PIVOT RULES INC, 424A, 1997-03-14

PIVOT RULES INC
424A, 1997-03-14
APPAREL, PIECE GOODS & NOTIONS

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<PAGE>

Filed Pursuant to Rule 424(a)
Registration File No.: 333-22895

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 MARCH 14, 1997

PROSPECTUS

[PIVOT RULES LOGO] [THREE GOLFER LOGO]

1,500,000 SHARES OF COMMON STOCK AND
1,500,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS

All of the 1,500,000 shares of common stock ("Common Stock") and 1,500,000
Redeemable Common Stock Purchase Warrants ("Warrants") offered hereby
(collectively, "Securities") are being sold by Pivot Rules, Inc. ("Company").
Each Warrant entitles the holder to purchase one share of Common Stock for
$ [100% of the per-share 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.
See "Description of Securities."

Prior to this offering ("Offering"), there has been no public market for the
Securities 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 and $6 per share of Common Stock and $.10 per Warrant. See
"Underwriting" for information relating to the factors considered in
determining the initial public offering price of the Securities and the
exercise price of the Warrants. The Company has applied for quotation of the
Common Stock and Warrants on the Nasdaq Small Cap Market under the symbols
"PVTR" and "PVTRW," respectively, and for listing of the Common Stock and
Warrants on the Boston Stock Exchange under the trading symbols "PVR" and
"PVRW," respectively.

This prospectus 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 without the prior consent of the
Underwriter.

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A HIGH
DEGREE OF RISK AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS" AT PAGE 7 AND
"DILUTION" AT PAGE 13.

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 Share ...... $ $ $
- --------------- --------------- ----------------- ---------------
Per Warrant ... $ $ $
- --------------- --------------- ----------------- ---------------
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 to purchase 150,000 shares
of Common Stock and/or 150,000 Warrants ("Underwriter's Purchase
Option") 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 shares of Common Stock and/or 225,000 Warrants 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 Securities 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 Securities will be made
against payment therefor at the offices of the Underwriter in New York City
on or about , 1997.

[GKN SECURITIES LOGO]
, 1997

<PAGE>

[Graphic omitted. Graphic depicts man on motorcycle wearing golf shirt with the
Company's logo swinging a golf club at a golf ball. Pictured in background are
two men on horses each swinging polo mallets. Text above graphic states "THE
RULES HAVE CHANGED."(Registered Trademark)]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE 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
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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.

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<PAGE>
THE OFFERING

Securities Offered ............ 1,500,000 shares of Common Stock and
1,500,000 Warrants. Each Warrant entitles
the holder to purchase one share of Common
Stock for $ [100% of the per-share
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. 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 ............... Common Stock: PVTR
Warrants: PVTRW

Proposed Boston Stock
Exchange Symbols ............. Common Stock: PVR
Warrants: PVRW

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."

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."

5
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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 $5.50 per share of Common Stock and $.10 per Warrant, 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 Underwriter's 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 75,000 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."

6
<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 and some are
currently operating under the protection of the federal bankruptcy laws. 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

7
<PAGE>
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 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

8
<PAGE>
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. See "Business--Sourcing."

Responsibility for Markdowns. 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 have been adequate to date, there can be no assurance that markdown
expenses in the future will not exceed historical levels or that the actual
markdown expenses will not exceed the amount of reserves. In the event that
the amount of reserves proves to be materially inadequate, 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. 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 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

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<PAGE>
Note"). E. Kenneth Seiff, the Company's Chief Executive Officer, has 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 $5.50 per share of Common Stock and $.10 per Warrant,
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 $5.50 per share
of Common Stock and $.10 per Warrant. 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 Common Stock or
Warrants and there can be no assurance that

10
<PAGE>
a public market for the Common Stock or Warrants will develop or be sustained
after the Offering. Although the Company has applied to have the Common Stock
and Warrants approved 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
Common Stock and Warrants no longer being eligible for quotation on Nasdaq
and trading, if any, of the 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 Common Stock was to become delisted from trading on Nasdaq and the
trading price of the Common Stock was less than $5.00 per share, trading in
the Common Stock 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 Common Stock and Warrants,
which could severely limit the liquidity of the Common Stock and Warrants and
the ability of purchasers in this Offering to sell the Common Stock and
Warrants in the secondary market. See "Underwriting."

