plan."

The Company's executive officers are appointed annually by, and serve at
the discretion of, the Board of Directors. All directors hold office until
the next annual meeting of the Company or until their successors have been
duly elected and qualified. There are no family relationships among any of
the executive officers or directors of the Company.

The Company maintains a "key person" life insurance policy in the amount
of $1.2 million on the life of Mr. Seiff.

DIRECTOR COMPENSATION

The Company's directors do not receive any cash compensation for their
services as members of the Board of Directors, although they are reimbursed
for expenses incurred on behalf of the Company. Each current non-employee
director has received options to purchase 5,000 shares of Common Stock under
the Plan and is eligible to receive annual option grants to purchase 2,500
shares of Common Stock under the Plan. See "--Stock Option Plan."

EXECUTIVE COMPENSATION

The following tables sets forth information concerning the compensation
paid by the Company during the fiscal year ended December 31, 1996 to E.
Kenneth Seiff, the Company's Chief Executive Officer. No other executive
officer of the Company received a total annual salary and bonus from the
Company in excess of $100,000.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------
NAME AND PRINCIPAL POSITIONS ANNUAL COMPENSATION
- -----------------------------------------------------------------------------
YEAR SALARY BONUS
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
E. Kenneth Seiff .............................. 1996 $89,115 $144,759
Chief Executive Officer, President and
Treasurer
- -----------------------------------------------------------------------------
</TABLE>

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with its Chief
Executive Officer, E. Kenneth Seiff, which expires on January 1, 2000.
Pursuant to the agreement, Mr. Seiff will serve as the Company's Chief
Executive Officer and Chairman of its Board of Directors for an annual salary
of $165,000, subject to increase by the Board of Directors, and an annual
bonus to be determined by the Board of Directors but not to exceed Mr.
Seiff's annual salary for the year in question. At the discretion of the
Board of Directors, all or part of such bonus may be paid through the
issuance to Mr. Seiff of capital stock of the Company or stock options issued
pursuant to the Plan, provided that at the request of Mr.

28
<PAGE>
Seiff a portion of such bonus sufficient to pay any income taxes arising from
such bonus will be paid in cash rather than in capital stock of the Company.
In the event the agreement is terminated by the Company without cause or
through a Constructive Termination (as defined therein), the Company is
obligated to pay Mr. Seiff severance payments equal to the base salary
payments that Mr. Seiff would be entitled to receive over the entire
remaining term of the agreement. The employment agreement further provides
that Mr. Seiff will not engage in activities competitive with the Company for
the term of the agreement and for two years thereafter. In the event the
agreement is terminated by the Company without cause or through a
Constructive Termination the restriction on competition will not extend
beyond the term of the agreement. Under the terms of Mr. Seiff's employment
agreement, the Company maintains a $1 million life insurance policy on the
life of Mr. Seiff for the benefit of his named beneficiaries.

The Company has also entered into an employment agreement with William T.
McLoone, which expires on March 16, 2002. Pursuant to Mr. McLoone's
employment agreement, he will serve as Executive Vice President of Sales for
an annual salary of $125,000 and devote his full professional and business
time to the affairs of the Company. The employment agreement also provides
that Mr. McLoone is eligible to receive an annual bonus in 1997 based on such
factors as the Company's President and Board of Directors deem appropriate
and in subsequent years contingent on achieving certain performance
objectives. Pursuant to the employment agreement, Mr. McLoone is entitled to
annual raises to be determined by the Board of Directors in its discretion
but subject to certain specified minimums, and an annual option grant. In the
event the employment agreement is terminated by the Company without cause or
through a Constructive Termination (as defined therein), the Company is
obligated to pay Mr. McLoone severance payments equal to his base salary for
a three to five month period depending upon the date of termination. The
employment agreement further provides that Mr. McLoone will not engage in
activities competitive with the Company for the term of the agreement and for
two years thereafter. In addition, the employment agreement provides for a
five year loan payable to Mr. McLoone in the amount of $50,000 at an interest
rate of 8% per annum, of which amount approximately 50% will be forgiven over
the five year term of the employment agreement, with the balance to be repaid
out of annual bonuses, if any, or on March 17, 2002.

In addition, the Company has entered into an employment agreement with
David Lewis, President and principal owner of IDL, which expires on February
28, 2001. Upon execution of the employment agreement, the IDL Agreement was
terminated by mutual consent. Pursuant to Mr. Lewis' employment agreement, he
will serve as Vice President of Operations for an annual salary of $100,000
and devote his full professional and business time to the affairs of the
Company. The employment agreement also provides that Mr. Lewis is eligible to
receive an annual bonus based on such factors as the Company's Board of
Directors deems appropriate. In addition, the employment agreement provides
that Mr. Lewis is entitled to annual raises to be determined by the Board of
Directors in its discretion but subject to certain specified minimums, and an
annual option grant contingent on achieving certain specified performance
objectives. In the event the employment agreement is terminated by the
Company without cause or through a Constructive Termination (as defined
therein), the Company is obligated to pay Mr. Lewis severance payments equal
to his base salary for a three to five month period depending upon the date
of termination. The employment agreement further provides that Mr. Lewis will
not engage in activities competitive with the Company for the term of the
agreement and for two years thereafter. Under the terms of Mr. Lewis'
employment agreement, the Company maintains a life insurance policy on the
life of Mr. Lewis in the amount of at least $250,000 for the benefit of his
named beneficiaries.

STOCK OPTION PLAN

The Plan was adopted by the Company's Board of Directors in March 1997 for
the purpose of encouraging key employees and consultants and directors who
are not employees ("Non-Employee Directors") to acquire a proprietary
interest in the growth and performance of the Company. Messrs. Miller,
Millstein, Rosenfeld and Stevens are currently Non-Employee Directors.
Options for 83,000 shares have been granted under the Plan, all of which have
an exercise price equal to the initial public offering price.

Under the Plan, the maximum number of shares with respect to which options
may be granted is 200,000. The Company may in its sole discretion grant
options to key employees and consultants and shall grant options to the
Company's Non-Employee Directors subject to specified terms and conditions
and in

29
<PAGE>
accordance with a specified formula ("Formula") as discussed below. Options
granted to key employees may be either incentive stock options ("ISOs")
meeting the requirements of Section 422 of the Internal Revenue Code of 1986,
as amended ("Code"), or non-qualified stock options ("NQSOs") not meeting the
requirements of Section 422 of the Code. Options granted to Non-Employee
Directors and consultants shall be NQSOs. The Plan is currently administered
by the Option Plan/Compensation Committee, which is generally empowered to
interpret the Plan, prescribe rules and regulations relating thereto and
determine the individuals to whom options are to be granted. The future
exercise price of all ISOs granted under the Plan, and the future exercise
price of all NQSOs granted under the Plan within three years after this
Offering, will be at least 100% of the fair market value of the Common Stock
on the date of grant. Thereafter, the exercise price of all NQSOs granted
under the Plan will be at least 85% of the fair market value of the Common
Stock on the date of grant.

Under the Formula, each Non-Employee Director has been granted on the date
of this Prospectus an option to purchase 5,000 shares of Common Stock at an
exercise price equal to the initial public offering price per share. Further,
each person who subsequently becomes a Non-Employee Director will be
automatically granted an option to purchase 5,000 shares on the date such
person becomes a Non-Employee Director. In addition, each Non-Employee
Director who is a member of the Board of Directors on April 30 of a year
beginning in calendar year 1998 will be automatically granted an option to
purchase 2,500 shares of Common Stock on May 1 of the following year. All
options issued to Non-Employee Directors pursuant to the Formula will have an
exercise price equal to the Fair Market Value (as defined in the Plan) on the
date of grant and have a term of 10 years.

The Board of Directors may modify, suspend or terminate the Plan;
provided, however, that certain material modifications affecting the Plan
must be approved by the shareholders and any change in the Plan that may
adversely affect an optionee's rights under an option previously granted
under the Plan requires the consent of the optionee.

E. Kenneth Seiff, the Company's Chief Executive Officer, was not granted
any stock options by the Company during the year ended December 31, 1996. As
of the date of this Prospectus, Mr. Seiff has not been granted any stock
options by the Company during 1997. During 1997, NQSOs to purchase 3,000 shares
of Common Stock were granted under the Plan to Nicole Seiff, a consultant
to the Company and the wife of Mr. Seiff. See "Principal Shareholders."

30
<PAGE>
PRINCIPAL SHAREHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the capital stock of the Company as of the date of
this Prospectus for (i) each person who is known by the Company to own
beneficially more than 5% of the capital stock, (ii) each of the Company's
directors, (iii) the Company's Chief Executive Officer, and (iv) all
directors and executive officers as a group. Unless otherwise indicated, the
address of all persons named in the table is 80 West 40th Street, New York,
New York 10018.

<TABLE>
<CAPTION>
PERCENTAGE(1)
---------------------
NUMBER OF SHARES BEFORE AFTER
NAME BENEFICIALLY OWNED OFFERING OFFERING
- ----------------------------------------------------------- ------------------ ---------- ----------
<S> <C> <C> <C>
E. Kenneth Seiff ........................................... 502,157(2) 41.8% 18.6%
Martin Miller .............................................. 0(3) * *
Alan G. Millstein .......................................... 0(3) * *
Fred Rosenfeld ............................................. 0(3) * *
Robert G. Stevens .......................................... 12,939(3) 1.1 *
Joseph Boughton, Jr.(4) .................................... 207,548(5) 16.3 7.5
Jennifer Miller Symonds(6) ................................. 68,597 5.7 2.5
All directors and executive officers as a group (7 persons) 515,096(7) 42.9% 19.1%
</TABLE>

- ------------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("Commission") and generally
includes voting or investment power with respect to securities. Shares
of Common Stock issuable upon the exercise of options or warrants
currently exercisable or exercisable within 60 days are deemed
outstanding for computing the percentage ownership of the person
holding such options or warrants but are not deemed outstanding for
computing the percentage ownership of any other person.
(2) Does not include 3,000 shares of Common Stock underlying options
granted under the Plan to Nicole Seiff, a consultant to the Company and
the wife of E. Kenneth Seiff, which options are not currently
exercisable. Mr. Seiff disclaims beneficial ownership with respect to
such shares.
(3) Does not include 5,000 shares of Common Stock underlying options
granted under the Plan which are not currently exercisable.
(4) Mr. Boughton's address is c/o Middlemarket Capital Management Co., 2627
Sandy Plains Road, Suite 201, Marietta, Georgia 30066.
(5) Includes 70,000 shares of Common Stock underlying Bridge Warrants
issued to Northstar Investment Group, Ltd. ("Northstar"). Mr. Boughton
is the President of Northstar. Does not include up to 14,052 shares of
Common Stock and 14,052 shares of Common Stock underlying Warrants
which may be purchased in the Offering by Mr. Boughton pursuant to
certain preemptive rights held by Mr. Boughton. See "Certain
Transactions."
(6) Ms. Symonds' address is 116 East 66th Street, New York, New York 10021.
Ms. Symonds is the daughter of Martin Miller.
(7) Does not include 43,000 shares underlying options granted under the
Plan which are not currently exercisable.

CERTAIN TRANSACTIONS

In February 1992, the Company and Joseph J. Boughton, Jr., an
approximately 16% shareholder in the Company, entered into a loan agreement
pursuant to which Mr. Boughton loaned the Company $100,000. Under the terms
of such loan agreement, Mr. Boughton received preemptive rights such that he
would have the opportunity to maintain at least an 8% equity interest in the
Company. In November 1996, the Company and Mr. Boughton entered into a letter
agreement pursuant to which, in return for the right to subscribe to
approximately 11.5% of the Bridge Notes and Bridge Warrants, Mr. Boughton
agreed that

31
<PAGE>
his contractual preemptive rights would terminate upon the closing of this
Offering. Pursuant to the terms of such letter agreement, Northstar, an
entity controlled by Mr. Boughton, purchased 1.75 of the 15 Units sold in the
Bridge Financing upon the same terms and conditions as the other investors in
the Bridge Financing.

In September 1994, pursuant to the Stock Purchase Agreement between the
Company and the Leisure Wear Group, the Company repurchased 572,526 shares of
Common Stock from the Leisure Wear Group for a cash payment of $50,000 and a
promissory note in the principal amount of $822,291. Prior to September 1996,
the Company paid an aggregate of $343,111 in principal, plus accrued
interest, on the promissory note. In September 1996, in lieu of any further
payments of principal or interest under the promissory note, the Company
agreed to pay the Leisure Wear Group $240,000 and to make certain cash
incentive payments to the Leisure Wear Group, including, but not limited to,
payments equal to 5% of the net cash proceeds to the Company resulting from
the issuance of securities of the Company in any public offering or private
placement, up to an aggregate of $279,000. Further, the Company agreed to pay
David Goldblatt and Jeffrey Goldstein an aggregate of $60,000 in consulting
and noncompetition fees on December 31, 1998. The Company paid the Leisure
Wear Group cash incentive payments equal to approximately $60,000 of the net
cash proceeds of the Bridge Financing and will pay the Leisure Wear Group
cash incentive payments equal to approximately $219,000 of the net proceeds
of this Offering. Under the terms of the Stock Purchase Agreement, the
Company is also obligated to use its best efforts to allow the Leisure Wear
Group to invest an amount equal to the cash incentive payments to be paid as
a result of this Offering in the Units to be sold in this Offering. In
addition, prior to the Stock Purchase Agreement, David Goldblatt and Jeffrey
Goldstein were directors of the Company. In connection with the repurchase,
Messrs. Goldblatt and Goldstein resigned from such positions.

