COYOTE SPORTS INC, 424B1, 1997-09-22

COYOTE SPORTS INC
424B1, 1997-09-22
SPORTING & ATHLETIC GOODS, NEC

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<PAGE>
Filed Pursuant to
Rule 424(b)(1)
Reg. No. 333-29077

COYOTE SPORTS, INC.

1,050,000 SHARES OF COMMON STOCK

[LOGOS OF REYNOLDS, APOLLO, AND ICE.USA APPEAR HERE]

Coyote Sports, Inc. (the "Company" or "Coyote") is offering 1,050,000 shares
of Common Stock of the Company (the "Shares"). In addition, an aggregate of
75,000 shares of Common Stock owned by certain shareholders of the Company (the
"Bridge Lenders") and Warrants to purchase an additional 125,000 shares are
being registered simultaneously with this offering for resale by such
shareholders from time to time. See "Additional Registered Securities."

Prior to the offering of the Company's securities as described herein, there
has been no public market for the Shares and there can be no assurance that any
such market will develop. The initial offering price has been determined by
negotiation between the Company and Cohig & Associates, Inc., the
Representative of the Underwriters (the "Representative"). For a discussion of
the factors considered in determining the initial public offering price, see
"Underwriting." The Shares have been approved for quotation on The Nasdaq
SmallCap Market.
-----------

THIS OFFERING INVOLVES SPECULATIVE SECURITIES WITH A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CAREFULLY CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES.
-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE 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 TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNTS(1) COMPANY(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................................. $ 5.00 $ 0.50 $ 4.50
- --------------------------------------------------------------------------------
Total(3)................................... $5,250,000 $525,000 $4,725,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(1) The Company has agreed to pay the Representative a non-accountable expense
allowance equal to 3% of the gross offering proceeds, and to issue to it,
the Representative's Warrants (as defined herein). The Company has also
agreed to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting estimated offering expenses payable by the Company of
$870,000, including the non-accountable expense allowance. The Bridge
Lenders are not responsible for any of these expenses.
(3) The Company has granted the Representative an option, exercisable within 45
days from the date of this Prospectus, to purchase up to an additional
157,500 Shares on the same terms as set forth above solely to cover
overallotment, if any. If the overallotment option is exercised in full,
the total Price to Public, Underwriting Discounts and Proceeds to Company
will be $6,037,500, $603,750 and $5,433,750 respectively. See
"Underwriting."
-----------

The Shares are being offered severally, and not jointly, by the Underwriters,
when, as and if delivered to and accepted by the Underwriters, and subject to
their right to reject orders in whole or in part and certain other conditions.
It is expected that delivery of the certificates representing the Shares will
be made on or about September 23, 1997.

COHIG & ASSOCIATES, INC.

THE DATE OF THIS PROSPECTUS IS SEPTEMBER 18, 1997.
<PAGE>

COYOTE SPORTS, INC. DESIGNS, ENGINEERS, MANUFACTURES, MARKETS AND DISTRIBUTES
BRAND NAME SPORTS EQUIPMENT AND RECREATIONAL PRODUCTS WORLDWIDE.

[PHOTO OF GOLF SHAFTS APPEARS HERE]

[REYNOLDS LOGO APPEARS HERE]

[PHOTO OF SKI POLES APPEARS HERE]

[APOLLO LOGO APPEARS HERE]

[PHOTO OF BICYCLE FRAMES APPEARS HERE]

[ICE.USA LOGO APPEARS HERE]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ SMALLCAP MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

The Company intends to furnish its security holders with annual reports
containing audited financial statements and quarterly reports for the first
three quarters of each fiscal year containing unaudited interim financial
information.

On the effective date of the Registration Statement of which this Prospectus
forms a part, the Company became a "reporting company" under the Exchange Act.
The Company has registered the Common Stock under the Exchange Act as of the
effective date of the Registration Statement. The Company is a "small business
issuer" as defined under Regulation S-B adopted under the Securities Act of
1933, as amended (the "Securities Act"), and will file reports with the
Commission pursuant to the Exchange Act on forms applicable to small business
issuers.
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and the notes thereto appearing elsewhere
in this Prospectus. Coyote conducts all of its operations through its
subsidiaries, Apollo Sports Technologies, Limited ("Apollo"), Apollo Golf, Inc.
("Apollo U.S."), Reynolds Cycle Technology, Limited ("Reynolds"), ICE*USA LLC
("ICE"), Cape Composites, Inc., a wholly-owned subsidiary of Sierra Materials,
LLC (which collectively shall be referred to herein as "Sierra Materials") and
Pentiumatics Sdn., Bhd. ("Pentiumatics"). As used in this Prospectus, unless
the context otherwise requires, the term Company includes Coyote and all of its
subsidiaries. Unless otherwise indicated, all share and per share data and
information contained in this Prospectus relating to the number of shares of
Common Stock outstanding (i) reflects a 3,450 to one forward stock split
effected June 11, 1997; (ii) reflects the return to the Company for
cancellation of 850,000 shares of Common Stock by the Company's two existing
shareholders on July 23, 1997 ("Share Return"); (iii) assumes the issuance upon
consummation of this offering of an aggregate of 75,000 shares of Common Stock
and warrants to purchase 125,000 shares of Common Stock to the Bridge Lenders
in connection with a private placement financing in April 1997 (see "Private
Placement"); (iv) assumes no exercise of the overallotment option (up to
157,500 Shares); (v) does not include up to 500,000 shares of Common Stock
reserved for issuance upon exercise of options available for grant under the
Company's 1997 Stock Option Plan (the "Option Plan") and (vi) does not include
up to 105,000 Shares reserved for issuance to the Representative pursuant to
this offering (the "Representative's Warrants"). See "Description of
Securities" and "Underwriting."

THE COMPANY

Coyote Sports, Inc. designs, engineers, manufactures, markets and distributes
brand name sports equipment and recreational products worldwide. The Company's
products include steel and graphite golf shafts, premium grade cycle tubing,
composite ski poles and javelins. The Company also produces graphite and other
advanced composite materials for use in the production of golf shafts, fishing
poles, ski poles, hockey sticks and other third party manufactured products.
The Company will be producing aluminum extruded alloys for such products as
cycle tubing, ski poles and tennis rackets. The Company manufactures its Apollo
golf shafts in its manufacturing facility in Oldbury, England, its Reynolds
cycle tubing in Tyseley, England, and graphite and other advanced composite
materials in California and will be manufacturing extruded aluminum alloys in
Southeast Asia for such products as cycle tubing, ski poles and tennis rackets.

During the year ended December 31, 1996, the greatest portion of the
Company's sales were derived from its Apollo steel golf shafts and Reynolds
cycle tubing. Apollo is the only manufacturer of seamless steel golf shafts in
the world. Management believes that the physical integrity of the seamless golf
shaft is superior to the welded golf shafts made by its competitors. Seamless
tubes can be manufactured using a greater variety of high carbon alloys which
the Company believes increase golf shaft consistency and permits greater design
versatility. Apollo has a strong OEM customer base, including in alphabetical
order, such brand names as Callaway Golf, Inc., Cobra Golf, Inc., Focus Golf,
Harris International, Karsten, Knight Golf, MacGregor Golf, Mizuno Golf
Company, Northwestern Golf, and Wilson Sporting Goods Company. Reynolds ranks
as one of the leading suppliers of premium brand cycle tubing serving such
customers as GT Bicycle, Inc., Kona Bicycles USA, Raleigh Bicycle Company, Ltd.
and Trek Bicycle Corp. Twenty-seven of the last 39 Tour de France races were
won with bicycles made from Reynolds tubing.

3
<PAGE>

product lines, and strong engineering and design capabilities. Management
intends to strengthen and foster the growth of these companies through the
introduction of additional manufacturing capabilities and techniques, expanded
sales and marketing efforts and vertical integration of company-wide
manufacturing and distribution capabilities. Since September 1996, Coyote has
acquired sole ownership of three operating companies and has a controlling
interest in three other operating companies in furtherance of this strategy.

The Company's strategies to achieve its objective and facilitate its growth
are to: (i) continue to evaluate and acquire businesses compatible with the
Company's objective; (ii) expand further into the graphite golf shaft market;
(iii) increase the production of steel golf shafts to the optimal manufacturing
plant production output so as to realize cost efficiencies; (iv) shift the
manufacturing mix to products with higher value to increase per unit
profitability; (v) introduce aluminum alloy cycle tubing and other products
through a new manufacturing facility in Southeast Asia; (vi) increase the
capacity of the Company's graphite and other advanced composite materials
manufacturing facility; and (vii) expand product offerings into new and
existing markets.

The Company was incorporated in Nevada on October 24, 1994. The Company's
principal offices are located at 2291 Arapahoe Avenue, Boulder, Colorado 80302,
and its telephone number is (303) 417-0942.

THE OFFERING

Securities offered...... 1,050,000 Shares.

Common Stock
outstanding before
offering............... 2,600,000 Shares

Common Stock
outstanding after
offering............... 3,725,000 Shares(1)

Use of Proceeds......... Repayment of loan, capital equipment for Sierra
Materials, repayment of liabilities for Sierra
Materials, repayment of stockholder notes, and
working capital. See "Use of Proceeds."

NASDAQ SmallCap symbol
for Common Stock....... "COYT"
- --------
(1) Includes 75,000 shares to be issued to Bridge Lenders on the effective date
of this offering. See "Private Placement."

RISK FACTORS

This offering involves a high degree of risk and immediate substantial
dilution. Prospective investors should carefully consider the matters set forth
under "Risk Factors" and "Dilution."