Possible Volatility of Stock Price. The public offering prices of the
Securities 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
Common Stock or the Warrants may experience substantial difficulty in selling
their securities. The trading price of the Company's Common Stock and
Warrants is 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 Common Stock or the 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 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

11
<PAGE>
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 75,000 shares of Common Stock issued under
the Plan. In addition, in connection with this Offering, the Company will issue
the Warrants and the Underwriter's 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 "Selling Securityholders," "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. The Company is also 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."

12
<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 Securities offered hereby at an
assumed initial offering price of $5.50 per share of Common Stock and $.10
per Warrant (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.

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- --------- ------------- --------- ----------
<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 Underwriter's Purchase Option or the
Warrants included in the Underwriter's 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.

13
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the Securities 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 $5.50 per share of Common Stock and $.10 per
Warrant), 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 this Offering in the Securities to be sold in this Offering.

14
<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. 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.

15
<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 Securities 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.

16
<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>

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

17
<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. During 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. Since the beginning of 1996, the Company has reduced the
sourcing costs of its largest volume product style by approximately 20%.

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 increased unit volume of its men's
sportswear collection, which more than offset the decrease in the Company's
prices. 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.

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

18
<PAGE>
1995 to 23.6% in 1996, primarily due to the decrease in average sales prices,
as well as the close-out of women's sportswear inventory and commissions
incurred pursuant to a contract with a purchasing agent.

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.

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
borrow from Heller, at Heller's discretion, 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.

19
<PAGE>
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. All amounts due
under the Bridge Notes will be paid out of the proceeds of this Offering.
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 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.

20
<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:

21
<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

22
<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 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

23
<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."

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, 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

24
<PAGE>
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.

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.

25
<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
David Lewis ....... 43 Vice President of Operations
Meena N. Bhatia .. 28 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.

DAVID LEWIS has served as Vice President of Operations of the Company
since March 1997. From April 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.

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.

26
<PAGE>

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. 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

27
<PAGE>
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 David
Lewis, President and principal owner of IDL. 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 substantially all of
his business time to the affairs of the Company. The employment agreement
also provides that Mr. Lewis is entitled to an annual bonus and certain
minimum annual raises to be determined by the Board of Directors in its
discretion and an annual option grant contingent on achieving certain
specified performance objectives. 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. In the event the
employment agreement is terminated by the Company without cause or through a
Constructive Termination (as defined therein) the restriction on competition
will not extend beyond the term of the agreement. Under the terms of Mr.
Lewis' employment agreement, the Company maintains a life insurance policy on
the life of Mr. Lewis 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 75,000 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 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.

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.

28
<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, an employee of 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

29
<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 Securities to be sold in this Offering.

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.

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, 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.

30
<PAGE>

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 Underwriter's 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-share 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 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 Securities 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.

31
<PAGE>

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.

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

32
<PAGE>
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. For purposes of determining when
outstanding shares of Common Stock may first be sold, it is assumed that the
amendment of Rule 144 adopted by the Commission on February 20, 1997 and
effective April 29, 1997 is in effect.

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 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.

33
<PAGE>

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.

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.

34
<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 shares of Common Stock and 1,500,000 Warrants. 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 Securities
offered by this Prospectus (other than the Securities covered by the
over-allotment option described below), if any are purchased.

The Underwriter has advised the Company that it proposes to offer the
Securities 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 share of Common Stock and $ per
Warrant. The Underwriter may allow, and such dealers may reallow, a
concession not in excess of $ per share of Common Stock and $ per
Warrant 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 Securities offered by this Prospectus (including the sale of any
Securities 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 Securities 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
shares of Common Stock and/or an aggregate of 225,000 additional Warrants 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, while soliciting the exercise of the Warrants, the
Underwriter will be prohibited from engaging in any market activities or
solicited brokerage activities with regard to the Company's securities unless
the Underwriter has waived its right to receive a fee for the exercise of the
Warrants.