In May 1996, the Company entered into the IDL Agreement with IDL. David
Lewis is the President and principal owner of IDL. Under the IDL Agreement,
the Company has paid IDL a commission of 5% on the first $1 million of goods
shipped to the Company in a given year and 2.5% thereafter. In addition, IDL
received a bonus based on the Company's gross margins. The IDL Agreement has
been terminated effective as of March 1, 1997 in connection with the hiring
of David Lewis as Vice President of Operations.

The Company has adopted a policy whereby all future transactions between
the Company and its officers, directors, principal shareholders or affiliates
will be approved by a majority of the Board of Directors, including all of
the independent and disinterested members of the Board of Directors or, if
required by law, a majority of disinterested shareholders, and will be on
terms no less favorable to the Company than could be obtained in arm's length
transactions from unaffiliated third parties.

DESCRIPTION OF SECURITIES

GENERAL

The authorized capital stock of the Company is 17,000,000 shares,
consisting of 15,000,000 shares of Common Stock, $.01 par value per share,
and 2,000,000 shares of Preferred Stock, $.01 par value per share. As of the
date of this Prospectus, 1,200,000 shares of Common Stock are outstanding.
Upon the completion of this Offering there will be 2,700,000 shares of Common
Stock outstanding (2,925,000 if the Underwriter's over-allotment option is
exercised in full). As of the date of this Prospectus, no shares of Preferred
Stock are outstanding.

UNITS

Each Unit consists of one share of Common Stock and one Warrant. Each
Warrant entitles the holder to purchase one share of Common Stock. The Common
Stock and Warrants comprising the Units are immediately detachable and
separately transferable.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held
of record on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of directors,

32
<PAGE>
with the result that the holders of more than 50% of the shares voted can
elect all of the directors then being elected. The holders of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared by
the Board of Directors out of funds legally available for the payment of
dividends. In the event of a liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities. Holders of shares of Common
Stock, as such, have no redemption, preemptive or other subscription rights,
and there are no conversion provisions applicable to Common Stock. All of the
outstanding shares of Common Stock are, and the shares of Common Stock to be
issued upon completion of the Offering, when issued and paid for as set forth
in this Prospectus, will be, fully paid and non-assessable.

Under Section 630 of the BCL, the 10 largest shareholders of the Company
may become personally liable for unpaid wages and debts to the Company's
employees if the Company's capital stock ceases to be listed on a national
securities exchange or regularly quoted in an over-the-counter market by one
or more members of a national or an affiliated securities association.

PREFERRED STOCK

The Company's authorized shares of Preferred Stock may be issued in one or
more series, and the Board of Directors is authorized, without further action
by the shareholders, to designate the rights, preferences, limitations and
restrictions of and upon shares of each series, including dividend, voting,
redemption and conversion rights. The Board of Directors also may designate
par value, preferences in liquidation and the number of shares constituting
any series. The Company believes that the availability of Preferred Stock
issuable in series will provide increased flexibility for structuring
possible future financings and acquisitions, if any, and in meeting other
corporate needs. It is not possible to state the actual effect of the
authorization and issuance of any series of Preferred Stock upon the rights
of holders of Common Stock until the Board of Directors determines the
specific terms, rights and preferences of a series of Preferred Stock.
However, such effects might include, among other things, restricting
dividends on the Common Stock, diluting the voting power of the Common Stock,
or impairing liquidation rights of such shares without further action by
holders of the Common Stock. In addition, under various circumstances, the
issuance of Preferred Stock may have the effect of facilitating, as well as
impeding or discouraging, a merger, tender offer, proxy contest, the
assumption of control by a holder of a large block of the Company's
securities or the removal of incumbent management. The issuance of Preferred
Stock could also adversely affect the market price of the Common Stock. The
Company has no present plan to issue any shares of Preferred Stock.

WARRANTS

Each Warrant offered hereby, including Warrants converted from Bridge
Warrants and each Warrant included in the Unit Purchase Option, will entitle
the registered holder to purchase one share of the Company's Common Stock at
an exercise price of $ per share [100% of the per-Unit offering price]
during a four-year period commencing one year after the Effective Date. No
fractional shares of Common Stock will be issued in connection with the
exercise of Warrants. Upon exercise, the Company will pay the holder the
value of any such fractional shares in cash, based upon the market value of
the Common Stock at such time.

The Warrants will expire at 5:00 p.m., New York time, on the fifth
anniversary of the date of this Prospectus. In the event a holder of Warrants
fails to exercise the Warrants prior to their expiration, the Warrants will
expire and the holder thereof will have no further rights with respect to the
Warrants.

The Company may, with the consent of GKN Securities Corp., redeem the
Warrants, at any time after they become exercisable, at a price of $.01 per
Warrant upon not less than 30 days' prior written notice if the last sale
price of the Common Stock has been at least 165% of the then exercise price
of the Warrants (initially $ ) on 20 out of the 30 consecutive trading days
ending on the third day prior to the day on which notice is given.

No Warrants will be exercisable unless at the time of exercise there is a
current prospectus covering the shares of Common Stock issuable upon exercise
of such Warrants under an effective registration

33
<PAGE>

statement filed with the Commission and such shares have been qualified for
sale or are exempt from qualification under the securities laws of the state
or residence of the holder of such Warrants. The Company has undertaken and
intends to file and keep current a prospectus which will permit the purchase
and sale of the Common Stock underlying the Warrants, but there can be no
assurance that the Company will be able to do so. Although the Company
intends to seek to qualify for sale the shares of Common Stock underlying the
Warrants in those states where the Units are being offered, there can be no
assurance that the Company will be able to do so.

A holder of Warrants will not have any rights, privileges or liabilities
as a shareholder of the Company prior to the exercise of the Warrants. The
Company is required to keep available a sufficient number of authorized
shares of Common Stock to permit exercise of the Warrants.

The exercise price of the Warrants and the number of shares issuable upon
exercise of the Warrants will be subject to adjustment to protect against
dilution in the event of stock dividends, stock splits, combinations,
subdivisions and reclassifications. No assurance can be given that the market
price of the Company's Common Stock will exceed the exercise price of the
Warrants at any time during the exercise period.

LIMITATION OF LIABILITY OF DIRECTORS

The Restated Certificate provides that a director will not be personally
liable for damages to the Company or its shareholders for breach of duty as a
director, except to the extent such exemption or limitation is not permitted
under the BCL (i.e, liability (i) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (ii) for
any transaction from which the director derived a financial profit or other
advantage to which he was not legally entitled, (iii) for violating certain
provisions of the BCL prohibiting the payment of dividends in certain
circumstances, prohibiting certain payments to shareholders after dissolution
and prohibiting particular types of loans), or (iv) for any act or omission
prior to the adoption of this provision.

The limitation of liability described above does not alter the liability
of directors under federal securities laws.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Restated Certificate and Restated By-Laws provides that officers and
directors of the Company shall be indemnified by the Company to the fullest
extent permissible under New York law. Insofar as indemnification for
liability under the Securities Act of 1933, as amended ("Securities Act"),
may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company, has
been advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable.

NEW YORK ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

Generally, Section 912(b) of the BCL prohibits a New York corporation from
engaging in a "business combination" with an "interested shareholder" for a
period of five years after the date of the transaction in which the person
became an interested shareholder unless the combination or the transaction in
which the person became an interested shareholder is approved by the board of
directors of the corporation before the date such person became an interested
shareholder. If the business combination is not previously approved, the
interested shareholder may effect a business combination after the five-year
period only if a majority of the shares not owned by the interested
shareholder is voted in favor of the combination or the aggregate amount of
the offer meets certain fair price criteria. A "business combination"
includes mergers, asset sales and other transactions resulting in a financial
benefit to the shareholder. An "interested shareholder" is a person who
beneficially owns, or is an affiliate or associate of a corporation and
within the past five years beneficially owned, 20% or more of the
corporation's voting stock. Pursuant to Section 912(d) of the BCL, on April
22, 1997, the Company adopted an amendment

<PAGE>

to the Restated By-Laws electing not to be governed by, or subject to, the
provisions of Section 912(b) of the BCL. Pursuant to Section 912(d) of the
BCL, such amendment to the Restated By-Laws is not effective until eighteen
months after the adoption of the amendment (i.e., October 22, 1998).

The Restated Certificate and Restated By-Laws contains certain provisions
intended to enhance the likelihood of continuity and stability in the
composition of the Company's Board of Directors and of the policies
formulated by the Board of Directors which may discourage a future
unsolicited takeover of the Company. These provisions could have the effect
of discouraging certain attempts to acquire the Company or remove incumbent
management, including incumbent members of the Company's Board of Directors,
even if some or a majority of the Company's shareholders deemed such an
attempt to be in their best interests.

The Restated Certificate or Restated By-Laws, as applicable, among other
things (i) provides that the number of directors will be not fewer than three
nor more than seven, with the exact number of directors to be determined in
accordance with the Restated By-Laws; (ii) provides that whenever there are
at least six directors, the Board of Directors will consist of two classes of
directors having staggered terms of two years each, with each of the classes
consisting of at least three directors; (iii) requires any shareholder who
wishes to bring any proposal before a meeting of shareholders or to nominate
a person to serve as a director to give written notice thereof and certain
related information at least 90 but no more than 120 days prior to the date
one year from the date of the immediately preceding annual meeting, if such
proposal or nomination is to be submitted at an annual meeting, and within
ten days of the giving of notice to shareholders, if such proposal or
nomination is to be submitted at a special meeting; and (iv) provides that
the Board of Directors, without action by the shareholders, may issue and fix
the rights and preferences of shares of Preferred Stock. These provisions may
have the effect of delaying, deferring or preventing a change of control of
the Company without further action by the shareholders, may discourage bids
for the Common Stock at a premium over the market price of the Common Stock
and may adversely affect the market price of, and the voting and other rights
of the holders of, Common Stock.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's securities is American
Stock Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

COMMON STOCK

Upon completion of this Offering, the Company will have outstanding
2,700,000 shares of Common Stock, not including shares of Common Stock
issuable upon exercise of outstanding options and warrants, and assuming no
exercise of the over-allotment option granted to the Underwriter. Of those
shares, the 1,500,000 shares of Common Stock sold to the public in the
Offering (1,725,000 if the Underwriter's over-allotment option is exercised
in full) may be freely traded without restriction or further registration
under the Securities Act, except for any shares that may be held by an
"affiliate" of the Company (as that term is defined in the rules and
regulations under the Securities Act) which may be sold only pursuant to a
registration under the Securities Act or pursuant to an exemption from
registration under the Securities Act, including the exemption provided by
Rule 144 adopted under the Securities Act.

The 1,200,000 shares of Common Stock outstanding prior to this Offering
are "restricted securities" as that term is defined in Rule 144 and may not
be sold unless such sale is registered under the Securities Act or is made
pursuant to an exemption from registration under the Securities Act,
including the exemption provided by Rule 144. Of such shares, 684,904 shares
may be sold pursuant to Rule 144 beginning on the date of this Prospectus and
the remaining 515,096 shares may be sold beginning 90 days thereafter,
subject to the Lock-Up Agreements discussed below.

In general, under Rule 144, a shareholder (or shareholders whose shares
are aggregated) who has beneficially owned any restricted securities for at
least one year (including a shareholder who may be

35
<PAGE>
deemed to be an affiliate of the Company), will be entitled to sell, within
any three-month period, that number of shares that does not exceed the
greater of (i) 1% of the then outstanding shares of Common Stock or (ii) the
average weekly trading volume of the Common Stock during the four calendar
weeks preceding the date on which notice of such sale is given to the
Commission, provided certain public information, manner of sale and notice
requirements are satisfied. A shareholder who is deemed to be an affiliate of
the Company, including members of the Board of Directors and executive
officers of the Company, will still need to comply with the restrictions and
requirements of Rule 144, other than the one-year holding period requirement,
in order to sell shares of Common Stock that are not restricted securities,
unless such sale is registered under the Securities Act. A shareholder (or
shareholders whose shares are aggregated) who is deemed not to have been an
affiliate of the Company at any time during the 90 days preceding a sale by
such shareholder, and who has beneficially owned restricted securities for at
least two years, will be entitled to sell such restricted securities under
Rule 144 without regard to the volume limitations described above.