4
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

The following historical summary consolidated statement of operations data
for each of the years in the two-year period ended December 31, 1996 and the
historical summary balance sheet data as of December 31, 1996 are taken or
derived from the historical consolidated financial statements of the Company
included elsewhere herein, which were audited by KPMG Peat Marwick LLP as set
forth in their report thereon also included herein. The historical summary
consolidated statements of operations data for the six months ended June 30,
1996 and 1997 are taken or derived from the unaudited consolidated financial
statements of the Company included elsewhere herein. In the opinion of
management, such unaudited interim consolidated financial statements reflect
all adjustments (including only normal recurring accruals) which in the opinion
of management are necessary for a fair presentation of the results for these
periods. The operating results for the six months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997. The following summary unaudited pro forma financial data are
taken or derived from the unaudited pro forma condensed combined financial
statements of the Company included elsewhere herein. The pro forma data are not
necessarily indicative of the results of the operations or financial position
that would have been obtained had the acquisitions occurred as of the beginning
of the periods covered thereby nor do they purport to be indicative of the
future results of operations or financial position of the Company. The summary
financial and operating data should be read in conjunction with the financial
statements, including notes thereto, included elsewhere in the Prospectus and
the discussion under "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------ ---------------------------------------
PRO FORMA(1) PRO FORMA(2)
1995 1996 1996 1996 1997 1997
---------- ---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales............. $ -- 5,453 23,522 20 12,750 13,683
Cost of goods sold.... -- (4,169) (17,881) (23) (9,784) (10,622)
---------- ---------- ---------- ---------- ---------- ----------
Gross profit (loss)... -- 1,284 5,641 (3) 2,966 3,061
Selling, general and
administrative
expenses............. (371) (2,308) (6,856) (238) (4,072) (4,233)
---------- ---------- ---------- ---------- ---------- ----------
Operating loss........ (371) (1,024) (1,215) (241) (1,106) (1,172)
Other income (ex-
pense), net.......... -- 92 (106) -- (788)(6) (760)
Income tax benefit
(expense)............ -- -- (248) -- 181 181
Minority interests.... -- (6) (6) -- 48 60
---------- ---------- ---------- ---------- ---------- ----------
Net loss.............. $ (371) (938) (241) (1,665)
========== ========== ========== ==========
Net loss per share.... $ (0.11) (0.27) (0.07) (0.48)
========== ========== ========== ==========
Pro forma net loss.... $ (1,575) (1,691)
========== ==========
Pro forma net loss per
share(3)............. $ (0.46) (0.49)
========== ==========
Shares used in
computing net loss
per share and pro
forma net loss per
share(3)(5).......... 3,450,000 3,450,000 3,450,000 3,450,000 3,450,000 3,450,000
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------
DECEMBER 31, AS ADJUSTED
1996 ACTUAL (4)
------------ ------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash....................................... $ 305 1,807 3,515
Working capital (deficit).................. 1,960 (672) 3,136
Total assets............................... 11,799 19,717 21,425
Total liabilities.......................... 6,563 13,447 11,300
Minority interests in net assets of subsid-
iaries.................................... 210 756 756
Total stockholders' equity................. 5,027 5,514 9,369
</TABLE>
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(1) Pro forma financial information is based upon the historical consolidated
financial statements of the Company for the year ended December 31, 1996,
the historical combined financial statements of Apollo, Apollo U.S.,
Reynolds and an acquired manufacturing facility for the nine months ended
September 30, 1996 (collectively, the "Apollo Entities"), and the
historical financial statements of Sierra Materials for the ten months
period ended December 31, 1996.
(2) Pro forma financial information is based upon the historical consolidated
financial statements of the Company and the historical financial statements
of Sierra Materials for the period January 1, 1997 to March 31, 1997.
(3) Calculated as described in Note 1 of Notes to Consolidated Financial
Statements.
(4) As adjusted amounts reflect the sale of 1,050,000 Shares (excluding any
Shares which may be sold as a result of the exercise of the overallotment
option and excluding 75,000 shares to be issued to the Bridge Lenders) as
contemplated by this Prospectus at a price of $5.00 per Share, net of
$1,395,000 of estimated offering expenses including the non-accountable
expense allowance and underwriting discounts and the application of the
estimated net proceeds therefrom. See "Use of Proceeds" and
"Capitalization."
(5) Subsequent to June 30, 1997, the Company retired 850,000 shares of Common
Stock contributed back by the Company's stockholders.
(6) Approximately $550,000 of this amount is attributable to debt financing
costs associated with the Private Placement (See "Private Placement").

6
<PAGE>

RISK FACTORS

The purchase of the Shares is speculative and involves a high degree of risk
and immediate and substantial dilution. Prospective investors should carefully
consider all of the information contained in this Prospectus and, in
particular, the following factors which could adversely affect the operations
and prospects of the Company, before making a decision to purchase any Shares.

RISK FACTORS RELATED TO THE BUSINESS OF THE COMPANY

Recent Operating Losses and Accumulated Deficit. Coyote has acquired an
interest in seven operating companies since inception, one of which was
recently dissolved. Of these, Apollo, Apollo U.S., Reynolds and ICE were the
only companies with business operations during the year ended December 31,
1996 which had been acquired as of that date. The Company, on a consolidated
historical basis, incurred a net loss of $937,954 for the year ended December
31, 1996. Subsequent to December 31, 1996, the Company acquired two additional
entities, Sierra Materials and Pentiumatics, in exchange for cash and the
assumption of indebtedness. Sierra Materials operated at a loss of $252,782
for the ten month period ended December 31, 1996. Pentiumatics was acquired by
the Company in April 1997 and had no prior business operations. From inception
through June 30, 1997, the Company has an accumulated deficit of $2,991,075.
In order to become profitable, the Company must increase sales while
effectively managing costs. There can be no assurance that the Company will be
able to achieve these goals or attain profitability. See "Selected
Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business."

Risks Involved With Expansion Strategy and Unspecified Acquisitions. Since
inception, the Company has acquired an equity interest in seven operating
companies. In May 1997, the Company and its partner dissolved one of the
companies whose objective was to evaluate the business opportunities in
marketing and selling sporting apparel. An important part of the Company's
growth strategy is to increase sales through product innovation and pursuing
growth opportunities in domestic and international markets, including growth
through acquisitions. In most cases, the Company will not be required to
obtain stockholder approval in order to complete its acquisitions.
Acquisitions involve numerous risks, including potential difficulties in the
assimilation of acquired operations, diversion of management's attention away
from normal operating activities, negative financial impact based on the
amortization of any acquired intangible assets, potential loss of key
employees of the acquired operation and potential financial risks resulting
from pre-acquisition liabilities that may exceed any indemnities provided by
the seller of the acquired company.

No Assurance That Acquisitions Will Be Effectively Assimilated. The
successful integration of any such acquisition is critical to the future
financial performance of the Company. Complete integration of any acquisitions
could take several fiscal quarters to accomplish and would require, among
other considerations, assimilation of the acquired companies, their
management, personnel and procedures as part of the Company's existing
consolidated group and coordination of the respective companies' sales and
marketing and research and development efforts. There can be no assurance that
present and potential customers of the Company and any acquired entity would
continue purchasing from the Company. In addition, the process of combining
two organizations could cause the interruption of, or loss of momentum in, the
activities of either or both companies' businesses, which could have an
adverse impact on their combined operations. The Company believes that there
may be other acquisition opportunities which could complement its existing
businesses. While the Company regularly evaluates acquisition and business
combination opportunities, there are no commitments or agreements with respect
to any potential additional acquisition as of the date of this Prospectus.
There can be no assurance that the recent acquisitions or any other business
that the Company may acquire in the future will be effectively and profitably
integrated into the Company.

Further Capital Requirements Associated With Expansion. The Company's
capital requirements have been and will continue to be significant. To date,
the Company has funded its capital requirements primarily with equity
investments from the Company's founders and the gross proceeds of $1,500,000
obtained by the Company pursuant to the Private Placement. The Company
anticipates that the proceeds to the Company from

<PAGE>

this offering, together with projected cash flows from operations, will be
sufficient to satisfy its contemplated cash requirements for at least 12
months following the consummation of this offering. However, the Company's
growth strategies include acquisitions which, in particular, could create cash
requirements beyond those presently contemplated. No portion of the net
proceeds from this offering have been specifically designated for any future
acquisitions of other companies or the assets of other companies. See "Use of
Proceeds." The Company's ability to consummate future acquisitions and execute
its growth strategy will depend to a significant degree on its ability to
obtain additional debt or equity financing. Other than the proceeds from this
offering, the Company has no commitments for additional borrowings or sales of
equity securities, and there can be no assurance that the Company will be
successful in consummating any such future financing arrangements on terms
favorable to the Company or that any such acquisition will not force the
Company to acquire additional debt. Certain factors among others could affect
the Company's access to the capital markets or the cost of such capital,
including the perception in the capital markets of the Company's present
businesses, results of operations, leverage, financial condition and business
prospects or concerns in the capital markets regarding the potential for
growth in the particular industries in which the Company's subsidiaries
conduct their businesses. Expansion or acquisition costs could adversely
affect the Company's liquidity and financial stability. See "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Potential Problems Associated With Growth. The Company has experienced
significant growth in the past two years and expects such growth to continue.
The Company's growth may place significant strains on the Company's future
management, staff, working capital, and operating and financial control
systems. There can be no assurance that the Company's management, staff,
working capital and systems will be adequate to support its future anticipated
growth. The failure to continue to upgrade operating and financial control
systems, to recruit qualified staff or to respond effectively to difficulties
encountered during expansion could have a material adverse effect on the
Company's business, results of operations and financial condition.

Dependence on Foreign Manufacturing Operations; Country Risks and Exchange
Rate Fluctuations. For the year ended December 31, 1996, and the six months
ended June 30, 1997, substantially all of the Company's revenues were from
products manufactured in foreign countries. The Company's business is highly
dependent upon steel golf shaft and cycle tubing products that are
manufactured in England utilizing raw materials furnished by a foreign
supplier. Apollo's steel golf shaft business and Reynolds cycle tubing
business accounted for approximately 91% of the Company's sales for the year
ended December 31, 1996. In the future, the Company expects that an expanded
number of its products will be manufactured in Southeast Asia. The Company's
business is subject to the risks generally associated with doing business
abroad, such as delays in shipment, foreign governmental regulation, adverse
fluctuations in foreign exchange rates, embargoes, tariffs, exchange controls,
trade disputes, expropriation, changes in economic conditions and governmental
instability in the countries in which the Company's manufacturing plants are
located. The Company's business is also subject to the risks associated with
the enactment of additional United States or foreign legislation and
regulations relating to exports or imports, including quotas, duties, taxes or
other charges or restrictions that could be imposed upon the import or export
of the Company's products in the future which, if imposed, could have a
material adverse effect on the Company's business, results of operations and
financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Dependence on Economic Conditions and Consumer Trends. The Company's
business is subject to economic cycles and changing consumer trends. Purchases
of discretionary sports equipment and recreational products tend to decline in
periods of economic uncertainty. The Company's products are generally used by
its customers in manufacturing finished goods for sale. Any significant
decline in general economic conditions or uncertainties regarding future
economic prospects that affect consumer spending could have a material adverse
effect on the Company's business, results of operations and financial
condition. In the past ten years, there has been increased consumer spending
on golf, cycle and skiing products. There can be no assurance that consumer
spending for golf, cycle and skiing products will continue. Any general
decline in the size of the market for golf shafts, cycle tubing or ski poles,
whether from general economic conditions, or otherwise or any adverse change
in the sale of products manufactured for the Company's customers would have a
material adverse effect on the Company's business, results of operations and
financial condition. See "Business."