In connection with this Offering, the Company has agreed to sell to the
Underwriter, for an aggregate purchase price of $100, the Underwriter's
Purchase Option, consisting of the right to purchase up to an aggregate of
150,000 shares of Common Stock and/or an aggregate of 150,000 Warrants. The
Underwriter's Purchase Option is exercisable initially at a price equal to
% of the initial public offering price of such Securities for a period of
four years commencing one year from the date hereof. The Underwriter's
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

35
<PAGE>
dealers and their officers or partners. The Underwriter's Purchase Option
grants to the holders thereof certain "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
Underwriter's 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 Securities 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 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%).

SELLING SECURITYHOLDERS

The Company has agreed to register the Warrants converted from the Bridge
Warrants for resale under the Securities Act concurrently with this Offering
and to pay certain expenses in connection therewith. An aggregate of 600,000
Warrants may be offered and sold pursuant to this Prospectus by the holders
thereof. 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.

The investors in the Bridge Financing made loans to the Company
aggregating $1.5 million and received the Bridge Notes and an aggregate of
600,000 Bridge Warrants. Upon the consummation of this Offering, each of the
Bridge Warrants will be automatically converted into a like number of
Warrants.

The Warrants registered for sale on behalf of the Selling Securityholders
under the Registration Statement of which this Prospectus forms a part may be
offered and sold from time to time in transactions (which may include block
transactions) on the Nasdaq SmallCap Market in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, or at negotiated prices. The
Selling Securityholders have advised the Company that they have not entered
into any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities. The Selling
Securityholders may effect such transactions by selling their securities
directly to purchasers or to or through broker-dealers (including

36
<PAGE>
GKN Securities Corp.), which may act as agents or principals. Such
broker-dealers may receive compensation in the form of discounts,
concessions, or commissions from the Selling Securityholders and/or the
purchasers of the securities for whom such broker-dealers may act as agents
or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
Selling Securityholders and any broker-dealers that act in connection with
the sale of the securities might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act. The Selling Securityholders
may agree to indemnify any agent, dealer or broker-dealer that participates
in transactions involving sales of the securities against certain
liabilities, including liabilities arising under the Securities Act.
Notwithstanding that such shares are being registered, the Selling
Securityholders have agreed that none of such securities may be sold prior to
one year following the consummation of the Offering without the prior written
consent of the Underwriter.

The following table sets forth the name of each Selling Securityholder and
the number of Warrants beneficially owned prior to sale. Except as indicated,
none of the Selling Securityholders has ever held any position or office with
the Company or had any other material relationship with the Company.

<TABLE>
<CAPTION>
NUMBER
NAME OF WARRANTS
- --------------------------------------- -------------
<S> <C>
ALSA, Inc. ............................. 30,000
Wissam Amoudi .......................... 4,000
Jan Arnett ............................. 10,000
Norma Barasch .......................... 5,000
Stanley H. Blum ........................ 15,000
Herbert Chestler ....................... 10,000
Michael Cohen .......................... 5,000
Jean Etra .............................. 10,000
Richard Etra and Kenneth Etra .......... 30,000
Steven Etra ............................ 20,000
John Franco and Donna Franco ........... 10,000
Arnold Glatter ......................... 5,000
Abraham Goldstein ...................... 8,000
Robert D. Goldstein .................... 8,000
Alan Henick ............................ 5,000
Huberfeld/Bodner Family Foundation .... 20,000
Peter K. Hunt .......................... 15,000
Irwin Schlass Enterprises, Inc ......... 8,000
Frank Joy and Charlotte Joy ............ 10,000
Daniel A. Kaplan ....................... 12,000
Lawrence A. Kestin ..................... 10,000
Konigsberg Wolf & Co., P.C. 401(k) Plan 8,000
R. Bruce LeBlanc ....................... 10,000
Stephen E. Marks ....................... 8,000
Joseph Melnick and Georgia Melnick .... 10,000
Joseph J. Messina ...................... 8,000
Irwin M. Miller ........................ 10,000
Frank Mills ............................ 10,000
Northstar Investment Group, Ltd. ...... 70,000
Salvatore Palacino and Karen Palacino . 10,000
A.C. Providenti ........................ 5,000
R.J.B. Partners L.P. ................... 10,000
Steven Rosen ........................... 5,000
Claudia C. Rouhana ..................... 8,000
William J. Rouhana, Jr. ................ 8,000
</TABLE>

<PAGE>

NUMBER
NAME OF WARRANTS
- --------------------------------------- -------------
<S> <C>

Jack P. Schleifer ...................... 10,000
Mark J. Shankman ....................... 15,000
Carl E. Siegel ......................... 10,000
Howard M. Siegel ....................... 10,000
Jonathan H. Simon ...................... 20,000
Stuart Kahn & Co. ...................... 5,000
David Thalheim ......................... 25,000
Greg Trubowitsch ....................... 5,000
Charles Warshaw ........................ 10,000
Woodland Partners ...................... 60,000
</TABLE>

CHANGES 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.