Of the 1,200,000 restricted shares, all of the shares held by the
Company's directors, officers and shareholders holding 1% or more of the
outstanding shares of Common Stock ("1% or Greater Holder"), 1,154,890 shares
in the aggregate, are subject to lock-up agreements ("Lock-Up Agreements")
pursuant to which each such director, officer or 1% or Greater Holder has
agreed not to offer, sell, transfer or otherwise dispose of any shares of
Common Stock (other than shares of Common Stock acquired in the Offering or
in the after market after the closing date of the Offering) without the prior
written consent of the Underwriter. Holders of 515,096 shares of Common Stock
have agreed to be subject to such restrictions for a period of 24 months from
the date of this Prospectus and holders of 639,794 shares of Common Stock
have agreed to be subject to such restrictions for a period of 18 months from
the date of this Prospectus.

The Company has agreed to register the Warrants converted from the Bridge
Warrants for resale under the Securities Act and to pay certain expenses in
connection therewith. An aggregate of 600,000 Warrants are being registered
in the registration statement of which this Prospectus forms a part. The
securities offered by such holders ("Selling Securityholders") are not part
of the underwritten offering. The Company will not receive any of the
proceeds from the sale of such Warrants. Notwithstanding that such securities
are being registered, the Selling Securityholders may not sell any of such
securities prior to one year from the date of this Prospectus. This
restriction on resale is unconditional and may not be waived by the
Underwriter.

Prior to this Offering, there has been no public trading market for the
Common Stock, and no predictions can be made as to the effect, if any, that
future sales of shares or the availability of shares for sale will have on
the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of the Common Stock in the public market could adversely
affect the then-prevailing market price.

36
<PAGE>
UNDERWRITING

GKN Securities Corp. ("Underwriter") has agreed, subject to the terms and
conditions of the Underwriting Agreement, to purchase from the Company a
total of 1,500,000 Units. The obligations of the Underwriter under the
Underwriting Agreement are subject to approval of certain legal matters by
counsel and various other conditions precedent, and the Underwriter is
obligated to purchase all of the Units offered by this Prospectus (other than
the Units covered by the over-allotment option described below), if any are
purchased.

The Underwriter has advised the Company that it proposes to offer the
Units to the public at the initial public offering prices set forth on the
cover page of this Prospectus and to certain dealers at those prices less a
concession not in excess of $ per Unit. The Underwriter may allow, and
such dealers may reallow, a concession not in excess of $ per Unit to
certain other dealers. After the Offering, the offering prices and other
terms may be changed by the Underwriter.

The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act. The Company has
also agreed to pay to the Underwriter an expense allowance on a
nonaccountable basis equal to 3% of the gross proceeds derived from the sale
of the Units offered by this Prospectus (including the sale of any Units
subject to the Underwriter's over-allotment option), $50,000 of which has
been paid to date. The Company also has agreed to pay all expenses in
connection with qualifying the Units offered hereby for sale under the laws
of such states as the Underwriter may designate and registering this Offering
with the National Association of Securities Dealers, Inc. ("NASD"), including
fees and expenses of counsel retained for such purposes by the Underwriter.

The Company has granted the Underwriter an option, exercisable during the
45-day period after the date of this Prospectus, to purchase from the Company
at the initial offering price, less underwriting discounts and the
nonaccountable expense allowance, up to an aggregate of 225,000 additional
Units for the sole purpose of covering over-allotments, if any.

The Company has engaged the Underwriter, on a non-exclusive basis, as its
agent for the solicitation of the exercise of the Warrants. To the extent not
inconsistent with the guidelines of the NASD and the rules and regulations of
the Commission, the Company has agreed to pay the Underwriter for bona fide
services rendered a commission equal to 5% of the exercise price of each
Warrant exercised after one year from the date of this Prospectus if the
exercise was solicited by the Underwriter. In addition to soliciting, either
orally or in writing, the exercise of the Warrants, such services may also
include disseminating information, either orally or in writing, to warrant
holders about the Company or the market for the Company's securities, and
assisting in the processing of the exercise of the Warrants. No compensation
will be paid to the Underwriter in connection with the exercise of the
Warrants if the market price of the underlying shares of Common Stock is
lower than the exercise price, the Warrants are held in a discretionary
account, the Warrants are exercised in an unsolicited transaction, the
warrantholder has not confirmed in writing that the Underwriter solicited
such exercise or the arrangement to pay the commission is not disclosed in
the prospectus provided to warrantholders at the time of exercise. In
addition, unless granted an exemption by the Commission from Regulation M
under the Exchange Act, any broker-dealer soliciting the exercise of the
Warrants, including the Underwriter, may be prohibited from engaging in any
market activities or solicited brokerage activities with regard to the
Company's securities. If one or more broker-dealers making a market in the
Company's securities are required temporarily to suspend such market making,
such suspension could adversely affect the liquidity of the market for such
securities.

In connection with this Offering, the Company has agreed to sell to the
Underwriter, for an aggregate purchase price of $100, the Unit Purchase
Option, consisting of the right to purchase up to an aggregate of 150,000
Units. The Unit Purchase Option is exercisable initially at a per-Unit price
equal to % of the per-Unit initial public offering price for a period of
four years commencing one year from the date hereof. The Unit Purchase Option
may not be transferred, sold, assigned or hypothecated during the one year
period following the date of this Prospectus except to officers of the
Underwriter and the selected dealers and their officers or partners. The Unit
Purchase Option grants to the holders thereof certain

37
<PAGE>

"piggyback" and demand rights for periods of seven and five years,
respectively, from the date of this Prospectus with respect to the
registration under the Securities Act of the securities directly and
indirectly issuable upon exercise of the Unit Purchase Option.

Pursuant to the Underwriting Agreement, all of the officers, directors and
1% or Greater Holders (collectively, "Insiders") have executed Lock-Up
Agreements pursuant to which they each have agreed not to offer, sell,
transfer or otherwise dispose of any shares of Common Stock (other than
shares of Common Stock acquired in the Offering or in the after market after
the closing date of the Offering) without the prior written consent of the
Underwriter; each 1% or Greater Holder who holds no other position with the
Company and who does not reside in the same household as any other Insider
has agreed to be subject to such restrictions for a period of 18 months and
each other Insider has agreed to be subject to such restrictions for a period
of 24 months. During the four year period following the date of this
Prospectus, the Underwriter shall have the right to purchase for the
Underwriter's account or to sell for the account of the Insiders, any
securities sold by any of such persons in the open market.

The Underwriting Agreement provides that, for a period of four years from
the date of this Prospectus, the Company will recommend and use its best
efforts to elect a designee of the Underwriter as a member of the Board of
Directors. Alternatively, the Underwriter will have the right to send a
representative to observe each meeting of the Board of Directors. The
Underwriter has not yet selected such designee or representative.

Prior to this Offering there has been no public market for any of the
Company's securities. Accordingly, the offering price of the Units and the
terms of the Warrants have been determined by negotiation between the Company
and the Underwriter and do not necessarily bear any relation to established
valuation criteria. Factors considered in determining such prices and terms,
in addition to prevailing market conditions, include an assessment of the
prospects for the industry in which the Company competes, the Company's
management and the Company's capital structure.

In connection with this Offering, the Underwriter may engage in
transactions that stabilize or maintain the price of the Units, Common Stock
or Warrants at levels above those which might otherwise prevail in the open
market, including syndicate short covering transactions and penalty bids.
Such transactions may be effected on Nasdaq, in the over-the-counter market
or otherwise. Such stabilizing, if commenced, may be discontinued at any
time.

In January 1997, the Underwriter acted as placement agent for the Bridge
Financing and was paid a commission of $150,000 (10%) and a nonaccountable
expense allowance of $45,000 (3%).

CHANGE IN ACCOUNTANTS

Effective January 1997, Grant Thornton LLP was engaged as the Company's
independent auditors, replacing Richard A. Eisner & Company, LLP, the
Company's former auditors. The appointment of Grant Thornton LLP has been
approved by the Company's Board of Directors. The former auditors' report on
the Company's financial statements for the year ended December 31, 1995 is
included in the financial statements of the Company included in this
Prospectus. There were no disagreements with the former auditors on any
matter of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure with respect to the Company's financial
statements for the fiscal year ended December 31, 1995 or up through the time
of replacement, which, if not resolved to the former auditors' satisfaction,
would have caused it to make reference to the subject matter of the
disagreement in connection with its report. The report of Richard A. Eisner &
Company, LLP in connection with such audit did not contain any adverse
opinion or disclaimer of opinion, and was not modified as to uncertainty,
audit scope, or accounting principles. Prior to retaining Grant Thornton LLP,
the Company had not consulted with Grant Thornton LLP regarding accounting
principles.

38
<PAGE>
LEGAL MATTERS

The legality of the securities offered hereby will be passed upon for the
Company by Shereff, Friedman, Hoffman & Goodman, LLP, New York, New York.
Graubard Mollen & Miller, New York, New York, has served as counsel to the
Underwriter in connection with this Offering.

EXPERTS

The financial statements of Pivot Rules, Inc. at December 31, 1996
included herein have been audited by Grant Thornton LLP, independent
auditors, as set forth in their report thereon appearing herein, and are
included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.

The financial statements of Pivot Rules, Inc. for the year ended December
31, 1995 included herein have been audited by Richard A. Eisner & Company,
LLP, independent auditors, as set forth in their report thereon appearing
herein, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing. In
consideration of the inclusion of such report, the Company has agreed to
indemnify Richard A. Eisner & Company, LLP against any legal costs incurred
by it and any damages assessed against it in the event that Richard A. Eisner
& Company, LLP becomes a party to, or is threatened with, any litigation
resulting from any sale of securities pursuant to the Registration Statement
or any transaction made in reliance upon information contained herein,
provided that such indemnification shall not be effective with regard to any
liability for professional malpractice or payment of settlement or judgment
costs; provided further that the Company will not indemnify Richard A.
Eisner & Company, LLP for the payment of any legal costs or expenses incurred
by it except in a successful defense of a legal action or proceeding that
arises as a result of its consent to the inclusion of such report.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement under
the Securities Act with respect to the Units offered hereby. This Prospectus
does not contain all of the information set forth in the Registration
Statement and the exhibits thereto, certain portions having been omitted from
this Prospectus in accordance with the rules and regulations of the
Commission. For further information with respect to the Company, the
securities offered by this Prospectus and such omitted information, reference
is made to the Registration Statement, including any and all exhibits and
amendments thereto. Statements contained in this Prospectus concerning the
provisions of any document filed as an exhibit are of necessity brief
descriptions thereof and are not necessarily complete, and in each instance
reference is made to the copy of the document filed as an exhibit to the
Registration Statement, each such statement being qualified in its entirety
by this reference.

Following the effectiveness of the Registration Statement, the Company
will be subject to the information requirements of the Exchange Act, and in
accordance therewith the Company will file reports, proxy statements and
other information with the Commission. Such reports, proxy statements and
other information may be inspected and copied at public reference facilities
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and 7 World Trade Center, New York, New York 10048. Copies of
such material, including the Registration Statement, can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web
site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding issuers that file electronically
with the Commission.

The Company intends to furnish its shareholders annual reports containing
financial statements audited and reported on by its independent public
accounting firm and such other periodic reports as the Company may determine
to be appropriate or as may be required by law.

39
<PAGE>
PIVOT RULES, INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-------------
<S> <C>
Independent Auditors' Reports
Grant Thornton LLP.............................................................. F-2
Richard A. Eisner & Company, LLP................................................ F-3
Financial Statements
Balance Sheet as of December 31, 1996........................................... F-4
Statements of Operations for the Years Ended December 31, 1995 and 1996......... F-5
Statements of Changes in Shareholders' Equity for the Years Ended December 31,
1995 and 1996 ................................................................ F-6
Statements of Cash Flows for the Years Ended December 31, 1995 and 1996......... F-7
Notes to Financial Statements................................................... F-8 -F-18
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS

To the Shareholders
PIVOT RULES, INC.

We have audited the accompanying balance sheet of Pivot Rules, Inc. as of
December 31, 1996, and the related statements of operations, changes in
shareholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.

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

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

GRANT THORNTON LLP
New York, New York
February 18, 1997

F-2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS

To the Shareholders
Pivot Rules, Inc.
New York, New York

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

In our opinion, the financial statements enumerated above present fairly,
in all material respects, the results of operations and cash flows of Pivot
Rules, Inc. for the year ended December 31, 1995 in conformity with generally
accepted accounting principles.

RICHARD A. EISNER & COMPANY, LLP
New York, New York
October 21, 1996

F-3
<PAGE>
PIVOT RULES, INC.
BALANCE SHEET
DECEMBER 31, 1996

<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash......................................................................... $ 33,000
Due from factor ............................................................. 176,000
Inventories ................................................................. 835,000
Prepaid expenses and other current assets ................................... 114,000
Deferred income taxes ....................................................... 97,000
------------
Total current assets ...................................................... 1,255,000

PROPERTY AND EQUIPMENT, NET .................................................. 89,000

DEFERRED COSTS AND OTHER ASSETS .............................................. 292,000
------------
Total ..................................................................... $1,636,000
============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of notes payable ............................................ $ 230,000
Short-term loan payable ..................................................... 279,000
Due to factor ............................................................... 123,000
Accounts payable, accrued expenses and other current liabilities ........... 336,000
Income taxes payable ........................................................ 112,000
------------
Total current liabilities ................................................. 1,080,000

NOTES PAYABLE, less current portion .......................................... 135,000

DEFERRED INCOME TAXES ........................................................ 12,000
------------
1,227,000
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Common stock -$.01 par value; 10,000,000 shares authorized; 1,200,000 shares
issued and outstanding ..................................................... 12,000
Additional paid-in capital .................................................. 397,000
------------
409,000
------------
Total ..................................................................... $1,636,000
============
</TABLE>

The accompanying notes are an integral part of this statement.