<PAGE>

Seasonality and Dependence on Customers' Markets. Golf equipment, cycle
tubing and ski poles are seasonal products. The Company's results of
operations may be materially adversely affected by quarter-to-quarter changes
in unit sales to individual customers. Such changes may result from either
decisions by the customer to increase or decrease purchases or from the
traditional volatility in consumer demand for products. The Company believes
that this volatility is likely to continue in the future as customers seek to
gain competitive advantage through increased technology, innovation and
design. The mix of products may also contribute to quarterly or other periodic
fluctuations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

Limited Supply of Carbon Fiber. The business of the Company's subsidiary,
Sierra Materials, is dependent on the availability of carbon fiber raw
materials. There are a limited number of carbon fiber suppliers worldwide. In
recent years, carbon fiber has, from time to time, been subject to limited
supply. Sierra Materials is, and expects to remain throughout 1997, on
allocation from its suppliers for carbon fiber materials used in its products.
Although it is anticipated in the future that the supply of carbon fiber will
increase, there can be no assurance that the carbon fiber supply currently
committed to Sierra Materials will be available when required or that Sierra
Materials' allocation will be sufficient to meet currently projected demand or
additional opportunities. Because Sierra Materials purchases large volumes of
carbon fiber, any decrease in the supply or increase in the cost of Sierra
Materials' carbon fiber could have a material adverse effect on the business,
results of operations and financial condition of Sierra Materials. See
"Business--Sierra Materials."

Continued Control by Management and Principal Stockholders. Following the
completion of this offering, the Company's executive officers and directors
and founding stockholders together will beneficially own 2,600,000 shares
(69.8% of the shares outstanding after this offering assuming the
overallotment option is not exercised). As a consequence, management will be
in control of the Company, including the ability to elect all of the persons
serving on the Company's Board of Directors, following completion of this
offering. This concentration of ownership may have the effect of delaying or
preventing a change in control of the Company. See "Principal Stockholders."

Substantial Purchase Obligation Could Negatively Impact Company Assets. ICE
was formed on September 18, 1996, by the transfer of certain assets from
Expedition Trading Company ("Expedition") which also retained a 20% ownership
interest in ICE. The Company owns an 80% ownership interest in ICE which
entitles the Company to receive 80% of the allocations of profits and losses
and 80% of all cash and in-kind distributions, if any, which may be made by
ICE to members in the future, including distributions of assets or the
proceeds from the sale of assets in a liquidation of ICE. Expedition is
entitled to receive 7% of gross sales from ICE from 1997 through 2002, with a
minimum payment of $100,000 per year and a maximum payment of $200,000 per
year. In 2003, ICE must pay Expedition $1.5 million less all amounts
previously paid to date under the agreement. Expedition retains a security
interest in all of the ICE assets. No assurance can be given that ICE can be
profitable in the future with the burden of the Expedition payment or that the
Company will be able to meet its substantial payment obligation to Expedition
in 2003. Failure to meet that obligation would cause a default under the
agreement and possible loss of the ICE assets, including its trade name,
customer lists, and proprietary information which the Company will have
developed over the period of time prior to 2003. (See "Business--ICE" and
"Business--Acquisition History.")

Substantial Portion of Proceeds Used for Debt Repayment Owed to Officer. A
substantial portion of the proceeds of this offering after deduction of
estimated offering expenses and underwriting discounts of $1,395,000
($2,350,155 or 61%) will be used for repayment of debt, including $200,155 to
be paid to Mr. Stonebraker, the President of the Company. Interest rates under
Mr. Stonebraker's notes range from 12% to 25% per annum, which generally
reflect the interest costs incurred by Mr. Stonebraker to enable him to
advance the funds to the Company.

Broad Discretion by Management in Application of Proceeds. Of the
approximate $3,855,000 net proceeds from this offering, $554,845 has been
allocated to working capital and other general corporate purposes. In
addition, approximately $468,000 of the offering expenses estimated to be
$870,000 have been prepaid by the

<PAGE>

Company as of September 10, 1997 and will be available for additional working
capital to the Company. Furthermore, while the Company has allocated
approximately $3,300,000 of the net proceeds of this offering to the repayment
of the Bridge Loans, the purchase of capital equipment, the repayment of
liabilities and the repayment of notes to a stockholder, the Board of
Directors has the right, in its discretion, to reallocate the net proceeds for
purposes in furtherance of the Company's business strategy. Accordingly,
management will have broad discretion concerning the exact nature of the
application of the net proceeds of this offering.

Dependence on Key Personnel. The Company's success depends to a considerable
extent on the performance of its senior management team. The loss of the
services of a limited number of key management personnel, particularly Mel S.
Stonebraker, Chief Executive Officer, James M. Probst, Chief Operating
Officer, or certain key employees of the Company or its subsidiaries, could
have a material adverse effect on the Company. Although the Company has
employment agreements with Messrs. Stonebraker and Probst which extend through
the year 2000, and which contain a non-competition clause prohibiting such
employees from competing for nine months after termination, such agreements
are difficult to enforce against employees. The Company has key-person life
insurance policies in the amounts of $1,000,000 each on the lives of Messrs.
Stonebraker and Probst. See "Management--Employment Agreements."

Environmental Considerations. The Company's operations are subject to
governmental, environmental and health and safety laws and regulations,
including the laws of the United Kingdom and Southeast Asia, that impose
workplace standards and limitations on the discharge of pollutants into the
environment and establish standards for the handling, generation, emission,
release, discharge, treatment, storage and disposal of certain materials,
substances and wastes. The environmental laws in the United Kingdom are
presently being redrafted and, although no assurance can be given, the Company
believes that its facilities in the United Kingdom will be in compliance with
the new legislation as anticipated to be enacted. The nature of the Company's
heavy industrial manufacturing and assembly operations in Oldbury and Tyseley,
England, its manufacturing facility in California and its future operations in
Southeast Asia could expose the Company to the risk of claims with respect to
environmental matters. Although compliance with governmental requirements
relating to the protection of the environment has not had a material adverse
effect on the Company's business results of operations or financial condition
to date, there can be no assurance that material costs or liabilities will not
be incurred in connection with such environmental matters in the future. The
Company's Oldbury facility has a permit to discharge waste effluent into a
settling pond located on-site. The Company believes it is in compliance with
the discharge permit. In addition, expenditures for upgrades to Apollo's
effluent treatment system, if required, may be material. The Company holds an
indemnity from the seller of this property for certain remediation
attributable to the settling pond which is limited to five years and 500,000
Pounds Sterling. The existence of the settling pond on future events, such as
changes in existing laws and regulations or enforcement policies or the
discovery of contamination on sites owned or operated by the Company, may give
rise to additional compliance costs or operational interruptions which could
have a material adverse effect on the Company's business, results of
operations and financial condition. See "Business--Governmental Regulation."

Highly Competitive Industry. The sports equipment and recreational products
industry is highly competitive. The Company faces competition, from companies,
many of which have greater financial and management resources, research and
development facilities and manufacturing and marketing capabilities, including
brand name recognition, than the Company. There can be no assurance that
technological and other developments by the Company's competitors or potential
competitors will not make the Company's products less competitive in the
market. The Company's ability to compete effectively will depend upon its
ability to attract and retain qualified personnel, innovate its manufacturing
techniques and processes, make adequate provision for its raw material
requirements and supplies through long-term supply agreements, maintain and
expand its technological capabilities, continue the process of vertically
integrating its manufacturing and distribution capabilities through further
acquisitions of companies whose businesses complement those of the Company,
market and sell existing products to new customers, develop new products for
existing and new customers, service its products and further develop its sales
force. Golf product sales are driven, in significant

<PAGE>

part, by technological improvements and innovations which will require that
the Company maintain its ability to compete in this area. No assurance can be
given that the Company will be able to compete effectively. See "Business."

Labor Unions; Risk of Work Stoppage. The Company's employees at its Oldbury
and Tyseley, England facilities are represented by several trade unions for
collective bargaining purposes. Approximately 223 of Apollo's employees and
approximately 19 additional Reynolds employees are covered by different trade
union agreements, representing individual trade unions, regarding such issues
as grievance procedures and safety. These union agreements may be renegotiated
at various times in the future, depending on a variety of circumstances.
Although the Company believes its relations with its employees are good, there
can be no assurance that the Company will not experience work stoppages or
slowdowns in the future. Any such work stoppage or slowdown could have a
material adverse effect on the business results of operations and financial
condition of the Company's Apollo and Reynolds subsidiaries. In addition,
there is no assurance that the Company's non-union facilities will not at
sometime in the future become subject to labor disputes and union
organizational efforts. See "Business--Employees and Consultants."

Dependence on Proprietary Technology. The Company relies primarily on
trademark and trade secret laws and confidentiality procedures to protect its
trade secrets, goodwill, proprietary processes and product designs. Although
the Company intends to protect its intellectual property, there can be no
assurance that the steps that are taken by the Company in this regard will be
adequate to prevent misappropriation of its technology or that the Company's
competitors will not independently develop technologies that are substantially
equivalent or superior to the Company's technology. Furthermore, litigation
may be necessary to enforce the Company's intellectual property rights, to
protect the Company's trade secrets, to determine the validity and scope of
the proprietary rights of others or to defend against claims of infringement
could have a material adverse effect on the Company's business, results of
operations and financial condition. Such litigation could result in
substantial costs and diversion of resources and personnel. See "Business--
Intellectual Property."