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. 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. The Company has
agreed to indemnify Richard A. Eisner & Company, LLP against certain
liabilities, including liabilities arising under the Securities Act, provided
that such indemnification shall not be effective with regard to any liability
for professional malpractice or payment of settlement or judgment costs.

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.

<PAGE>

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement under
the Securities Act with respect to the Securities 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-17
</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. 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.

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

NOTE A--SUMMARY OF ACCOUNTING POLICIES (Continued)

8. PREPAID EXPENSES

Sample costs for upcoming seasons are deferred and charged to expenses in
the season to which they pertain.

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>

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

NOTE B--NOTES PAYABLE (Continued)

(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). 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:

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 O).

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.

F-10
<PAGE>

PIVOT RULES, INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

December 31, 1995 and 1996

NOTE D--FACTORING AGREEMENTS (Continued)

The amounts due to the factor at the balance sheet date represent the
difference between charges and advances from the factor and the accounts
receivable assigned to the factor.

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>

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>

F-11
<PAGE>

PIVOT RULES, INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

December 31, 1995 and 1996

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>

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.

NOTE I--COMMITMENTS AND CONTINGENCIES

1. LETTERS OF CREDIT

The Company has outstanding letters of credit of approximately $952,000 as
of December 31, 1996, of which $574,000 was reflected in the year-end balance
sheet as due to factor.

F-12
<PAGE>
PIVOT RULES, INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

December 31, 1995 and 1996

NOTE I--COMMITMENTS AND CONTINGENCIES (Continued)

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.

Future minimum annual rentals are as follows:

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 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.

F-13
<PAGE>
PIVOT RULES, INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

December 31, 1995 and 1996

NOTE I--COMMITMENTS AND CONTINGENCIES (Continued)

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.
Revenues from licensing arrangements approximated $58,000 in 1995 and $90,000
in 1996.

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

F-14
<PAGE>
PIVOT RULES, INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

December 31, 1995 and 1996

NOTE J--SHAREHOLDERS' EQUITY (Continued)

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
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--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 most 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. 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-15
<PAGE>
PIVOT RULES, INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

December 31, 1995 and 1996

NOTE L--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 M--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 N--LEGAL PROCEEDINGS

NOTE O--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-16
<PAGE>

PIVOT RULES, INC.

NOTES TO FINANCIAL STATEMENTS -- (Continued)

December 31, 1995 and 1996

NOTE O--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 shares of the Company's common stock and 1,500,000 IPO Warrants,
each warrant to purchase one share of the Company's common stock. 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-17
<PAGE>

[Graphic omitted]

[Graphic depicts golfer wearing golf lifestyle apparel hitting a golf ball at
an archery target, while archers on either side of golfer take aim at targets
on either side of golfer's target. Text above graphic states
"THE RULES HAVE CHANGED." (Registered Trademark")]

<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 ............................... 7
Dilution ................................... 13
Use of Proceeds ............................ 14
Capitalization ............................. 16
Dividend Policy ............................ 16
Selected Financial Data .................... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ............................... 18
Business ................................... 21
Management ................................. 26
Principal Shareholders ..................... 29
Certain Transactions ....................... 29
Description of Securities .................. 30
Shares Eligible for Future Sale ............ 33
Underwriting ............................... 35
Selling Securityholders .................... 36
Changes in Accountants ..................... 38
Legal Matters .............................. 38
Experts .................................... 38
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 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 SHARES OF COMMON STOCK
AND
1,500,000 REDEEMABLE COMMON
STOCK PURCHASE WARRANTS

PROSPECTUS

[GKN SECURITIES LOGO]

, 1997