F-4
<PAGE>
PIVOT RULES, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1996

<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
Sales .................................................. $7,124,000 $9,292,000
Less returns and allowances ............................ 787,000 696,000
------------ ------------
Net sales ............................................ 6,337,000 8,596,000

Cost of sales .......................................... 3,996,000 6,571,000
------------ ------------
Gross profit ......................................... 2,341,000 2,025,000

Selling, marketing, design and administrative expenses 2,288,000 1,502,000
------------ ------------
Operating profit ..................................... 53,000 523,000

Other income (expense)
License fee income .................................... 58,000 90,000
Other income .......................................... 10,000 35,000
Interest expense and factoring charges ................ (418,000) (443,000)
------------ ------------
(350,000) (318,000)
------------ ------------
Income (loss) before taxes ........................... (297,000) 205,000

Provision (benefit) for income taxes ................... (89,000) 70,000
------------ ------------

NET INCOME (LOSS) .................................... $ (208,000) $ 135,000
============ ============

Net income (loss) per share ............................ $(.17) $.11
============ ============
Weighted average shares outstanding .................... 1,200,000 1,200,000
============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>
PIVOT RULES, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years ended December 31, 1995 and 1996

<TABLE>
<CAPTION>
COMMON STOCK, COMMON STOCK,
NO PAR VALUE $.01 PAR VALUE
-------------------- ---------------------
NUMBER NUMBER
OF OF
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Balance at December 31, 1994 200 $ 955,000
Net loss for the year ended
December 31, 1995............
-------- -----------
Balance at December 31, 1995 200 955,000
Stock-split recapitalization . (200) (955,000) 1,200,000 $12,000
Net income for the year ended
December 31, 1996............
-------- ----------- ----------- ---------
Balance at December 31, 1996 -- $ -- 1,200,000 $12,000
======== =========== =========== =========
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
TREASURY STOCK
---------------------
NUMBER
PAID-IN RETAINED OF
CAPITAL EARNINGS SHARES AMOUNT TOTAL
---------- ----------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ 399,000 (64) $(872,000) $ 482,000
Net loss for the year ended
December 31, 1995............ (208,000) (208,000)
----------- -------- ------------ -----------
Balance at December 31, 1995 191,000 (64) (872,000) 274,000
Stock-split recapitalization . $397,000 (326,000) 64 872,000 --
Net income for the year ended
December 31, 1996............ 135,000 135,000
---------- ----------- -------- ------------ -----------
Balance at December 31, 1996 $397,000 $ -- -- $ -- $ 409,000
========== =========== ======== ============ ===========
</TABLE>

The accompanying notes are an integral part of this statement.

F-6
<PAGE>
PIVOT RULES, INC.
STATEMENTS OF CASH FLOWS
Years ended December 31, 1995 and 1996

<TABLE>
<CAPTION>
1995 1996
------------ -------------
<S> <C> <C>
Cash flows from operating activities
Net (loss) income ............................................... $(208,000) $ 135,000
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities
Loss on equipment disposition .................................. -- 8,000
Depreciation and amortization .................................. 43,000 55,000
Deferred income taxes .......................................... (8,000) (40,000)
Changes in operating assets and liabilities
(Increase) decrease in
Inventories .................................................. 78,000 792,000
Prepaid expenses and other current assets ................... (67,000) 89,000
Income taxes receivable ..................................... (72,000) --
Increase (decrease) in
Accounts payable and accrued expenses ....................... (128,000) 183,000
Income taxes payable ........................................ -- 184,000
------------ -------------
Net cash (used in) provided by operating activities ............. (362,000) 1,406,000
------------ -------------
Cash flows from investing activities
Purchase of property and equipment .............................. (23,000) (42,000)
Trademark costs ................................................. (78,000) --
------------ -------------
Net cash used in investing activities ........................... (101,000) (42,000)
Cash flows from financing activities
Costs associated with bridge financing and initial public
offering ...................................................... -- (128,000)
Proceeds from notes payable ..................................... 67,000 240,000
Payments of notes payable ....................................... (59,000) (492,000)
Net increase (decrease) in advances from factor ................. 389,000 (1,005,000)
------------ -------------
Net cash provided by (used in) financing activities ............ 397,000 (1,385,000)
------------ -------------
NET DECREASE IN CASH ............................................ (66,000) (21,000)
Cash balance--January 1 ........................................... 120,000 54,000
------------ -------------
Cash balance--December 31 ......................................... $ 54,000 $ 33,000
============ =============
Supplemental disclosure of cash flow information:
Cash paid during the year for
Interest ........................................................ $ 308,000 $ 209,000
============ =============
Income taxes .................................................... $ 15,000 $ --
============ =============
</TABLE>

The accompanying notes are an integral part of these statements.

F-7
<PAGE>
PIVOT RULES, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996

NOTE A--SUMMARY OF ACCOUNTING POLICIES

1. COMPANY

Pivot Rules, Inc. ("Company") designs, sources and markets a full
collection of golf lifestyle sportswear for men under the Pivot Rules brand
name and registered trademark.

2. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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

3. INVENTORIES

Inventories, which consist of finished goods, are valued at the lower of
cost or market. Cost is determined by the first-in, first-out ("FIFO")
method.

4. PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Equipment is depreciated on a
straight-line basis over five to seven years. Leasehold improvements are
amortized over the shorter of their estimated useful lives or the term of the
lease. Maintenance and repairs are expensed as incurred.

5. DEFERRED COSTS

Deferred costs are composed of trademark, organization and financing
costs. The trademark and organization costs are amortized on the
straight-line basis over their estimated lives of 10 years. The unamortized
financing costs were costs incurred to obtain bridge financing in January
1997 and for costs incurred for the planned initial public offering scheduled
for 1997. The Company's policy is to defer the initial public offering costs.
If the initial public offering is successful, the Company will reduce
additional paid-in capital. If the initial public offering is not successful,
all costs pertaining to the offering will be expensed (Note O).

6. INCOME TAXES

Deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates in effect for the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.

7. ADVERTISING EXPENSE

Advertising costs are expensed as incurred. Advertising expense for the
years ended December 31, 1995 and 1996 amounted to approximately $648,000 and
$176,000, respectively.

8. PREPAID EXPENSES

Sample costs for upcoming seasons are deferred and charged to expenses in
the season to which they pertain. Costs are deferred for a period of
approximately six to nine months.

F-8
<PAGE>
PIVOT RULES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1995 and 1996

NOTE A--SUMMARY OF ACCOUNTING POLICIES (Continued)
9. REVENUE RECOGNITION

Revenue is recognized when merchandise is shipped to a customer.

10. STOCK SPLIT

As discussed in Note J, on January 2, 1997, the Company effected a
8,862.6292-to-1 stock split of its common stock. All share and per share
amounts included in the accompanying financial statements and footnotes have
been restated to reflect the stock split.

11. EARNINGS PER SHARE

Earnings per share are computed by dividing net income by the weighted
average number of common shares outstanding and after giving effect to the
stock split.

12. IMPACT OF NEW ACCOUNTING PRONOUNCEMENT

In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS No.
125"). SFAS No. 125 particularly affects the accounting for transfers of
financial assets in which the seller has some type of continuing involvement
with the transferred assets. The carrying amounts of the financial assets
transferred are allocated to the various components of the transaction based
on their relative fair values. The components are then accounted for
separately, with parties to the transaction recognizing only assets they
control and liabilities incurred, and removing from the balance sheet assets
if control is surrendered and liabilities if extinguished. If the transfer
does not qualify as a sale, it is accounted for as a secured borrowing. SFAS
No. 125 provides that a liability is removed from the balance sheet only if
the debtor either pays the creditor and is relieved of its obligation for the
liability or is legally released from being the primary obligor. Provisions
of SFAS No. 125 are generally effective for transactions occurring after
December 31, 1996. However, provisions with respect to secured borrowings and
transfers of financial assets that are part of repurchase agreement,
dollar-roll, securities lending, and similar transactions are effective for
transactions occurring after December 31, 1997. The Company has made no
assessment of the potential impact of adopting SFAS No. 125 at this time.

NOTE B--NOTES PAYABLE

Notes payable at December 31, 1996 consist of the following:

<TABLE>
<CAPTION>
<S> <C>
Factor (a) ................ $ 195,000
Unrelated third party (b) 170,000
-----------
365,000
Less current portion ..... (230,000)
-----------
$ 135,000
===========
</TABLE>

(a) The factor's note bears interest at 2% over the prime interest rate
and requires monthly principal payments of $5,420 plus accrued interest. A
balloon payment of approximately $135,000 is due upon maturity in January
1998. The note is collateralized by accounts receivable, inventory, other
assets and 18 shares of the Company's treasury stock (159,527 after giving
effect to the stock split).

F-9
<PAGE>
PIVOT RULES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1995 and 1996

NOTE B--NOTES PAYABLE (Continued)
Such treasury shares were retired subsequent to December 31, 1996. In the
event of a default of the factoring agreement, this note shall become
immediately due.

(b) Notes payable from unrelated third party. Proceeds from this note
were used to repay the amended treasury stock note. This loan bears
interest at 12% per annum and is payable in ten monthly equal installments
of $25,339.70, inclusive of interest. The final payment on the note is due
in July 1997. This note is collateralized by a second position in
inventory and receivables and 20 shares of a shareholder's stock (177,253
after giving effect to the stock split).

Annual principal payments required as of December 31, 1996 on the
aforementioned debt are as follows:

1997 ... $230,000
1998 ... 135,000
----------
$365,000
==========

NOTE C--SHORT-TERM LOAN PAYABLE

As of December 31, 1995, the Company had a note payable for the purchase
of treasury stock with interest at 12% per annum, payable in annual
installments ranging from approximately $104,000 to $243,000 each December
31, through maturity in 1999. The payments originally due on December 31,
1995 were extended and payable in three monthly installments of $25,000 in
January, February and March of 1996 and $75,000 in June of 1996. The note was
collateralized by 44 shares of treasury stock (389,956 after giving effect to
the stock split) held in escrow. Such treasury shares were retired subsequent
to December 31, 1996.

In September 1996, the agreement to purchase treasury stock was amended,
and the outstanding balance plus accrued interest, of $39,000, was reduced to
an aggregate of $240,000 plus certain contingent payments (not to exceed
$279,000) based upon future distributions to remaining shareholders, or the
sale of additional debt or equity securities.

The Company borrowed $240,000 from an unrelated third party and used the
proceeds to repay the amended treasury stock note. The new loan bears
interest at 12% per annum and is payable in ten monthly installments
commencing in October 1996 (Note B).

In January 1997, the Company paid $60,000 regarding the contingent
payments due under the above-referenced loan. The payment represented 5% of
the net proceeds from the bridge loan (Note P).

NOTE D--FACTORING AGREEMENTS

In April 1992, the Company entered into factoring and financing agreements
whereby the Company sells substantially all of its trade receivables without
recourse, to a commercial factor. Advances bear interest at 2% over the prime
interest rate. In addition, the Company will also pay the factor an annual
commission aggregating at least $30,000. Any amounts due to the factor are
collateralized by accounts receivable, inventories and other assets.

The amounts due to the factor at the balance sheet date represent the
difference between charges and advances from the factor and accounts
receivable assigned to the factor. Accrued letters of credit convert into
advances from the factor when the letter of credit is presented and therefore
are accounted for as due to factor.

F-10
<PAGE>
PIVOT RULES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1995 and 1996

NOTE D--FACTORING AGREEMENTS (Continued)
The Company incurred $388,000 and $415,000 of factoring commissions and
interest charges on receivables sold and on advances for the years ended
December 31, 1995 and 1996, respectively. In addition, the Company incurred
interest expense of approximately $30,000 and $25,000 for the years ended
December 31, 1995 and 1996, respectively, on the term note described in Note
B.

The amounts due to the factor as of December 31, 1996 consist of the
following:

<TABLE>
<CAPTION>
<S> <C>
Accounts receivable assigned ............. $ 3,732,000
Less allowance for credits and bad debts (256,000)
-------------
3,476,000
Accrued letters of credit ................ (574,000)
Advances from factor ..................... (3,025,000)
-------------
Due to factor ............................ $ (123,000)
=============
</TABLE>

In addition, the Company used a second factor for one customer during
1996. The net amount due from this factor amounted to approximately $176,000
as of December 31, 1996. Commissions associated with this agreement
approximated $26,000.