Product Liability Risk; Limited Insurance Coverage and Uninsured Risks. Due
to the nature of the Company's golfing, cycling and skiing products, the
Company is subject to product liability claims involving personal injuries
allegedly related to Apollo's golf shafts, Reynolds' cycle tubing and ICE ski
poles. The Company's Apollo, Reynolds and ICE subsidiaries currently carry
occurrence-based product liability insurance policies. The Company believes
that its insurance has been and continues to be adequate to cover product
liability claims. Nevertheless, any future claims are subject to the
uncertainties related to litigation, and the ultimate outcome of such
proceedings or claims cannot be predicted. Due to the uncertainty with respect
to the nature and extent of manufacturers' and distributors' liability for
personal injuries, there is no assurance that the product liability insurance
of the Company's subsidiaries is or will be adequate to cover such claims.
Further, there can be no assurance that insurance will remain available or, if
available, that it will not be prohibitively expensive. Although the Company
believes it has adequate insurance coverage against hazards and risks which
are typical in the businesses conducted by its subsidiaries and that such
coverage is in reasonable amounts, there can be no assurance that due to
certain unforeseen circumstances that such insurance will be adequate in every
instance. In addition, certain hazards and risks may be specifically excluded
from coverage under the policies maintained by the Company or otherwise may be
unavailable to the Company or other companies within the industry. The loss of
insurance coverage or claims exceeding that coverage or uninsured risks or
hazards could have a material adverse effect on the Company's business,
results of operations and financial condition. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

Industrial Injury Claims. The Company is subject to the normal kind of
claims from employees in heavy industrial manufacturing operations. Several
employees at Apollo's heavy industrial manufacturing facility have filed
claims concerning a variety of work related ailments, including a condition
which results from prolonged exposure to machinery which vibrates. The Company
is intent on remedying this exposure by replacing certain

<PAGE>

equipment. Apollo's Employers Liability Insurance Policy and related insurance
company are involved with processing and settlement of these claims. No
assurance can be given that these claims can be settled at reasonable cost to
the Company or that repair or replacement of certain machinery will not cost
more than expected or be required in a manner other than as contemplated by
management. It is possible that the incidence of claims may have an effect on
the terms of which insurance becomes available in the future. See "Business--
Governmental Regulations."

RISK FACTORS RELATED TO THIS OFFERING

Offering Prices Not Necessarily Indicative of the Actual Value of the
Company. The offering price of the Shares was determined by negotiation
between the Company and the Representative and is not necessarily related to
the Company's assets, book value or financial condition, and may not be
indicative of the actual value of the Company. See "Underwriting."

Dilution to Investors. At June 30, 1997, after giving effect to the Share
Return, the Company had net tangible book value of $4,545,962 or $1.75 per
Share based upon 2,600,000 shares of Common Stock outstanding. Net tangible
book value per share is determined by dividing the number of outstanding
shares of Common Stock into the net tangible book value of the Company (total
assets less total liabilities and intangible assets). After giving effect to
the receipt of the net proceeds therefrom, the adjusted net tangible book
value at June 30, 1997, would have been $8,400,962 or $2.30 per Share. This
represents an immediate increase of $0.55 per Share to current stockholders
and an immediate dilution of $2.70 per Share or 54% to the investors in this
offering. See "Dilution."

Underwriters' Influence on the Market. A significant number of Shares may be
sold to customers of the Underwriters. Such customers may subsequently engage
in transactions for the sale or purchase of such Shares through or with the
Underwriters. Although they have no legal obligation to do so, the
Underwriters from time to time in the future may make a market in and
otherwise effect transactions in the Shares. To the extent the Underwriters do
so, they may be a dominating influence in any market that might develop and
the degree of participation by the Underwriters may significantly affect the
price and liquidity of the Shares. Such market making activities, if
commenced, may be discontinued at any time or from time to time by the
Underwriters without obligation or prior notice. Depending on the nature and
extent of the Underwriters' market making activities and retail support of the
Shares at such time, the Underwriters' discontinuance could adversely affect
the price and liquidity of the Shares.

Lack of Dividends. The Company has not paid any dividends since inception.
The Board of Directors does not intend to declare payment of any dividends in
the foreseeable future. See "Dividend Policy."

Possible Illiquidity of Trading Market and Application of Penny Stock
Rules. The Shares are eligible for initial quotation on the NASDAQ SmallCap
Market upon completion of this offering which may be a significantly less
liquid market than the NASDAQ National Market. Moreover, if the Company should
experience losses from operations, it may be unable to maintain the standards
for continued quotation on the NASDAQ SmallCap Market, and the Shares could be
subject to removal from the NASDAQ SmallCap Market. Trading, if any, in the
Common Stock would therefore be conducted in the over-the-counter market on an
electronic bulletin board established for securities that do not meet the
NASDAQ SmallCap Market Listing requirements, or in what are commonly referred
to as the "pink sheets." As a result, an investor would find it more difficult
to dispose of, or to obtain accurate quotations as to the price of, the
Company's Common Stock. In addition, if the Company's Common Stock were
removed from the NASDAQ SmallCap Market, it would be subject to so-called
"penny stock" rules that impose additional sales practice and market making
requirements on broker-dealers who sell and/or make a market in such
securities. As such, broker-dealers at any date after the offering, to the
extent that the Company's Common Stock were to become subject to the "penny
stock" rules, would be required in connection with transactions in the
Company's Common Stock, to provide customers with required risk disclosure
documents, disclose quotation and compensation information and provide monthly
price information and other required information. Consequently, removal from
the NASDAQ SmallCap Market, if it were to occur, could affect the ability or
willingness of broker-dealers to sell and/or make a market in the

<PAGE>

Company's Common Stock and the ability of purchasers of the Company's Common
Stock to sell their securities in the secondary market. In addition, if the
market price of the Company's Common Stock is less than $5.00 per share, the
Company may become subject to certain "penny stock" rules even if still quoted
on the NASDAQ SmallCap Market. While such "penny stock" rules should not
affect the quotation of the Company's Common Stock on the NASDAQ SmallCap
Market, such rules may further limit the market liquidity of the Common Stock
and the ability of purchasers in this offering to sell such securities in the
secondary market.

Currently Restricted Shares Will Be Eligible for Future Sale. Upon
consummation of this offering, the Company will have 3,725,000 Shares
outstanding (including 75,000 shares of Common Stock issuable to the Bridge
Lenders) of which the 1,050,000 Shares offered hereby will be freely tradeable
without restriction or further registration under the Securities Act and as
discussed below, 75,000 of the Shares are subject to a lock up. The remaining
2,600,000 outstanding Shares, are "restricted securities" and under certain
circumstances may, in the future, be sold in compliance with Rule 144 adopted
under the Securities Act. Holders of all said 2,600,000 shares of restricted
stock, including all officers and directors of the Company who hold such
restricted stock, have agreed that they will not, without the written consent
of the Representative, offer to sell, contract to sell, or otherwise sell or
dispose of their stock for one year following the date of this Prospectus. In
general, under Rule 144, subject to the satisfaction of certain other
conditions, a person, including an affiliate of the Company, who has
beneficially owned restricted Shares for at least one year is entitled to
sell, within any three-month period, a number of shares that does not exceed
the greater of (i) 1% of the total number of outstanding shares of the same
class, or (ii) if the Common Stock is quoted on NASDAQ or a stock exchange,
the average weekly trading volume during the four calendar weeks immediately
preceding the sale. A person who presently is not and who has not been an
affiliate of the Company for at least three months immediately preceding the
sale and who has beneficially owned the Shares for at least two years is
entitled to sell such shares under Rule 144 without regard to any of the
volume limitations described above.

Upon the consummation of this offering, the Company will issue 75,000 shares
of Common Stock and warrants to purchase an additional 125,000 shares to the
Bridge Lenders. These shares, warrants and shares underlying the warrants are
being registered simultaneously with this offering for resale by the holders
thereof from time to time. The Bridge Lenders have agreed that they will not
offer to sell, contract to sell, or otherwise sell or dispose of the 75,000
shares, the 250,000 warrants to purchase 125,000 shares or the 125,000 shares
underlying the warrants for a period of six months following the effective
date of the offering and will not, without the written consent of the
Representative, offer to sell, contract to sell, or otherwise sell or dispose
of the 75,000 shares for one year following the offering, provided, however,
that they will be released from the second six month lockup if the Common
Stock trades at 150% or more of the public offering price for three
consecutive days.

The Company is authorized to issue additional options to purchase up to
500,000 shares of Common Stock under the Company's Option Plan. The Company
plans to register for sale under the Securities Act all shares issuable upon
exercise of options granted under the Option Plan. Following completion of the
offering, in addition to the warrants issuable to the Bridge Lenders, the
Company will have outstanding warrants exercisable to purchase 100,000 Shares
which will be issued to the Representative. The Company has undertaken to
register for sale under the Securities Act all shares issuable upon exercise
of those warrants. No prediction can be made to the effect, if any, that sales
of shares of Common Stock or the availability of such shares for sale will
have on the market prices prevailing from time to time. Nevertheless, the
possibility that substantial amounts of Common Stock may be sold in the public
market in the future may adversely affect prevailing market prices of the
Common Stock and could impair the Company's ability to raise capital in the
future through the sale of equity securities. Actual sales or the prospect of
future sales of Shares under Rule 144 may have a depressive effect upon the
price of the Common Stock.

Warrants May Create Dilution of Ownership. In connection with the offering,
the Company will sell to the Underwriter, for a nominal cost, warrants (the
"Representative's Warrants") to purchase up to 105,000 Shares. In addition,
the Bridge Lenders will receive 250,000 warrants to purchase 125,000 shares.
The Representative's Warrants will be exercisable commencing one year after
the date of this Prospectus and for

<PAGE>

four years thereafter, at an exercise price equal to 125% of the initial
public offering price of the Shares. The Bridge Lender warrants will be
exercisable commencing with the date of this Prospectus and for three years
thereafter, at an exercise price equal to 150% of the initial public offering
price of the Shares. Holders of these warrants are given the opportunity to
profit from a rise in the market price of the Shares with a resulting dilution
of the percentage ownership of the then stockholders. Furthermore, the Company
will grant certain registration rights with respect to the Representative's
Warrants and such registration could result in substantial expense to the
Company. See "Underwriting--Representative's Warrants" and "Additional
Registered Shares."

Forward Looking Statements May Materially Differ from Actual Financial
Results. To the extent that the Prospectus contains forward-looking statements
regarding the financial condition, operating results, business prospects or
any other aspect of the Company, investors should be aware that the Company's
actual financial condition, operating results and business performance may
differ materially from that projected or estimated by the Company in forward-
looking statements. The Company has attempted to identify, in context, certain
of the factors that it currently believes may cause actual future experience
and results to differ from the Company's current expectations. The differences
may be caused by a variety of factors, including but not limited to adverse
economic conditions, general decreases in consumer spending for sports
equipment and recreational products, intense competition, including entry of
new competitors, increased or adverse governmental regulation, inadequate
capital, unexpected costs, lower sales and net income than forecasted or
greater losses than forecasted, loss of significant customers, price increases
for raw materials, inability to raise prices, the risk of litigation and
administrative proceedings involving the Company and its employees, higher
than anticipated labor costs, labor disputes, the possible fluctuation and
volatility of the Company's operating results and financial condition, adverse
publicity and news coverage, adverse currency exchange rates, inability to
carry out marketing and sales plans, loss of key executives, changes in
interest rates, inflationary factors, and other specific risks that may be
alluded to in this Prospectus.

No Prior Public Market; Determination of Offering Price May Bear No
Relationship to Market Price After Offering; Possible Volatility of Stock
Price. Prior to this offering, there has been no public market for the
Company's Shares and there can be no assurance that an active trading market
for the Shares will develop or be sustained after this offering. In the event
that the Company's Shares are thinly traded, stockholders may not be able to
sell a significant amount of Shares at the price quoted, or at all. The
initial public offering price for the Shares will be determined by negotiation
between the Company and the Representative based on several factors and may
bear no relationship to the market price of the Shares subsequent to this
offering. Following this offering, the market price for the Shares may be
highly volatile depending on various factors, including the general economy,
stock market conditions, announcements by the Company or its competitors and
fluctuations in the Company's operating results. In addition, the securities
market historically has experienced volatility which has affected the market
price of securities of many companies and which has sometimes been unrelated
to the operating performance of such companies. The trading price of the
Shares could also be subject to significant fluctuations in response to
variations in quarterly results of operations, announcements of new products
by the Company or its competitors, changes in earnings estimates by analysts,
governmental regulatory action, other developments or disputes with respect to
proprietary rights, general trends in the industry and overall market
conditions, and other factors. See "Underwriting."

Anti-takeover Considerations May Deter Change of Control. The Board of
Directors, without any action by the Company's stockholders, is authorized
under the terms of its Restated Articles of Incorporation, to designate shares
of preferred stock in such classes or series as it deems appropriate and to
establish the rights, preferences and privileges of such shares, including
dividend, liquidation and voting rights. This ability of the Board of
Directors would permit the Company to adopt a stockholders' rights plan which
would deter a hostile takeover or issue shares which could entrench the Board
of Directors and deter an unsolicited tender offer. Either event may deprive
current stockholders of the ability to sell shares at a premium over the
market price or adversely affect the voting power and other rights of holders
of Common Stock. These provisions could have the effect of discouraging,
delaying, deferring or preventing a change in control of the Company. See
"Description of Securities."

<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from this offering, after deduction of
estimated offering expenses and underwriting discounts of $1,395,000 will be
approximately $3,855,000, ($4,642,500 if the over-allotment option on the
Shares is exercised in full). Management anticipates that the net proceeds
will be applied with the following priority during the next twelve month
period:

<TABLE>
<CAPTION>
DESCRIPTION OF USE AMOUNT PERCENT
------------------ ---------- -------
<S> <C> <C>
Repayment of Loans(1) ....................................... $1,500,000 38.9
Capital Equipment--Sierra Materials(2)....................... 950,000 24.6
Repayment of Liabilities--Sierra Materials(3)................ 650,000 16.9
Repayment of notes to stockholder(4)......................... 200,155 5.2
Working Capital(5)........................................... 554,845 14.4
---------- ----
Total.................................................... $3,855,000 100
========== ====
</TABLE>
- --------
(1) In April 1997, as a result of the Private Placement, the Company obtained
two loans in the aggregate principal amount of $1,500,000 from
unaffiliated third parties. The loans are due on the earlier of
December 31, 1997, or five days subsequent to the Company's completion of
an initial public offering. The interest rate on each of the loans is 8%
per annum. The loans are secured by a Stock Pledge Agreement for the
Company's shares in Apollo and Apollo U.S. and by personal guarantees by
Mel Stonebraker and James Probst. The proceeds of these loans were used by
the Company as follows: Apollo and Reynolds working capital, $808,000;
Sierra Materials working capital, $360,000; and general corporate expenses
of $332,000.
(2) The Company intends to purchase certain capital equipment necessary for an
additional production line.
(3) The Company intends to use these funds to repay certain liabilities of
Sierra Materials which include $534,000 needed to eliminate the personal
guarantees of the prior shareholders of Sierra Materials and to eliminate
the obligation of the Company to make future royalty payments. See
"Consolidated Financial Statements" Note 2, Acquisitions.
(4) The Company had outstanding notes payable to Mel Stonebraker in the amount
of $112,496 at June 30, 1997. Subsequent to June 30, 1997 the Company
entered into an additional note payable to Mr. Stonebraker in the amount
of $87,659. The notes are unsecured and bear interest at rates ranging
from 12% to 25% per annum which approximates Mr. Stonebraker's cost of the
money lent to the Company. Interest is payable monthly on the notes and
any principal amounts outstanding are due between August 1998 and October
1999. The Company used the proceeds of Mr. Stonebraker's loans for working
capital. See "Certain Transactions."
(5) Part of the working capital may be used for Apollo marketing and sales,
for the Pentiumatics manufacturing facility, or for additional capital
equipment for Sierra Materials. Working capital will be increased by an
amount equal to the expenses of the offering that have been prepaid. The
Company had prepaid approximately $468,000 as of September 10, 1997.

The amounts set forth above represent the Company's present intentions for
the use of the proceeds from this offering. However, actual expenditures could
vary considerably depending upon many factors, including, without limitation,
unanticipated complications, delays or expenses, in developing Pentiumatic's
manufacturing facility. Any reallocation of the net proceeds of this offering
will be made at the discretion of the Board of Directors but will be in
furtherance of the Company's strategy to achieve growth and profitable
operations, including through the acquisition of products or businesses which
are complementary to the Company's current products and businesses. Although
the Company anticipates that the proceeds from this offering will be
sufficient for twelve months, the Company's working capital requirements are a
function of its future sales growth and expansion plans, neither of which can
be predicted with any reasonable degree of certainty, especially growth
resulting from business acquisitions. The Company may need to seek funds
through loans or other financing arrangements in the future, and there can be
no assurance that the Company will be able to make such arrangements in the
future should the need arise. See "Risk Factors."

Pending use of the net proceeds of the offering, the funds may be invested
temporarily in certificates of deposit, short-term government securities or
similar investments. Any income from these short-term investments will be used
for working capital.

15
<PAGE>

CAPITALIZATION

The following table sets forth, cash, short term debt and capitalization of
the Company as of June 30, 1997, and as adjusted to give effect to the sale of
the Shares offered hereby and the initial application of the net proceeds
therefrom and giving effect to the Share Return. See "Use of Proceeds." For
additional information, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements
and notes thereto included in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------
AS
ACTUAL ADJUSTED(3)
---------- -----------
<S> <C> <C>
Cash.................................................... $1,806,705 3,514,985
Short term debt and current portion of long term
debt(1)(2)............................................. 5,508,824 3,408,913
========== ==========
Long term debt, excluding current portion(1)............ 1,892,123 1,845,314
Minority interests in net assets of subsidiaries........ 755,823 755,823
Stockholders' equity:
Preferred stock, $.001 par value, 4,000,000 shares
authorized, no shares issued or outstanding........... -- --
Common Stock, $.001 par value, 25,000,000 shares
authorized, 3,450,000 shares issued and outstanding;
3,650,000 shares issued and outstanding, as adjusted.. 3,450 3,650
Additional paid-in capital.............................. 8,347,333 12,202,133
Accumulated deficit..................................... (2,991,075) (2,991,075)
Foreign currency translation adjustment................. 154,000 154,000
---------- ----------
Total stockholders' equity.............................. 5,513,708 9,368,708
---------- ----------
Total capitalization.................................... $8,161,654 11,969,845
========== ==========
</TABLE>
- --------
(1) Certain obligations are in connection with the Company's acquisition of
intangible assets by ICE. See Consolidated Financial Statements included
herein.
(2) Notes payable to stockholder and partial repayment of Sierra Material's
indebtedness.
(3) As adjusted amounts reflect the sale of 1,050,000 Shares (excluding any
Shares which may be sold as a result of the exercise of the overallotment
option and excluding 75,000 shares to be issued to the Bridge Lenders) as
contemplated by this Prospectus at $5.00 per Share, net of $1,395,000 of
estimated offering expenses including the non-accountable expense
allowance and underwriting discounts and the application of the estimated
net proceeds therefrom. See "Use of Proceeds" and "Capitalization."

DIVIDEND POLICY

The Company has paid no dividends since inception. The payment of dividends
on the Shares rests with the discretion of the Board of Directors. There are
no restrictions on payment of dividends under any agreements to which the
Company is a party other than in the agreements relating to the Private
Placement, which restrictions will cease when the bridge loans are paid with
the proceeds of this offering. Payment of dividends is contingent upon, among
other things, future earnings, if any, and the financial condition of the
Company, capital requirements, general business conditions, and other factors
which cannot now be predicted. The Board of Directors does not intend to
declare payment of any dividends in the foreseeable future. There can be no
assurance that the future operations of the Company will be profitable or that
dividends will ever be paid by the Company.