NOTE E--PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 1996 consist of the following:

<TABLE>
<CAPTION>
<S> <C>
Office equipment ............................... $171,000
Leasehold improvements ......................... 29,000
----------
200,000
Less accumulated depreciation and amortization 111,000
----------
$ 89,000
==========
</TABLE>

F-11
<PAGE>
PIVOT RULES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1995 and 1996

NOTE F--DEFERRED COSTS AND OTHER ASSETS

As of December 31, 1996, deferred costs and other assets consist of the
following:

<TABLE>
<CAPTION>
<S> <C>
Organization costs ............................... $ 7,000
Deferred financing costs for bridge financing and
initial public offering ......................... 129,000
Trademarks ....................................... 170,000
Deposits ......................................... 17,000
----------
323,000
Less accumulated amortization .................... (31,000)
----------
$292,000
==========
</TABLE>

NOTE G--ACCOUNTS PAYABLE, ACCRUED EXPENSES AND
OTHER CURRENT LIABILITIES

As of December 31, 1996, accounts payable, accrued expenses and other
current liabilities consist of the following:

<TABLE>
<CAPTION>
<S> <C>
Accrued bonuses........... $144,000
Accrued professional
fees..................... 111,000
Accrued sample costs ..... 41,000
Other..................... 40,000
----------
$336,000
==========
</TABLE>

NOTE H--INCOME TAXES

As of December 31, 1995, the Company had available approximately $212,000
of net operating loss carryforwards for state and city income tax purposes.
During 1996, the Company utilized the entire carryforward, which resulted in
a tax benefit of approximately $10,000.

The components of deferred tax assets and liabilities as of December 31,
1996 are as follows:

<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets
Accounts receivable
reserves.................... $ 97,000
Deferred tax liabilities
Tax over book depreciation . (12,000)
----------
Net deferred tax asset....... $ 85,000
==========
</TABLE>

F-12
<PAGE>
PIVOT RULES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1995 and 1996

NOTE H--INCOME TAXES (Continued)
The provision (benefit) for income taxes is comprised of the following:

<TABLE>
<CAPTION>
1995 1996
----------- ----------
<S> <C> <C>
Current
Federal .. $(82,000) $ 92,000
State..... l,000 5,000
Foreign .. 13,000
----------- ----------
(81,000) 110,000
----------- ----------
Deferred
Federal .. (8,000) (45,000)
State..... 5,000
----------- ----------
(8,000) (40,000)
----------- ----------
$(89,000) $ 70,000
=========== ==========
</TABLE>

Differences between book and tax are primarily due to temporary
differences resulting from use of accelerated depreciation for income tax
purposes and using the direct write-off method for receivables for tax
purposes.

The statutory Federal income tax rate and the effective rate of the
provision for income taxes for the years ended December 31, 1995 and December
31, 1996 is reconciled as follows:

<TABLE>
<CAPTION>
1995 1996
--------- -------
<S> <C> <C>
Statutory Federal income tax rate............... (34.0)% 34.0%
State taxes, net of Federal income tax
benefits....................................... 0.0 3.2
Other........................................... 4.0 (3.1)
--------- -------
Effective tax rate.............................. (30.0)% 34.1%
========= =======
</TABLE>

NOTE I--COMMITMENTS AND CONTINGENCIES

1. LETTERS OF CREDIT

The Company had outstanding letters of credit in the aggregate amount of
$952,000 as of December 31, 1996, of which $574,000 was reflected in the
year-end balance sheet as due to factor. The Company's letter of credit
facility with its factor provides that the factor has sole and complete
discretion as to the extent to which the factor is willing to extend such
credit.

2. EMPLOYMENT CONTRACTS

The Company has an employment contract, which was amended on December 30,
1996, with the Chief Executive Officer and shareholder ("CEO"). The amended
employment agreement, which expires on January 1, 2000, provides for a base
salary plus annual bonuses at the discretion of the Board of Directors based
upon operating profits before taxes and financing costs. In addition, the
Company maintains a $1.2 million key person life insurance policy on the life
of the CEO.

3. OPERATING LEASE

The Company leases office, showroom and warehouse space under operating
leases which expire through August 1999. Rent expense aggregated
approximately $125,000 and $126,000 for the years ended December 31, 1995 and
1996.

F-13
<PAGE>
PIVOT RULES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1995 and 1996

NOTE I--COMMITMENTS AND CONTINGENCIES (Continued)
Future minimum annual rentals are as follows:

1997.... $123,000
1998.... 112,000
1999 ... 43,000
----------
$278,000
==========

4. CONSULTING AGREEMENT

The Company entered into agreements with two former shareholders which
originally provided that the Company will pay each former shareholder $37,500
on December 31, 2000 for consulting services. In September 1996, the
agreements were amended so that if the Company is in compliance with the
modified stock purchase agreement, the Company will only be obligated to pay
$30,000 to each former shareholder in December 1998 for their future
services.

5. PURCHASE MANAGEMENT AGREEMENTS

In May 1996, the Company entered into a purchase management agreement with
IDL International, LLC ("IDL"). Under the agreement, as amended in July 1996,
the Company pays IDL a commission of 5% on the first $1 million of goods
shipped to the Company in a given year and 2.5% thereafter. In addition, IDL
is entitled to a bonus based on the Company's gross margins. This agreement
expires December 31, 1998, unless cancelled by either party as per the terms
of the agreement. Total fees incurred to IDL for the year ended December 31,
1996 amounted to approximately $112,000. The Company is in the process of
negotiating an employment agreement with the president and principal owner of
IDL. In the event the employment agreement is executed, the purchase
management agreement between IDL and the Company will be terminated.

The Company sources substantially all of its products through Textiles
Network, Ltd. ("Textiles Network"), a Hong Kong agency that oversees
production and quality control. Textiles Network negotiates prices,
identifies factories to manufacture the products and conducts quality control
on the Company's behalf. The Company works closely with Textiles Network to
monitor each of these phases of the production process. The Company makes
substantially all final decisions with regard to pricing and the selection of
factories. Additionally, the Company approves samples of each garment prior
to the commencement of production. The Company pays Textiles Network an 8%
commission on the first $1.5 million of goods shipped to the Company and 7%
thereafter. Total fees incurred to Textiles Network amounted to approximately
$168,000 and $268,000 for the years ended December 31, 1995 and 1996,
respectively.

6. LICENSING

The Company has licensing agreements with licensees in a number of
countries for its sportswear products, including Japan, Thailand, Singapore,
Malaysia, Indonesia and Brunei. Under these licensing agreements, the Company
designs the "Pivot Rules" product and the licensee either produces the
product in accordance with the Company's quality standards or arranges for
the manufacture of the product through the Company's sourcing arrangements.
Licensing arrangements provided for minimum revenues of $58,000 in 1995 and
$90,000 in 1996. These minimum licensing fees are recorded pro rata in the
periods for which the minimums apply. Any amounts received in excess of
minimums are recorded as revenues at the time they are received.

F-14
<PAGE>
PIVOT RULES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1995 and 1996

NOTE I--COMMITMENTS AND CONTINGENCIES (Continued)
The Company has entered into a worldwide representation agreement
("Representation Agreement") with International Management Corporation
("IMC") (a member company of International Management Group ("IMG")) under
which IMC has been retained as the Company's sole and exclusive agent to
identify, qualify and negotiate with prospective international licensing
partners. IMG is a worldwide sports representation and marketing organization
with offices in 74 countries worldwide. Under the terms of the Representation
Agreement, IMC receives commissions equal to 30% of gross income for the
first $1 million of gross income covered by the agreement and 35% thereafter
from the Company on all international licensing revenues generated by the
Company through licensing agreements negotiated or entered into while the
Representation Agreement remains in effect. The Representation Agreement
provides for an original term expiring on June 30, 1997, with automatic
one-year renewal periods.

NOTE J--SHAREHOLDERS' EQUITY

1. SHAREHOLDERS' AGREEMENT

The shareholders of the Company entered into an agreement which includes
provisions, among others, related to the purchase and sale of stock by
shareholders of the Company, granting of options, voting requirements, and
with respect to the CEO of the Company, the repurchase of his shares by the
Company upon termination, without cause, of his employment agreement. The
shareholders' agreement was amended as of December 18, 1996 to provide that
it will terminate automatically immediately before the registration statement
filed in connection with the proposed initial public offering is declared
effective by the Securities and Exchange Commission.

The Company maintains a life insurance policy on the CEO's life. The
amount of coverage provided by the policy is required to be the greater of
$1,000,000 or the fair value of the common shares owned by the CEO. The
proceeds of the policy are required to be used to purchase the shares of the
Company's common stock held by the CEO's estate.

On December 30, 1996, the CEO's employment agreement was amended such
that, in the event of constructive termination as defined in the employment
agreement, the CEO shall have the right to: (a) keep his stock; (b) require
the Company to purchase all his stock at fair market value as defined in the
agreement; or (c) sell his stock to a third party after giving the Company
the right of first refusal. In addition, the Company's obligation to purchase
shares of the Company's stock held by the CEO upon termination of CEO's
employment will terminate automatically upon consummation of the proposed
initial public offering.

2. TREASURY STOCK

During 1994, the Company entered into a stock purchase agreement to
purchase 64.6 shares of common stock (572,526 after giving effect to the
stock split) from four shareholders for a purchase price of approximately
$872,000, of which $50,000 was paid in cash and the balance was financed by
the former shareholders (Note B). During December 1994, the Company borrowed
approximately $325,000 under a term loan from its factor (Note B) to make the
first debt service payment on the note due to the shareholders. As is more
fully described in Note C, during 1996, the terms of the stock purchase
agreement were amended.

3. RECAPITALIZATION

In December 1996, the Board of Directors approved a plan of
recapitalization through the use of a stock split. The recapitalization,
which was effected on January 2, 1997, resulted in the authorization of

F-15
<PAGE>
PIVOT RULES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1995 and 1996

NOTE J--SHAREHOLDERS' EQUITY (Continued)
10,000,000 shares of $.01 par value common stock. Shareholders received
8,862.6292 shares for each share of the previous no par value common stock.

In connection with the recapitalization, the Company's Board of Directors
approved the retirement of the 64.6 shares of treasury stock (572,526 after
giving effect to the stock split). Of the $872,000 in treasury stock,
$546,000 was first offset against the common stock account with the
remainder, totalling $326,000, reducing retained earnings.

NOTE K--OTHER INCOME

Included in other income are non-recurring items which do not relate
directly to ongoing business activity. Primarily included in this
classification are net proceeds from settlements regarding trademark
infringements settled in the favor of the Company. The settlements,
individually and in the aggregate, are not considered material to the
financial statements.

NOTE L--CONCENTRATIONS

The Company sells its products to department stores, sporting goods
stores, catalogs, corporations and discounters, including warehouse clubs.
The Company utilizes a factor to evaluate the creditworthiness of most of its
customers. The Company sells substantially all of its receivables to the
factor. For approved accounts, the factor assumes all credit risk. For
approved accounts, the factor has recourse in cases of disputes, chargebacks
and reserves. For nonapproved accounts, the factor has full recourse. For
nonfactored sales, credit losses have been within management's expectations.
As of December 31, 1996, all accounts were approved by the factor. For the
year ended December 31, 1996, four customers accounted for 45% of the
Company's sales, including one customer accounting for approximately 24.7% of
the Company's sales.

Substantially all of the Company's products are manufactured by third
parties in the Far East and India. The use of contractors and the resulting
lack of direct control could make it difficult for the Company to obtain
timely delivery of products of acceptable quality. Delays in shipments to the
Company, inconsistent or inferior garment quality and other factors beyond
the Company's control could adversely affect the Company's relationships with
its customers, its reputation in the industry and its sales and operating
results. Moreover, foreign manufacturing is subject to numerous risks,
including work stoppages, transportation delays, political instability,
foreign currency fluctuations, the imposition of tariffs and import and
export controls, customs laws, changes in governmental policies and other
factors that could have a material adverse effect on the Company's business,
financial condition and operating results. In particular, there have been a
number of recent trade disputes between China and the United States during
which the United States threatened to impose tariffs and duties on some
products imported from China and to withdraw China's "most favored nation"
trade status. In addition, since the Company's sourcing activities are based
in Hong Kong, such activities may be affected by the return of Hong Kong to
Chinese control in July 1997. Furthermore, because the Company's foreign
manufacturers are located at great distances from the Company, the Company
must generally allow for a significant amount of lead time for the delivery
of products. This reduces the Company's manufacturing flexibility, which
increases the risks associated with changes in fashion trends and consumer
preferences. These risks will increase as the Company seeks to source some of
its products through manufacturers in areas where labor and fabric costs are
lower than those in areas where the Company's products are currently
produced.

F-16
<PAGE>
PIVOT RULES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1995 and 1996

NOTE M--FAIR VALUE OF FINANCIAL INSTRUMENTS

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

Cash, Short-term loan payable--the carrying amount approximates fair
value due to the short-term maturities of these instruments.