<PAGE>

DILUTION

The following gives effect to the issuance of the Shares offered hereby at a
Price to Public of $5.00. The net tangible book value of the Company's Common
Stock at June 30, 1997 was $4,545,962 or $1.75 per share. "Net tangible book
value" represents the tangible assets less total liabilities of the Company,
and "net tangible book value per share" was determined by dividing the net
tangible book value of the Company by the number of shares of Common Stock
outstanding on June 30, 1997, as adjusted for the Share Return. See
"Capitalization." "Pro forma net tangible book value dilution per share"
represents the difference between the Price to Public per Share and the net
tangible book value per share after this offering. Without taking into account
any changes in the Company's net tangible book value per share after June 30,
1997 other than to give effect to the sale of the Shares offered hereby (net
of underwriting discounts and estimated offering expenses of $1,395,000), the
net tangible book value of the Company at June 30, 1997 would have been
$8,400,962 or $2.30 per share. This represents an immediate increase in net
tangible book value to the existing stockholders of $0.55 per share and an
immediate net tangible book value dilution to purchasers of the Shares of
$2.70 per Share, as illustrated by the following table:

<TABLE>
<S> <C> <C>
Price to Public per Share..................................... $5.00
Net tangible book value per share of Common Stock before of-
fering....................................................... $1.75
Increase per share of Common Stock attributable to new invest-
ors.......................................................... 0.55
Adjusted net tangible book value per Share of Common Stock af-
ter offering................................................. 2.30
Dilution in net tangible book value per Share of Common Stock
to new investors............................................. $2.70
=====
Dilution per share of Common Stock as a percentage of offering
price........................................................ 54%
</TABLE>

The following table summarizes as of September 15, 1997, the difference
between existing stockholders and the new investors with respect to the number
of shares of Common Stock purchased from the Company, the total consideration
paid and the average price paid per share to the Company hereby (before
deducting underwriting discounts and estimated offering expenses):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- ------------------------PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Existing stockholders... 2,600,000 70% $ 8,500,000 62% $3.27
New stockholders(1)..... 1,125,000 30% 5,250,000 38% 5.00
--------- ---- ------------- ------
Total................. 3,725,000 100% 13,750,000 100%
========= ==== ============= ======
</TABLE>
- --------
(1) Represents a Price to Public of $5.00 per Share with 1,050,000 Shares sold
in this offering and 75,000 shares issued to Bridge Lenders and excludes
warrants to purchase 125,000 shares which will be issued after this
offering in connection with the Private Placement. See "Private
Placement."

<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

The following historical selected consolidated statement of operations data
for each of the years in the two-year period ended December 31, 1996 and the
historical selected balance sheet data as of December 31, 1996 are taken or
derived from the historical consolidated financial statements of the Company
included elsewhere herein, which were audited by KPMG Peat Marwick LLP as set
forth in their report thereon also included herein. The historical selected
consolidated statement of operations data for the six months ended June 30,
1996 and 1997 are taken or derived from the unaudited consolidated financial
statements of the Company included elsewhere herein. In the opinion of
management, such unaudited interim consolidated financial statements reflect
all adjustments (including only normal recurring accruals) which in the
opinion of management are necessary for a fair presentation of the results for
these periods. The operating results for the six months ended June 30, 1997
are not necessarily indicative of the results that may be expected for the
year ending December 31, 1997. The following selected unaudited pro forma
financial data are taken or derived from the unaudited pro forma combined
financial statements of the Company included elsewhere herein. The pro forma
data are not necessarily indicative of the results of the operations or
financial position that would have been obtained had the acquisitions occurred
as of the beginning of the periods covered thereby nor do they purport to be
indicative of the future results of operations or financial position of the
Company. The selected financial and operating data should be read in
conjunction with the financial statements, including notes thereto, included
elsewhere in the Prospectus and the discussion under "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------- -------------------------------------
PRO FORMA(1) PRO FORMA(2)
1995 1996 1996 1996 1997 1997
--------- --------- ------------ --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales............... $ -- 5,453 23,522 20 12,750 13,683
Cost of goods sold...... -- (4,169) (17,881) (23) (9,784) (10,622)
--------- --------- --------- --------- --------- ---------
Gross profit (loss)..... -- 1,284 5,641 (3) 2,966 3,061
Selling, general and
administrative
expenses............... (371) (2,308) (6,856) (238) (4,072) (4,233)
--------- --------- --------- --------- --------- ---------
Operating loss.......... (371) (1,024) (1,215) (241) (1,106) (1,172)
Other income (expense),
net.................... -- 92 (106) -- (788)(6) (760)
Income tax benefit
(expense).............. -- -- (248) -- 181 181
Minority interests...... -- (6) (6) -- 48 60
--------- --------- --------- --------- --------- ---------
Net loss................ $ (371) (938) (241) (1,665) --
========= ========= ========= =========
Net loss per share...... $ (0.11) (0.27) (0.07) (0.48) --
========= ========= ========= =========
Pro forma net loss...... $ (1,575) (1,691)
========= =========
Pro forma net loss per
share(3)............... $ (0.46) (0.49)
========= =========
Shares used in computing
net loss per share and
pro forma net loss per
share(3)(5)............ 3,450,000 3,450,000 3,450,000 3,450,000 3,450,000 3,450,000
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------
DECEMBER 31, AS ADJUSTED
1996 ACTUAL (4)
------------- ------ -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash........................................ $ 305 1,807 3,515
Working capital (deficit)................... 1,960 (672) 3,136
Total assets................................ 11,799 19,717 21,425
Total liabilities........................... 6,563 13,447 11,300
Minority interests in net assets of subsidi-
aries...................................... 210 756 756
Total stockholders' equity.................. 5,027 5,514 9,369
</TABLE>
- --------
(1) Pro forma financial information is based upon the historical consolidated
financial statements of the Company for the year ended December 31, 1996,
the historical combined financial statements of Apollo, Apollo U.S.,
Reynolds and an acquired manufacturing facility for the nine months ended
September 30, 1996 (collectively, the "Apollo entities"), and the
historical financial statements of Sierra Materials for ten month period
ended December 31, 1996.
(2) Pro forma financial information is based upon the historical consolidated
financial statements of the Company and the historical financial
statements of Sierra Materials for the period January 1, 1997 to March 31,
1997.
(3) Calculated as described in Note 1 to Consolidated Financial Statements.
(4) As adjusted amounts reflect the sale of 1,050,000 Shares as contemplated
by this Prospectus at a price of $5.00 per Share, net of $1,395,000 of
estimated offering expenses including the non-accountable expense
allowance and underwriting discounts and the application of the estimated
net proceeds therefrom. See "Use of Proceeds" and "Capitalization."
(5) Subsequent to June 30, 1997, the Company retired 850,000 shares of Common
Stock contributed back by the Company's stockholders.
(6) Approximately $550,000 of this amount is attributable to debt financing
costs associated with the Private Placement (see "Private Placement").

19
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto and the Pro Forma
Consolidated Statements of Operations and Notes thereto, which appear
elsewhere in this Prospectus. Certain statements contained in this Prospectus
are "forward looking statements." Such statements are subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from future results expressed or implied by such forward looking
statements. The Company has attempted to identify, in context, certain of the
factors that it currently believes may cause actual future experience and
results to differ from the Company's current expectations. The differences may
be caused by a variety of factors, including but not limited to adverse
economic conditions, general decreases in consumer spending for sports
equipment and recreational products, intense competition, including entry of
new competitors, increased or adverse governmental regulation, inadequate
capital, unexpected costs, lower revenues and net income than forecasted, loss
of significant customers, price increases for raw materials, inability to
raise prices, the risk of litigation and administrative proceedings involving
the Company and its employees, higher than anticipated labor costs, labor
disputes, the possible fluctuation and volatility of the Company's operating
results and financial condition, adverse publicity and news coverage, adverse
currency exchange rates, inability to carry out marketing and sales plans,
loss of key executives, changes in interest rates, inflationary factors, and
other specific risks that may be alluded to in this Prospectus.

OVERVIEW

Coyote designs, engineers, manufactures, markets and distributes brand name
sports equipment and recreational products. The Company's products include
steel and graphite golf shafts, premium grade cycle tubing, composite ski
poles and javelins. The Company also produces graphite and other advanced
composite materials for use in the production of golf shafts, fishing poles,
ski poles, hockey sticks and other third party manufactured products. The
Company manufactures its Apollo golf shafts in its manufacturing facility in
Oldbury, England, its Reynolds cycle tubing in Tyseley, England, its advanced
composite materials in San Diego, California and intends on manufacturing
extruded aluminum alloys in Southeast Asia for such products as cycle tubing,
ski poles and tennis rackets. The Company's ICE products are assembled in
Heber City, Utah.

Management anticipates that technology, price, quality and service will be
determining factors in the future success of the Company's current brand name
products which principally include golf shafts, ski poles and cycle tubing.
With this strategy in mind, the Company made two investments in 1997. The
Company acquired an 80% interest in Sierra Materials in March and acquired its
interest in Pentiumatics in April. See "Acquisition History."

Located in San Diego, California, Sierra Materials manufactures advanced
composite materials made primarily from carbon fiber, fiberglass and Kevlar.
Sierra Materials sells its products to manufacturers of sports and recreation
equipment. In the future, Sierra Materials intends on selling product to a
third party in Southeast Asia who will use the product, in part, to
manufacture graphite golf shafts to be distributed by Apollo under an
exclusive distribution agreement. See "Apollo Golf Shafts." The Company
intends on using a portion of the proceeds from the offering for capital
equipment purchases to expand Sierra Materials' manufacturing capacity. See
"Use of Proceeds."

Pentiumatics is in the process of constructing a thirty thousand square foot
aluminum extrusion factory in Southeast Asia. Pentiumatics will manufacture
aluminum cycle tubes and aluminum ski poles to be sold under the Reynolds and
ICE brand names, respectively. In addition, Pentiumatics intends to sell
extruded aluminum to unrelated third parties.

20
<PAGE>

to be located in Southeast Asia, the Company would be in a position to be
vertically integrated in all the main materials used in the manufacturing of
golf shafts, cycle tubing and ski poles, the main businesses of the Company.
Management believes that the completion of the factory will not require
significant additional Company resources. However, there can be no assurance
that the Company will finish the construction of the aluminum extrusion
factory or that the Company will produce extruded aluminum alloy.

Source of Sales

During the year ended December 31, 1996, the greatest portion of the
Company's sales were derived from its Apollo steel golf shafts and Reynolds'
cycle tubing. Apollo's steel golf shaft business and Reynold's cycle tubing
business accounted for approximately 91% of the Company's sales for the year
ended December 31, 1996. In March 1997, the Company acquired an 80% interest
in Sierra Materials which manufactures advanced composite materials. In April
1997, the Company purchased all of the outstanding stock of Pentiumatics, a
Southeast Asian company, which expects to manufacture extruded aluminum
alloys. The combination of these two acquisitions is anticipated to lessen the
Company's dependence on the sale of golf and cycle products as the principal
source of its sales. During the year ending December 31, 1997 and thereafter,
management believes that the golf and cycle businesses will represent a
progressively lower percentage of its total sales. The Company's future
acquisitions strategy is to focus on the sports equipment and recreation
industry with no single product line representing a majority of its total
sales.