Letters of Credit--letters of credit collateralize the Company's
obligations to the factor and have terms ranging from 30 days to 120 days;
the face amount of the letters of credit approximate fair value since the
value for each is fixed over a relatively short period of time.

Long-term Debt--fair value is estimated based on current rates offered to
the Company for debt of the same remaining maturities.

The carrying amount and fair value of the Company's financial instruments
as of December 31, 1996 are as follows:

<TABLE>
<CAPTION>
CARRYING
AMOUNT FAIR VALUE
---------- ------------
<S> <C> <C>
Cash.................... $ 33,000 $ 33,000
Long-term debt.......... 365,000 365,000
Short-term loan
payable................ 279,000 279,000
Letters of credit....... 574,000 574,000
</TABLE>

NOTE N--NONCASH ACTIVITY

During 1996, the Company amended its agreement with a former shareholder
which resulted in a reclassification of approximately $279,000 from notes
payable to short-term loan payable. This transaction has been excluded on the
statement of cash flows.

NOTE O--LEGAL PROCEEDINGS

NOTE P--SUBSEQUENT EVENTS

BRIDGE FINANCING

On January 2, 1997, the Company issued 15 units, each consisting of one
convertible subordinated secured promissory note in the principal amount of
$100,000 per unit, ("Note") and warrants to purchase 40,000 shares of common
stock of the Company, no par value, at an exercise price of $2.50
("Warrants"). The issuance resulted in $1,500,000 of gross proceeds. Net
proceeds amounted to $1,290,000 after underwriter expenses and brokerage
fees, but before additional debt issuance costs. A portion of the gross
proceeds has been allocated to the warrants based on their estimate of fair
market value, resulting in an estimate of $138,000 of original issue discount
and a $138,000 increase in paid-in capital.

Interest on the Notes will accrue at a rate of 10% per annum from January
2, 1997 through April 30, 1997, and at the rate of 12% per annum thereafter
until maturity. Principal and interest on the Note are payable upon the
earliest of: (i) the closing of the Company's initial public offering of
securities, as

F-17
<PAGE>
PIVOT RULES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1995 and 1996

NOTE P--SUBSEQUENT EVENTS (Continued)
described below, (ii) twenty-four months from the date of closing of the
issuance of these securities, (iii) the sale of all or substantially all of
the Company's assets, (iv) the sale or exchange (including by way of merger)
of all or substantially all of the outstanding shares of the Company's common
stock, or (v) Offering Termination, as defined in the Notes.

The Warrants are exercisable at a price of $2.50 per share, commencing on
January 1, 1998 and expiring at the close of business on December 31, 2002.
The Warrants have been valued at $.23 each. The Warrants will be registered
for public resale by the holders thereof in the registration statement to be
filed for the initial public offering. If the initial public offering is
declared effective by the Securities and Exchange Commission, the Warrants
will be converted (on a one-for-one basis) into warrants with the same terms
sold in the initial public offering ("IPO Warrants"). The IPO Warrants will
be exercisable at an anticipated price per share equal to the initial public
offering of the common stock, commencing one year after the effective date
and expiring at the closing of business on the fifth anniversary of the
effective date.

PROPOSED INITIAL PUBLIC OFFERING

On October 3, 1996, the Company entered into an agreement with an
underwriter pursuant to which the Company intends to prepare and file with
the Securities and Exchange Commission a registration statement on Form SB-2
or other appropriate form in order to permit the initial public offering of
1,500,000 units. Each unit consists of one share of the Company's common
stock and one IPO Warrant. The Company anticipates that the registration
statement will be declared effective during the second quarter of 1997;
however, there can be no assurance that a registration statement will be
declared effective.

COMMITMENTS

In February 1997, the Company committed to purchase approximately $75,000
of fixed assets.

F-18
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS, OR AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IS
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary ......................... 3
Risk Factors ............................... 8
Dilution ................................... 14
Use of Proceeds ............................ 15
Capitalization ............................. 17
Dividend Policy ............................ 17
Selected Financial Data .................... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ............................... 19
Business ................................... 22
Management ................................. 27
Principal Shareholders ..................... 31
Certain Transactions ....................... 31
Description of Securities .................. 32
Shares Eligible for Future Sale ............ 35
Underwriting ............................... 37
Change in Accountants ...................... 38
Legal Matters .............................. 39
Experts .................................... 39
Available Information ...................... 39
Index to Financial Statements .............. F-1
</TABLE>

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

[PIVOT RULES LOGO]

1,500,000 UNITS

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

[GKN SECURITIES LOGO]

, 1997

<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Registrant's Certificate of Incorporation and By-Laws provide that the
Registrant shall indemnify its directors, officers, employees and agents to
the fullest extent permitted by New York law.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions and the 3% nonaccountable expense
allowance payable to the Underwriter, payable by the Registrant in connection
with the sale of the Common Stock being registered. Expenses relating to the
offer and sale of the Selling Securityholders' Bridge Warrants (except
commissions or discounts and fees of the Selling Securityholders' own
professionals, if any) will be borne by the Company. All amounts are
estimates except the Commission registration fee and the NASD filing fee.

<TABLE>
<CAPTION>
<S> <C>
Commission registration fee.................... $ 8,006.81
NASD filing fee................................ 3,143.91
Nasdaq and Boston Stock Exchange listing fees 25,000.00
Blue sky fees and expenses .................... 50,000.00
Legal fees and expenses........................ 135,000.00
Accounting fees and expenses................... 60,000.00
Printing and engraving ........................ 75,000.00
Transfer agent fees............................ 2,000.00
Miscellaneous expenses......................... 91,849.28
------------
Total........................................ $450,000.00
============
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

Since January 1, 1994, the Registrant has issued and sold the following
securities (as adjusted to reflect an 8,862.6292-for-1 stock split effected
in January 1997):

On January 2, 1997, the Registrant sold to 45 purchasers an aggregate of
$1,500,000 principal amount of the Registrant's secured subordinated
convertible promissory notes ("Bridge Notes") due upon the earliest of (a)
the closing of the Company's initial public offering, (b) January 2, 1999,
(c) the sale of all or substantially all of the Registrant's assets, (d) the
sale or exchange (including by way of merger) of all or substantially all of
the outstanding shares of the Registrant's Common Stock, (e) the merger or
consolidation of the Registrant, or (f) an "Offering Termination" as defined
in the Bridge Notes ("Maturity Date"). Upon an Offering Termination, all
outstanding principal and interest due under the Bridge Notes is convertible
into Common Stock of the Registrant at the rate of $2.50 per share. The
Bridge Notes bear interest at 10% per annum until April 30, 1997 and 12% per
annum thereafter, payable on the Maturity Date. The Bridge Notes were sold as
Units consisting of (a) a promissory note in the principal amount of $100,000
and (b) warrants to purchase 40,000 shares of the Registrant's Common Stock
at an exercise price of $2.50 per share, exercisable during the time period
commencing on January 1, 1998 and ending on December 31, 2002 ("Bridge
Warrants"). Upon consummation of the Registrant's initial public offering,
the Bridge Warrants will automatically convert into Warrants identical to
those sold in the offering covered by this Registration Statement. The price
per Unit was $100,000 and all fifteen Units that were offered were sold. GKN
Securities Corp. acted as the Registrant's placement agent for purposes of
the offering of the Units and received a commission of $150,000 and a
non-accountable expense allowance of $45,000.

II-1
<PAGE>
The transactions described above were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of such Act
as transactions by an issuer not involving any public offering. In addition,
the recipients of securities in each such transaction represented their
intentions to acquire the securities for investment only and not with a view
to or for sale in connection with any distribution thereof and appropriate
legends were affixed to the share certificates issued in such transactions.
All recipients had adequate access, through their relationships with the
Registrant, to information about the Registrant.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------- ------------------------------------------------------------------------------------
<S> <C>
+1.1 Form of Underwriting Agreement.
+3.1 Restated Certificate of Incorporation of the Company.
+3.2 Amended and Restated By-Laws of the Company.
3.3 Amendment to Amended and Restated By-Laws of the Company.
4.1 Specimen Common Stock certificate.
+4.2 Form of Unit Purchase Option.
+4.3 Form of Subscription Agreement, dated as of January 2, 1997, by and between the
Company and certain purchasers.
+4.4 Form of Bridge Warrant.
4.5 Specimen Redeemable Common Stock Purchase Warrant.
+4.6 Form of Warrant Agreement.
5.1 Opinion of Shereff, Friedman, Hoffman & Goodman, LLP.
+10.1 Loan Agreement by and between the Company and Joseph J. Boughton, Jr., dated
February 6, 1992.
+10.2 Letter Agreement by and between the Company and Joseph J. Boughton, Jr., dated
November 7, 1996.
+10.3 Stock Purchase Agreement, dated as of September 30, 1994, by and between the
Company, Leisure Wear Inc., David M. Goldblatt Inc. Profit Sharing Plan, David
Goldblatt, Anita Goldblatt and Jeffrey Goldstein.
+10.4 Agreement, dated as of September 24, 1996, by and between the Company, Leisure Wear
Inc., David M. Goldblatt Inc. Profit Sharing Plan, David Goldblatt, Anita Goldblatt
and Jeffrey Goldstein.
+10.5 Factoring Agreement by and between the Company and Heller Financial, Inc.
("Heller"), dated April 1992.
+10.6 Letter of Credit Financing Agreement by and between the Company and Heller, dated as
of April 28, 1992.
+10.7 Collateral Installment Note by the Company on behalf of Heller, dated December 8,
1994.
+10.8 Letter Agreement by and between the Company and Heller, dated December 18, 1996.
+10.9 Promissory Note dated September 30, 1996, executed by the Company in favor of Edward
H. Mank ("Mank").

II-2
<PAGE>
EXHIBIT NO. DESCRIPTION
- --------------- ------------------------------------------------------------------------------------
+10.10 Letter Agreement by and between the Company and Mank, dated December 23, 1996.
+10.11 Amended and Restated Employment Agreement by and between the Company and E. Kenneth
Seiff, to be in effect as of the consummation of the Offering.
+10.12 Representation Agreement by and between the Company and International Merchandising
Corporation, dated May 10, 1994.
+10.13 Lease Agreement by and between the Company and 80 West 40th Street Associates, dated
October 1992.
+10.14 Lease Agreement by and between the Company and Sound Floor Coverings, Inc., dated
November 18, 1994.
+10.15 Agreement by and between the Company and Textiles Network, Ltd., dated
August 1996.
+10.16 1997 Stock Option Plan.
+10.17 Agreement by and between the Company and IDL International, LLC, dated May 1996.
+10.18 Addendum to Agreement by and between the Company and IDL International, LLC, dated
July 1996.
+10.19 Employment Agreement by and between the Company and David Lewis, dated as of March
1, 1997.
+10.20 Employment Agreement by and between the Company and William McLoone, dated as of
March 17, 1997.
+16 Letter of Richard A. Eisner & Company, LLP, Independent Auditors.
23.1 Consent of Grant Thornton LLP, Independent Auditors.
23.2 Consent of Richard A. Eisner & Company, LLP, Independent Auditors.
23.3 Consent of Shereff, Friedman, Hoffman & Goodman, LLP (included in Exhibit 5.1).
+24 Power of Attorney (included on the signature page to initial filing).
+27 Financial Data Schedule.
</TABLE>

- ------------
+ Previously filed.

ITEM 28. UNDERTAKINGS

The Registrant hereby undertakes that it will file, during any period in
which it offers or sells securities, a post-effective amendment to this
registration statement to:

(1) Include any prospectus required by Section 10(a)(3) of the Securities
Act;

(2) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and

(3) Include any additional or changed material information on the plan of
distribution.

The Registrant hereby undertakes that, in the event the Company is
notified subsequent to the time this registration statement is declared
effective that the Underwriter or any dealer intends to acquire securities
from the selling securityholders, it will file a post-effective amendment to
this registration

II-3
<PAGE>

statement to reflect an arrangement involving 10% or more of the securities
registered for resale and will file a supplement to the prospectus contained
in this registration statement to reflect an arrangement involving between 5%
and 9% of the securities registered for resale.

The Registrant hereby undertakes to provide to the Underwriter, at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act, and is, therefore,
unenforceable. 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 hereunder, 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 of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

The Registrant hereby undertakes:

(1) that, for the purposes of determining any liability under the
Securities 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 Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.

(2) that, for the purpose of determining any liability under the
Securities 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.

II-4
<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form SB-2 and authorized
this Amendment No. 2 to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, State
of New York, on this 5th day of May, 1997.