Apollo Golf Shafts

The steel golf shaft market has three significant manufacturers: True Temper
(U.S.A.), Apollo (UK) and FM Precision (U.S.A.). Nippon Steel has
progressively withdrawn from the market and Apollo has purchased equipment
from Nippon Steel at favorable prices. There are large capital entry barriers
associated with the manufacturing of steel golf shafts and the Company does
not anticipate additional capacity coming on line from any new competitors.
Apollo is the only manufacturer of seamless steel golf shafts in the world.
Management believes that the physical integrity of the seamless golf shaft is
superior to a welded golf shaft made by its competitors. Seamless tubes can be
manufactured using a greater variety of high carbon alloys which the Company
believes increase golf shaft consistency and permits greater design
versatility. Currently, Apollo has a small market share of the graphite golf
shaft business. The Company's future plans are to increase sales in the
graphite golf shaft business utilizing Apollo's sales and distribution
channels. Initially, the Company plans to expand its presence in the graphite
golf shaft business by purchasing finished graphite golf shafts from an
independent graphite manufacturer for resale through equipment catalogs and
custom club makers ("retail after market"). Additionally, the Company will act
as sales agent for this same third party manufacturer for sales to original
equipment manufacturers ("OEMs"). The Company has signed an exclusive
distribution agreement with a Southeast Asian company whereby the Company will
distribute graphite golf shafts utilizing the Company's technology and
specifications and believes that with Apollo's established sales and
distribution channels that it will increase sales in this segment by providing
competitive pricing, quality and service.

Graphite golf shafts are manufactured by approximately 30 companies
worldwide and competition is intense. The industry is maturing and management
anticipates a consolidation will occur and as such, the number of competitors
will be reduced. Management anticipates that technology, price, quality and
service will be determining factors in effectively competing in this market.
The major competitors today are Aldila, HST, Unifiber, Fujikura, Grafalloy and
True Temper.

The Company's results of operations could be materially adversely affected
by the traditional volatility in consumer demand for specific golf club
brands. The Company also believes that while it will often be impossible to
predict such shifts in advance, the Company's broad range of customers should
reduce the extent of the impact on the Company's financial results.
Traditionally, the Company has focused its attention on the OEM market. The
Company plans to continue devoting a majority of its research and development
efforts on developing new innovations for the OEM market which today
represents a large portion of the Company's sales. The Company believes that
its strong presence in the OEM market has helped to position it as a leader in
the design,

21
<PAGE>

development and manufacture of golf shafts. The Company believes that its
strong historical position with respect to OEM manufacturers gives it
credibility in the retail after market as well. Expanding the Company's market
share in the retail after market is a significant component of its growth
strategy.

Apollo has a strong OEM customer base, including in alphabetical order, such
brand names as Callaway Golf, Inc., Cobra Golf, Inc., Focus Golf, Harris
International, Karsten, Knight Golf, MacGregor Golf Company, Mizuno Golf
Company, Northwestern Golf, and Wilson Sporting Goods Company. For the year
ended December 31, 1996, Apollo had approximately 700 customers in the U.S.A.
and 70 in Europe. No one customer accounted for more than 10% of the Company's
sales for the year ended December 31, 1996. Accordingly, the Company is not
economically dependent on any one key customer.

Reynolds Cycle Tubing

Reynolds ranks as one of the leading suppliers of premium brand cycle tubing
serving such customers as GT Bicycle, Inc., Kona Bicycles USA, Raleigh Bicycle
Company, Ltd. and Trek Bicycle Corp. Twenty-seven of the last 39 Tour de
France races were won with bikes made from Reynolds' tubing. The Reynolds
cycle tubing business is seasonal and had only a small impact on the financial
results of the Company for the period from acquisition (September 18, 1996)
through December 31, 1996. The Company plans to expand the Reynolds cycle
tubing business through its investment in Pentiumatics and the introduction of
an aluminum cycle tubing product line.

ICE Ski Poles

The ICE ski pole business represented approximately 7% of the Company's
total sales during the period from acquisition (September 18, 1996) through
December 31, 1996. In the future, the Company expects winter sports products
to become a larger portion of its business and as such, ICE expects that its
products will be in greater demand. By expanding its product line of winter
sports products, management expects greater cash flows for the Company
throughout the year.

Effects on Results of Operations

The acquisition of Apollo and Sierra Materials, both of which require
significant machinery and equipment to manufacture their respective products,
will result in depreciation charges to operations of approximately $600,000
per year.

ICE's intangible assets were recorded at approximately $815,000, net of the
minority interest in ICE. The Company is amortizing these assets, using the
straight-line method, over a 15-year period which will result in a non-cash
charge to operations of approximately $55,000 per year.

RESULTS OF OPERATIONS

The Company analyzes its results from operations in two categories: (1)
"United Kingdom (UK)" which consists of sales and corresponding cost of sales
of all product sold from the United Kingdom, with the exception of product
sold to Apollo U.S., and all selling, general, administrative, interest and
other expenses incurred by Apollo and Reynolds and (2) "U.S." which consists
of sales and corresponding cost of sales of all product sold from the United
States and all selling, general, administrative, interest and other expenses
incurred by Apollo U.S., Sierra Materials and ICE and general corporate
expenses incurred in the United States. Pentiumatics is not yet operational.

The Company accounts for its foreign operations in the local functional
currency, the Pound Sterling for United Kingdom operations and the Malaysian
Ringgit for Pentiumatics. These amounts are translated into the U.S. dollar
for financial reporting purposes. Balance Sheet amounts are translated using
the period end exchange rate. Statement of Operations amounts are translated
using the average exchange rate for the period. Translation

22
<PAGE>

gains/losses are reflected in Stockholders' equity (deficit) in the line item,
"Foreign currency translation adjustment." The risks inherent in maintaining
assets and liabilities and entering into transactions denominated in foreign
currencies increases volatility in reported results of operations and
Stockholders' equity due to exchange rate differences between the U.S. dollar
and the other currencies. The Company enters into forward foreign exchange
contracts, from time to time, to "fix" the exchange rate for specific sales
from the U.K. to the U.S. The contracts are "marked" to market at each period
end. Gains and losses on the contracts are recognized currently in the
Statement of Operations. Due to significant volatility between the U.S. dollar
and the U.K. Pound Sterling, the Company's Statement of Operations could be
significantly impacted by exchange rate changes in these currencies.

Prior to 1996, the Company was a development stage enterprise as it was
devoting most of its activities to financial planning and identifying and
evaluating acquisitions. Management's Discussion and Analysis includes
primarily discussions of operations subsequent to the acquisition of Apollo,
Reynolds, Apollo U.S., ICE, Sierra Materials and Pentiumatics. See
"Acquisition History." Accordingly, as discussed in greater detail below,
these acquisitions have resulted in material increases in the Company's net
sales, cost of goods sold and selling, general and administrative costs and
resulting net operating loss for the six months ended June 30, 1997 in
comparison to the six months ended June 30, 1996 and for the year ended
December 31, 1996 compared to the year ended December 31, 1995. Apollo,
Reynolds, Apollo U.S. and ICE were acquired in September 1996. The operating
results of these acquired entities are reflected only in the six months ended
June 30, 1997 and not for the six months ended June 30,1996 and from October
1, 1996 to December 31, 1996 for the year ended December 31, 1996. In March
and April of 1997 the Company acquired its interest in Sierra Materials and
Pentiumatics, respectively. The effects of these acquisitions are included in
the interim consolidated balance sheet of the Company as of June 30, 1997 and
in the interim consolidated statement of operations for the six months ended
June 30, 1997.

Six months ended June 30, 1997 and 1996.

The Company had net sales of $12,750,000 for the six months ended June 30,
1997 compared to $20,000 for the comparable period in 1996. Net sales for the
six months ended June 30, 1997 from UK operations were $4,339,000. The Company
did not have any UK sales, cost of sales or selling, general and
administrative costs for the six months ended June 30, 1996. Net sales from
U.S. operations were $8,411,000 for the six months ended June 30, 1997
compared to $20,000 for the comparable period in 1996.

The Company had a gross profit of $2,966,000 for the six months ended June
30, 1997 compared to $(3,000) for the comparable period in 1996. Gross profit
from UK operations was $1,158,000 for the six months ended June 30, 1997.
Gross profit from U.S. operations was $1,808,000 for the six months ended June
30, 1997 compared to $(3,000) for the comparable period in 1996.

The Company's selling, general and administrative expenses increased to
$4,072,000 for the six months ended June 30, 1997 compared to $238,000 for the
comparable period in 1996. Selling, general and administrative expenses from
UK operations were $2,623,000 for the six months ending June 30, 1997.
Selling, general and administrative expenses from U.S. operations were
$1,449,000 for the six months ended June 30, 1997 compared to $238,000 for the
comparable period in 1996.

The Company incurred an operating loss of $1,106,000 for the six months
ended June 30, 1997 compared to a $241,000 operating loss for the comparable
period in 1996. Operating loss from UK operations was $1,465,000 for the six
months ended June 30, 1997. The Company did not have UK operating income for
the six months ended June 30, 1996. Operating income from U.S. operations was
$359,000 for the six months ended June 30, 1997 compared to an operating loss
of $241,000 for the comparable period in 1996.

The disproportionate operating loss from UK operations compared to U.S.
operations is due to the organizational structure of Apollo and Apollo U.S.
(collectively the "Group"). All of the Group's manufacturing facilities, the
vast majority of the Group's employees and the majority of the Group's
selling, general and administrative expenses are in the UK, whereas most of
the Group's sales occur in the U.S.

23
<PAGE>

The Company had $200,000 in interest expense for the six months ended June
30, 1997; $77,000 from UK operations and $123,000 from U.S. operations. No
interest expense was incurred for the six months ending June 30, 1996. The
increase in interest expense is primarily the result of the Company's credit
facilities in the United States and the United Kingdom and interest on the
remaining purchase obligation for ICE.

The Company has entered into certain forward currency exchange contracts to
hedge its exposures to changes in currency exchange rates primarily between
the U.S. dollar and the UK pound sterling. These transactions resulted in
$39,000 in losses from UK operations for the six months ended June 30, 1997.
No such transactions took place for the six months ended June 30, 1996.