PIVOT RULES, INC.
By: /s/ E. Kenneth Seiff
---------------------------
E. Kenneth Seiff
Chief Executive Officer,
President and
Treasurer (Principal
Executive Officer)

In accordance with the requirements of the Securities Act of 1933, as
amended, this Amendment No. 2 to the Registration Statement has been signed
by the following persons in the capacities and on this 5th day of May, 1997.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------ ----------------------------------------------------
<S> <C>
/s/ E. Kenneth Seiff Director, Chief Executive Officer, President and
- ------------------------- Treasurer (Principal Executive Officer)
E. Kenneth Seiff

* Director
- -------------------------
Martin Miller

* Director
- -------------------------
Alan Millstein

* Director
- -------------------------
Fred Rosenfeld

* Director
- -------------------------
Robert Stevens

/s/ Meena N. Bhatia Chief Financial Officer (Principal Financial and
- ------------------------- Accounting Officer)
Meena N. Bhatia

- -------------------------
*By: /s/ E. Kenneth Seiff, as Attorney-in-Fact

</TABLE>

II-5
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- --------------- ----------------------------------------------------------------------------------- ------------
<S> <C> <C>
+1.1 Form of Underwriting Agreement.
+3.1 Restated Certificate of Incorporation of the Company.
+3.2 Amended and Restated By-Laws of the Company.
3.3 Amendment to Amended and Restated By-Laws of the Company.
4.1 Specimen Common Stock certificate.
+4.2 Form of Unit Purchase Option.
+4.3 Form of Subscription Agreement, dated as of January 2, 1997, by and between the
Company and certain purchasers.
+4.4 Form of Bridge Warrant.
4.5 Specimen Redeemable Common Stock Purchase Warrant.
+4.6 Form of Warrant Agreement.
5.1 Opinion of Shereff, Friedman, Hoffman & Goodman, LLP.
+10.1 Loan Agreement by and between the Company and Joseph J. Boughton, Jr., dated
February 6, 1992.
+10.2 Letter Agreement by and between the Company and Joseph J. Boughton, Jr., dated
November 7, 1996.
+10.3 Stock Purchase Agreement, dated as of September 30, 1994, by and between the
Company, Leisure Wear Inc., David M. Goldblatt Inc. Profit Sharing Plan, David
Goldblatt, Anita Goldblatt and Jeffrey Goldstein.
+10.4 Agreement, dated as of September 24, 1996, by and between the Company, Leisure Wear
Inc., David M. Goldblatt Inc. Profit Sharing Plan, David Goldblatt, Anita Goldblatt
and Jeffrey Goldstein.
+10.5 Factoring Agreement by and between the Company and Heller Financial, Inc.
("Heller"), dated April 1992.
+10.6 Letter of Credit Financing Agreement by and between the Company and Heller, dated
as of April 28, 1992.
+10.7 Collateral Installment Note by the Company on behalf of Heller, dated December 8,
1994.
+10.8 Letter Agreement by and between the Company and Heller, dated December 18, 1996.
+10.9 Promissory Note dated September 30, 1996, executed by the Company in favor of
Edward H. Mank ("Mank").
+10.10 Letter Agreement by and between the Company and Mank, dated December 23, 1996.
+10.11 Amended and Restated Employment Agreement by and between the Company and E. Kenneth
Seiff, to be in effect as of the consummation of the Offering.
+10.12 Representation Agreement by and between the Company and International Merchandising
Corporation, dated May 10, 1994.
<PAGE>
EXHIBIT NO. DESCRIPTION PAGE NO.
- --------------- ----------------------------------------------------------------------------------- ------------
+10.13 Lease Agreement by and between the Company and 80 West 40th Street Associates,
dated October 1992.
+10.14 Lease Agreement by and between the Company and Sound Floor Coverings, Inc., dated
November 18, 1994.
+10.15 Agreement by and between the Company and Textiles Network, Ltd., dated
August 1996.
+10.16 1997 Stock Option Plan.
+10.17 Agreement by and between the Company and IDL International, LLC, dated May 1996.
+10.18 Addendum to Agreement by and between the Company and IDL International, LLC, dated
July 1996.
+10.19 Employment Agreement by and between the Company and David Lewis, dated as of March
1, 1997.
+10.20 Employment Agreement by and between the Company and William McLoone, dated as of
March 17, 1997.
+16 Letter of Richard A. Eisner & Company, LLP, Independent Auditors.
23.1 Consent of Grant Thornton LLP, Independent Auditors.
23.2 Consent of Richard A. Eisner & Company, LLP, Independent Auditors.
23.3 Consent of Shereff, Friedman, Hoffman & Goodman, LLP (included in
Exhibit 5.1).
+24 Power of Attorney (included on the signature page to initial filing).
+27 Financial Data Schedule.
</TABLE>
- ------------
* To be filed by amendment.
+ Previously filed.

<PAGE>

UNANIMOUS WRITTEN CONSENT IN LIEU OF MEETING
OF THE SHAREHOLDERS
OF
PIVOT RULES, INC.

The undersigned, being all of the shareholders (the
"Shareholders") of Pivot Rules, Inc., a New York corporation (the "Company"),
hereby consent to the adoption of the following resolutions taking or
authorizing the actions specified therein pursuant to Section 615 of the New
York Business Corporation Law in lieu of holding a meeting of the
Shareholders.

WHEREAS, the underwriter of the Company's proposed initial public
offering of Common Stock (the "Public Offering") has indicated to the Company
that it intends to market such Common Stock in the State of California or to
residents of the State of California;

WHEREAS, the securities authorities of the State of California have
indicated to the Company that, in order to permit the Public Offering to be
made to California residents, they require the Company to elect not to be
governed by the provisions of Section 912 of the New York Business Corporation
Law;

WHEREAS, the Board of Directors of the Company has approved an
amendment to the Company's Amended and Restated Bylaws to make such election
and has recommend that the Shareholders approve such amendment;

NOW, THEREFORE, BE IT RESOLVED, that the Shareholders of the Company
hereby approve the amendment to the Company's Amended and Restated
Bylaws to add a new Article XIII which shall read in its entirety as
follows:

"Article XIII-Certain Business Combinations

The Company, pursuant to Section 912(d) of the New York
Business Corporation Law, elects not to be governed by, or
subject to, the provisions of Section 912 of the New York
Business Corporation Law."

IN WITNESS WHEREOF, the undersigned have executed this
consent this 22nd day of April, 1997.

1
<PAGE>

All Shareholders need not execute the same copy of this consent. This
consent may be adopted in one or more counterparts, and the foregoing
resolutions shall be deemed adopted when each of the Shareholders shall have
executed a copy thereof.

/s/ E. Kenneth Seiff /s/ Joe Littenberg
- ---------------------------- ----------------------------
E. Kenneth Seiff Joe Littenberg

/s/ Joseph Boughton, Jr. /s/ Arnold Krumholz
- ---------------------------- ----------------------------
Joseph Boughton, Jr. Arnold Krumholz

/s/ Jennifer Miller /s/ William Mentlik
- ---------------------------- ----------------------------
Jennifer Miller William Mentlik

/s/ Joelle Weiss /s/ Sid David
- ---------------------------- ----------------------------
Joelle Weiss Sid David

/s/ Stuart Weiss /s/ Bert Rosen
- ---------------------------- ----------------------------
Stuart Weiss Bert Rosen

/s/ William Roberti /s/ Robert Stevens
- ---------------------------- ----------------------------
William Roberti Robert Stevens

/s/ James Barnett /s/ Amy Tucker
- ---------------------------- ----------------------------
James Barnett Amy Tucker

/s/ Mi Si Kwong /s/ Courtney Taylor
- ---------------------------- ----------------------------
Mi Si Kwong Courtney Taylor

/s/ James Hilford /s/ Carole Hoffman
- ---------------------------- ----------------------------
James Hilford Carole Hoffman

/s/ Andrew Hilford /s/ Jon Morris
- ---------------------------- ----------------------------
Andrew Hilford Jon Morris

/s/ Jeffrey Hilford /s/ Judy Seiff
- ---------------------------- ----------------------------
Jeffrey Hilford Judy Seiff

/s/ Andrew Weiss
- ----------------------------
Andrew Weiss

<PAGE>

COMMON STOCK [PIVOT RULES LOGO] COMMON STOCK

NUMBER SHARES
- --------------------- ---------------------
PR
- --------------------- ---------------------
INCORPORATED UNDER THE LAWS OF SEE REVERSE FOR
THE STATE OF NEW YORK CERTAIN DEFINITIONS

CUSIP 725810 10 5

- ---------------------------------------------------------------------------
THIS CERTIFIES THAT

IS THE OWNER OF
- ---------------------------------------------------------------------------

FULLY-PAID AND NON ASSESSABLE VOTING SHARES OF THE COMMON STOCK
$.01 PAR VALUE OF

===============================PIVOT RULES, INC.==============================

TRANSFERABLE ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON OR
BY ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED. THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF THE
CORPORATION'S CERTIFICATE OF INCORPORATION AND BYLAWS, AND ALL AMENDMENTS
THERETO. THIS CERTIFICATE IS NOT VALID UNLESS COUNTERSIGNED BY THE TRANSFER
AGENT AND REGISTERED BY THE REGISTRAR.

IN WITNESS WHEREOF, THE CORPORATION HAS CAUSED THIS CERTIFICATE TO BE
SIGNED BY THE FACSIMILE SIGNATURES OF ITS DULY AUTHORIZED OFFICERS AND TO BE
SEALED WITH THE FACSIMILE SEAL OF THE CORPORATION.

DATED:

/s/ Meena N. Bhatia PIVOT RULES, INC. /s/ E. Kenneth Seiff
ASSISTANT SECRETARY CORPORATE PRESIDENT AND C.E.O.
SEAL
1991
NEW YORK

COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, NEW YORK)
TRANSFER AGENT
AND REGISTRAR
BY

AUTHORIZED SIGNATURE

<PAGE>

PIVOT RULES, INC.

THE CORPORATION SHALL FURNISH, WITHOUT CHARGE, TO EACH SHAREHOLDER WHO
REQUESTS, A FULL STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES, LIMITATIONS
AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OF STOCK OR SERIES THEREOF AND
THE VARIATIONS IN THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH
SERIES, AND THE QUALIFICATIONS, LIMITATIONS, OR RESTRICTIONS, OF SUCH
PREFERENCES OR SUCH RIGHTS AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO FIX
AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES.

THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF
THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OR REGULATIONS:

TEN COM - AS TENANTS IN COMMON UNIF GIFT MIN ACT-_________CUSTODIAN_______
TEN ENT - AS TENANTS BY THE ENTIRETIES (CUST) (MINOR)
JT TEN - AS JOINT TENANTS WITH
RIGHT OF SURVIVORSHIP AND UNDER UNIFORM GIFTS TO MINORS
NOT AS TENANTS IN COMMON
ACT____________________________
(STATE)
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.

FOR VALUE RECEIVED,______________________HEREBY SELL, ASSIGN AND TRANSFER UNTO

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFICATION NUMBER OF ASSIGNEE

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

- -------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

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

- -------------------------------------------------------------------------SHARES
OF THE COMMON STOCK REPRESENTED BY THE WITHIN CERTIFICATE AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT

- -----------------------------------------------------------------------ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN-NAMED CORPORATION, WITH
FULL POWER OF SUBSTITUTION IN THE PREMISES.

DATED,____________________________

X
--------------------------------------------------------------
X
--------------------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.

SIGNATURE GUARANTEED:

IMPORTANT:SIGNATURE(S) MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF A
MEDALLION GUARANTEE PROGRAM.

<PAGE>

WARRANTS WARRANT CERTIFICATE FOR WARRANTS
NUMBER PURCHASE OF COMMON STOCK
- ------------------- VOID AFTER 5:00 P.M. - ON MAY , 2002 -------------------
PRW
- ------------------- [PIVOT -------------------
RULES LOGO]

CUSIP 725810 11 3

THIS CERTIFIES THAT, for value received

, or registered assigns, ("Registered Holder") is the owner of the number of
warrants ("Warrants") specified above. Each Warrant initially entitles the
Registered Holder to purchase, subject to the terms and conditions set forth
in this Certificate and in the Warrant Agreement (as hereinafter defined), one
fully paid and nonassessable share (subject to adjustment as hereinafter
provided) of the Common Stock, par value $.01 per share ("Common Stock") of
Pivot Rules, Inc., a New York corporation ("Company"), at any time commencing
May , 1998, and before the Expiration Date (as hereinafter defined)
upon the presentation and surrender of this Warrant Certificate with the
Subscription Form on the reverse hereof duly executed, at the office of
American Stock Transfer & Trust Company, as warrant agent, or its successor
("Warrant Agent") accompanied by payment of the $ ("Purchase Price") per
Warrant, subject to adjustment as hereinafter provided, in lawful money of the
United States in cash, or by good certified or official bank check payable to
the order of the Company.

This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms set forth in
the Warrant Agreement ("Warrant Agreement") dated as of May , 1997, by
and between the Company and the Warrant Agent, to all the terms and
provisions of which the Registered Holder, by acceptance of this Warrant
Certificate, hereby assents. In the event of certain contingencies provided
for in the Warrant Agreement, the Purchase Price and the number of shares of
Common Stock subject to purchase upon the exercise of each Warrant represented
hereby are subject to modification or adjustment. Reference is made to the
Warrant Agreement for a more complete statement of the rights and limitations
of the rights of the Registered Holder hereof, the rights and duties of the
Warrant Agent and the rights and obligations of the Company thereunder. Copies
of the Warrant Agreement are on file at the corporate trust office of the
Warrant Agent.

The term "Expiration Date" shall mean 5:00 p.m. (New York time) on
May , 2002, or such earlier date as the Warrant shall be redeemed. If
such date shall in the State of New York be a holiday or a day on which the
banks are authorized to close, then the Expiration Date shall mean 5:00 p.m.
(New York time) the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to close.

Each Warrant represented hereby is exercisable at the option of the
Registered Holder. The Company shall not be required upon the exercise of the
Warrants represented hereby to issue any fractions of shares, but shall make an
adjustment therefor in cash on the basis of the market value of any such
fractional interest (computed as provided in the Warrant Agreement). In case
this Warrant is exercised with respect to less than all of such shares, a new
Warrant certificate or certificates will be issued on such surrender for the
number of Warrants represented hereby which were not so exercised. Prior to the
exercise of any Warrant represented hereby, the holder shall not be entitled
to any rights of a stockholder of the Company, including without limitation
the right to vote or to receive dividends or other distributions, and shall
not be entitled to receive any notice of any proceedings of the Company except
as provided in said Warrant Agreement. Prior to the due presentment for
registration of transfer of this Warrant Certificate, the Company and the
Warrant Agent may deem and treat the Registered Holder as the absolute owner
hereof and of each Warrant represented hereby (notwithstanding any notation of
ownership or other writing hereon made by anyone other than a duly authorized
officer of the Company or the Warrant Agent), for all purposes, and neither
the Company nor the Warrant Agent shall be affected by any notice to the
contrary.

This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate, or Warrant Certificates of like tenor representing an
equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender.

Upon due presentment together with any tax or other governmental charge
imposed in connection therewith, for registration of transfer of this Warrant
Certificate at such office, a new Warrant Certificate or Warrant Certificates
representing an equal aggregate number of Warrants will be issued to the
transferee in exchange therefor, subject to the limitations provided in the
Warrant Agreement.

The Company shall not be obligated to deliver any securities pursuant
to the exercise of any Warrant unless a registration statement under the
Securities Act of 1933 with respect to such securities is effective. The
Company has covenanted and agreed that it will file a registration statement
or a post-effective amendment to its existing registration statement and will
use its best efforts to cause the same to become effective and to keep it
current while any of the Warrants are outstanding and exercisable. The Warrants
represented hereby shall not be exercisable by a Registered Holder in any state
where such exercise would be unlawful.

The Warrants may be redeemed at the option of the Company in whole at
any time or in part from time to time, after the Warrants become exercisable
and prior to their expiration, by paying in cash, or certified or bank check,
therefor $.01 per Warrant upon at least thirty (30) days' written notice mailed
to the Registered Holders at any time, if the last sale price of the Common
Stock has been at least 165% of the then effective exercise price of the
Warrants on twenty (20) out of the thirty (30) consecutive trading days ending
on the third day prior to the date on which the notice of redemption is given.
Each Warrant not exercised on or before the date called for in such notice
shall become void, and all rights thereunder shall terminate.

If this Warrant shall be surrendered for exercise within any period
during which the transfer books for Common Stock or other securities
purchasable upon the exercise of this Warrant are closed for any purpose, the
Company shall not be required to make delivery of certificates for the
securities purchasable upon such exercise until the date of the reopening of
said transfer books.

The Company has agreed to pay a fee of 5% of the Purchase Price to
GKN Securities Corp. upon certain conditions as specified in the Warrant
Agreement upon the exercise of any Warrants represented hereby.

This Warrant Certificate and each Warrant represented hereby shall be
construed in accordance with and governed by the laws of the State of New York.

This Warrant Certificate shall not be valid unless countersigned by
Warrant Agent.

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed, manually or in facsimile by two of its officers thereunto
duly authorized and a facsimile of its corporate seal to be imprinted herein.

Dated: PIVOT RULES, INC. PIVOT RULES, INC.
CORPORATE
COUNTERSIGNED: SEAL BY: /s/ E. Kenneth Seiff
AMERICAN STOCK TRANSFER & TRUST 1991 PRESIDENT
COMPANY NEW YORK
(NEW YORK, NY) WARRANT AGENT

BY: ATTEST:
BY:

/s/ Meena N. Bhatia
AUTHORIZED OFFICER ASSISTANT SECRETARY

<PAGE>

PIVOT RULES, INC.

PURCHASE FORM
TO BE EXECUTED
UPON EXERCISE OF WARRANT CERTIFICATE

TO: American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10003

The undersigned hereby exercises, according to the terms and conditions
thereof, the right to purchase____________ Shares of Common Stock, evidenced by
the within Warrant Certificate, and herewith makes a payment of the purchase
price in full.

NAME:____________________________ _____________________________________
PAYMENT ENCLOSED
ADDRESS:_________________________ _____________________________________
SOCIAL SECURITY NO. of Warrant Holder

________________________________________________________________________________

The undersigned represents that the excercise of the within Warrant was
solicited by GKN Securities Corp. If not solicited by GKN Securities Corp.,
please write "unsolicited" in the space below. Unless otherwise indicated, it
will be assumed that the exercise was solicited by GKN Securities Corp.

____________________________________________________________________________
(Write "Unsolicited" on above line if not solicited by GKN Securities Corp.)

DATED:__________________________ SIGNATURE:______________________________

TRANSFER FORM
For value received______________________hereby sells, assigns and transfers
unto

_______________________________________________________________________________

(_____________________) Warrants to purchase Shares of Common Stock represented
by the within Warrant Certificate and does hereby irrevocably constitute and
appoint_________________________________________________________________________

________________________________________________________________________Attorney
to transfer such Warrants on the books of the within named Company with full
power of substitution in the premises.

DATED:______________________________

Notice:______________________________________________
The signature to this assignment must
correspond with the name as written upon the
face of this Certificate in every particular.

_________________________________________
Social Security Number of Assigneee
or other identifying number

Signature(s) Guaranteed:

____________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPOVED SIGNATURE GUARANTEE MEDALLION PROGRAM). PURSUANT
TO S.E.C. RULE 17Ad-15.

<PAGE>

Exhibit 5.1

[Letterhead of Shereff, Friedman, Hoffman & Goodman, LLP]

May 5, 1997

Pivot Rules, Inc.
80 West 40th Street
New York, NY 10018

Re: Registration Statement on Form SB-2
SEC File No. 333-22895

Gentlemen:

On March 6, 1997, Pivot Rules, Inc. (the "Company") filed a Registration
Statement on Form SB-2 with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (File No.
333-22895), as amended by Amendment No. 1 filed with the Commission on April
17, 1997. This opinion is being filed as an exhibit to Amendment No. 2 to the
Registration Statement. The Registration Statement, as amended by Amendments
Numbered 1 and 2, is referred to herein as the "Registration Statement." The
Registration Statement relates to the registration by the Company of the offer
and sale of (i) 1,725,000 units (including 225,000 units issuable upon exercise
of the Underwriter's over-allotment option) (the "Units"), the Units consisting
of an aggregate of 1,725,000 shares of common stock, par value $.01 per share
(the "Common Stock"), of the Company, and 1,725,000 redeemable common stock
purchase warrants ("Warrants"), each Warrant entitling the holder to purchase
one share of Common Stock, (ii) an option ("Underwriter's Unit Purchase
Option") to purchase 150,000 Units exercisable for four years commencing one
year from the effective date of the Registration Statement and (iii) 600,000
warrants ("Bridge Warrants"), each Bridge Warrant entitling the holder to
purchase one share of Common Stock to be sold by certain selling
securityholders. All capitalized terms used but not defined herein shall have
the same meanings ascribed to such terms in the Registration Statement.

<PAGE>

Pivot Rules, Inc.
May 5, 1997
Page 2

We have acted as special corporate and securities counsel to the Company
in connection with the proposed offer and sale of the securities referred to
above as contemplated by the Registration Statement. In such capacity, we have
participated in various corporate and other proceedings relating to the Company
and to the transactions contemplated by the Registration Statement. We have
also examined copies of the Certificate of Incorporation and By-Laws of the
Company, the minutes of meetings or written consents of the Company's Board of
Directors and shareholders and such other documents and instruments relating to
the Company and the registration of the securities referred to above as we have
deemed necessary under the circumstances. Insofar as this opinion relates to
securities to be issued in the future, we have assumed that all applicable
laws, rules and regulations in effect at the time of such issuance are the same
as such laws, rules and regulations in effect as of the date hereof.

In addition, we have assumed that the Restated Certificate (which amends
and restates the Certificate of Incorporation referenced above), increasing the
Company's authorized capital stock from 10,000,000 shares of capital stock to
17,000,000 shares of capital stock, consisting of 15,000,000 shares of Common
Stock and 2,000,000 shares of preferred stock, par value $.01 per share, which
has been filed as an exhibit to the Registration Statement, will be filed with
the Secretary of State of the State of New York immediately prior to the
effective date of the Offering and our opinion herein gives effect to such
filing.

We note that we are members of the Bar of the State of New York and do not
represent ourselves to be expert in the laws of any other state or
jurisdiction.

Based upon and subject to the foregoing, it is our opinion that:

1. The Company has been duly incorporated under the laws of the State of
New York and has authorized capital stock consisting of 15,000,000
shares of Common Stock and 2,000,000 shares of preferred stock, $.01
par value.

2. The (i) 1,725,000 Units, (ii) 1,725,000 shares of Common Stock and
1,725,000 Warrants to purchase 1,725,000 shares of Common Stock,
which comprise the Units, (iii) 1,725,000 shares of Common Stock
issuable upon the exercise of 1,725,000 Warrants, (iv) Underwriter's
Unit Purchase Option to purchase 150,000 Units, (v) 150,000 Units
issuable upon exercise of the Underwriter's Unit Purchase Option,
(vi) 150,000 shares of Common Stock included in the Underwriter's
Units and the 150,000 Warrants to purchase 150,000 shares of Common
Stock included in the Underwriter's Units, and (vii) 150,000 shares
of Common Stock issuable upon the exercise of 150,000 Warrants
included in the

<PAGE>

Pivot Rules, Inc.
May 5, 1997
Page 3

Underwriter's Units, to be sold by the Company have been duly
authorized and, subject to the effectiveness of the Registration
Statement and compliance with applicable state securities laws and
when (a) the Units are issued and paid for in accordance with the
terms of the Underwriting Agreement, (b) the Warrants are exercised
and the shares of Common Stock underlying the Warrants are issued and
paid for in accordance with the terms of the Warrant Agreement, (c)
the Underwriter's Unit Purchase Option is exercised and the Units
underlying the Underwriter's Unit Purchase Option are issued and paid
for in accordance with the terms of the Purchase Option and (d) the
Warrants included in the Underwriter's Units are exercised and the
shares underlying such Warrants are issued and paid for in accordance
with the terms of the Purchase Option, all as more fully described in
the Registration Statement, such securities will be validly issued,
fully paid and non-assessable.

3. The 600,000 Bridge Warrants to purchase 600,000 shares of Common
Stock are, and the shares of Common Stock underlying the Bridge
Warrants when issued and paid for in accordance with the terms of the
Bridge Warrants will be, validly issued, fully paid and
non-assessable.

We hereby consent to the filing of this opinion with the Commission as a
part of the Registration Statement, and as part of any application for
registration of the Company, the Units, the Common Stock or the Warrants or the
Underwriter's Units under the securities laws of any State in connection with
the offer and sale of the securities by the Company as contemplated by the
Registration Statement, and to the reference to this firm appearing under the
heading "Legal Matters" in the prospectus which is contained in the
Registration Statement.

<PAGE>

Pivot Rules, Inc.
May 5, 1997
Page 4

This opinion is rendered to you as of the date hereof, is limited to the
laws in effect as of the date hereof, and we undertake no obligation to advise
you of any change in any matters stated herein, whether legal or factual. This
opinion is furnished to you in connection with the filing of the Registration
Statement, and is not to be used, circulated, quoted or otherwise relied upon
for any other purpose, except as expressly provided in the preceding paragraph.

Very truly yours,

/s/ Shereff, Friedman, Hoffman & Goodman, LLP

SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN, LLP

RAG:DSR:DJP

<PAGE>

Exhibit No. 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated February 18, 1997 accompanying the financial
statements of Pivot Rules, Inc. contained in Amendment No. 2 to the
Registration Statement and Prospectus (Registration No. 333-22895). We consent
to the use of the aforementioned report in the Registration Statement and
Prospectus, and to the use of our name as it appears under the captions
"Summary Financial Information," "Selected Financial Data," "Change in
Accountants," and "Experts."

/s/ Grant Thornton LLP

GRANT THORNTON LLP

New York, New York
May 1, 1997

<PAGE>

Exhibit 23.2

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form
SB-2 of our report dated October 21, 1996 relating to the financial statements
of Pivot Rules, Inc., and to the reference to our Firm under the captions
"Summary Financial Information", "Selected Financial Data", "Change in
Accountants" and "Experts" in the Prospectus.

/s/ Richard A. Eisner & Company, LLP

New York, New York
April 30, 1997