The Company entered into two secured promissory notes with Bridge Lenders in
1997 for $1,500,000. For the six months ended June 30, 1997, the Company
incurred $550,000 in debt financing costs from U.S. operations in
consideration of the notes payable. No such transactions took place for the
six months ended June 30, 1996.

The Company recorded an income tax benefit of $181,000 for the six months
ended June 30, 1997 primarily as a result of losses generated by Apollo in the
United Kingdom. Taxable income (loss) by country is determined under the tax
regulations of the respective taxing authorities, and varies significantly
from the measurement bases utilized for financial reporting purposes.The
losses will be utilized to offset future taxable income in the United Kingdom.
No such income tax benefits existed for the six months ended June 30, 1996.

The Company incurred a net loss of $1,665,000; $1,400,000 from UK operations
and $265,000 from U.S. operations, for the six months ended June 30, 1997
compared to a net loss of $241,000 for the comparable period in 1996.
Management attributes the increase in loss primarily to lower than expected
sales of Apollo and ICE, manufacturing material usage inefficiencies at Sierra
Materials, debt financing costs and other general corporate expenses.

In order to become profitable, the Company must increase sales while
effectively managing costs. Profitability depends to a large extent on
management's ability to increase sales, reduce selling, general, and
administrative costs, outsource the manufacturing of graphite shafts, more
efficiently utilize existing plant capacities at Apollo and Reynolds and
expand manufacturing capacity at Sierra Materials, commencing manufacturing at
Pentiumatics, and by acquiring companies whose businesses would be
complementary to, and compatible with, the existing business of the Company's
subsidiaries. Management does not expect the Company to attain profitability
in 1997. There can be no assurance that the Company will be able to achieve
these goals or attain profitability in the future.

Years Ended December 31, 1996 and 1995

The Company had net sales of $5,453,000 for the year ended December 31,
1996, of which $2,499,000 were from UK operations and $2,954,000 were from
U.S. operations. The Company did not have any sales or cost of sales for the
year ended December 31, 1995.

The Company had a gross profit of $1,284,000 for the year ended December 31,
1996, of which $626,000 was from UK operations and $658,000 was from U.S.
operations.

The Company's selling, general and administrative expenses increased to
$2,308,000 for the year ended December 31, 1996 compared to $371,000 for the
comparable period in 1995. Selling, general and administrative expenses were
$1,348,000 from UK operations and $960,000 from U.S. operations for the year
ended December 31, 1996. All selling, general and administrative costs for the
year ended December 31, 1995 were from U.S. operations.

The Company incurred an operating loss of $1,024,000 for the year ended
December 31, 1996 compared to an operating loss of $371,000 for the comparable
period in 1995. Operating loss from UK operations was

24
<PAGE>

$722,000 for the year ended December 31, 1996. Operating loss from U.S.
operations was $302,000 for the year ended December 31, 1996 compared to an
operating loss of $371,000 for the comparable period in 1995. The operating
loss of $371,000 for the year ended December 31, 1995 was from U.S.
operations.

Interest expense for the year ended December 31, 1996 was $35,000; $16,000
from UK operations and $19,000 from U.S. operations. The Company did not have
interest expense for the year ended December 31, 1995.

The Company incurred a gain of $127,000 on forward currency exchange
contracts for the year ended December 31, 1996, all of which was from UK
operations. The Company did not have any forward currency exchanges gains or
losses for the year ended December 31, 1995.

The Company incurred a net loss of $938,000; $611,000 from UK operations and
$327,000 from U.S. operations for the year ended December 31, 1996, compared
to a net loss of $371,000 for the year ended December 31, 1995 entirely from
U.S. operations.

Inflation has not had a significant impact on the Company's operations
during the two year period ended December 31, 1996.

The following table sets forth, for the periods indicated, certain statement
of operations data as a percentage of net sales. The 1996 data is attributable
to Apollo, Reynolds, Apollo U.S., ICE and general corporate expenses and the
pro forma 1996 data reflects the pro forma combined results of those entities
as though the acquisitions were effective January 1, 1996. The June 30, 1997
data is attributable to Apollo, Reynolds, Apollo U.S., ICE, Sierra Materials,
Pentiumatics and general corporate expenses. The pro forma 1997 data reflects
the combined results of those entities and of Sierra Materials and
Pentiumatics as though these two acquisitions were effective January 1, 1997.

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
-------------------- --------------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net sales........................... 100% 100 100 100
Cost of goods sold.................. (77) (76) (77) (78)
Gross profit...................... 23 24 23 22
Selling, general and administrative
expenses........................... (42) (29) (32) (31)
Operating loss...................... (19) (5) (9) (9)
Interest expense.................... (1) (1) (2) (1)
Gains on forward exchange contracts,
net................................ 3 -- -- --
Debt financing costs................ -- -- (4) (4)
Loss before income taxes and
minority interest.................. (17) (6) (15) (14)
Income tax benefit (expense)........ -- (1) 2 2
Minority interests.................. -- -- -- --
Net loss.......................... (17)% (7) (13) (12)
</TABLE>

RECENT ACCOUNTING PRONOUNCEMENTS

In February of 1997, the Financial Accounting Standards Board (the "FASB")
issued Statements of Financial Accounting Standards, No.128, Earnings per
Share, (Statement No. 128) and No. 129, Disclosure of Information about
Capital Structure, (Statement No. 129), effective for years ending after
December 15, 1997. Statement No. 128 specifies the computation, presentation,
and disclosure requirements for earnings per share ("EPS") for entities with
publicly held common stock or potential common stock. The Company will adopt
Statement No. 128 in the December 31, 1997 consolidated financial statements.
Management believes that the effect of such adoption will not have a
significant impact on the earnings per share of the Company. Statement No. 129
specifies and aggregates various disclosures which were previously required
for certain entities. The Company has adopted the disclosure requirements
under this statement.

25
<PAGE>

SEASONALITY

As a result of the Company's present operations being primarily dependent
upon Apollo sales, management expects for the foreseeable future that the
Company's business will remain seasonal. Because the Company's customers have
historically built inventory in anticipation of purchases by golfers in the
spring and summer, the principal selling season for golf shafts, the Company's
primary product, the Company's operating results have been affected by
seasonal demand for golf clubs, which has generally resulted in higher sales
in the spring and summer months. The success of certain customers' products,
patterns of product introduction, and customer acceptance thereof, coupled
with a generally increasing overall demand for golf shafts, may mitigate the
impact of this seasonality. The Company acquisitions strategy will in part be
driven by its intention to moderate seasonality and balance cash flows.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1997, the Company had a working capital deficit of $672,000. As
of June 30, 1997 the Company had two outstanding notes payable. One note
payable provides for borrowings under a foreign line of credit up to 750,000
PS ($1,285,000 U.S.) plus cash on deposit with the bank with an interest rate
of 1.5% over the bank's prime rate (7% as of September 10, 1997). Amounts
outstanding on the note are secured by substantially all Apollo's assets. At
June 30, 1997, amounts outstanding under the note payable were $1,122,000, net
of $1,456,000 cash on deposit. The credit facility is due on demand and
subject to review in May 1998.

The second note payable provides for borrowings under a line of credit up to
a maximum of $500,000, with an interest rate equal to the bank's prime rate.
Amounts outstanding on the line of credit are secured by substantially all
assets of Apollo U.S. At June 30, 1997, $500,000 was outstanding. The line of
credit expires on May 31, 1998.

In August 1997 the Company borrowed $285,000 from an unrelated third party.
Principal is repayable on demand. Interest is agreed to as 8,000 shares of
common stock in the Company to be transferred equally from the Chief Executive
Officer and the Chief Operating Officer.

Management believes that the combination of remaining borrowings under the
foreign line of credit of $163,000, the Company's cash on hand of $351,000,
excluding the cash offset against the foreign line of credit, the $285,000
borrowing in August 1997, and the sale of Shares will provide sufficient cash
to meet the Company's financial obligations as they come due. However, there
can be no assurance that the Company will be able to meet its financial
obligations as they come due.

The Company incurred a loss of $938,000 in the year ended December 31, 1996
and $371,000 in the year ended December 31, 1995. At December 31, 1996,
amounts outstanding on the foreign line of credit were $738,000 and amounts
outstanding on the second note payable were $300,000.

Subsequent to December 31, 1996, the Company acquired a controlling interest
in two additional entities in exchange for the assumption of indebtedness and
entered into two new debt agreements which contractually terminate in 1997.
Management believes that the combination of extending the due dates of debt
agreements and the sale of the Shares will provide sufficient cash to meet its
obligations as they come due. However, there can be no assurance that the debt
agreements will be extended.

As of December 31, 1996, the Company had $305,000 in cash. Working capital
as of December 31, 1996, totaled $1,960,000.

Net cash used in operating activities was $345,000 and $1,117,000 in 1995
and 1996, respectively. The primary uses of cash were to fund the Company's
losses, to fund the build-up of inventory for the 1997 golf season, and to
reduce outstanding payables and accruals. Cash received from the collection of
receivables from sales prior to acquisition was also used to fund these uses
of cash.

Net cash used in investing activities of $5,046,000 was principally the
acquisition of businesses in 1996.

Net cash provided by financing activities was $351,000 and $6,226,000 in
1995 and 1996, respectively. The primary source of cash was capital
contributions by one of the Company's prior stockholders. The Company also
increased certain amounts payable to banks to finance its seasonal
fluctuations in working capital demand.

The Company continues to consider the acquisition of additional businesses
complementary to the Company's business. The Company would require additional
debt or equity financing, if it were to engage in a material acquisition in
the future.

26
<PAGE>

BUSINESS

OVERVIEW

Coyote was incorporated under the laws of the State of Nevada on October 24,
1994. For a further discussion concerning the capitalization and development
of the Company, see "Acquisition History."

Coyote designs, engineers, manufactures, markets and distributes brand name
sports equipment and recreational products. The Company's products include
steel and graphite golf shafts, premium grade cycle tubing, composite ski
poles and javelins. The Company also produces graphite and other advanced
composite materials for use in the production of golf shafts, fishing poles,
ski poles, hockey sticks and other manufactured third party products. The
Company intends to produce aluminum extruded alloys for such products as cycle
tubing, ski poles and tennis rackets. The Company manufactures its Apollo golf
shafts in its manufacturing facility in Oldbury, England, its Reynolds cycle
tubing in Tyseley, England, and graphite and other advanced composite
materials in California and intends to manufacture extruded aluminum alloys in
Southeast Asia.

During the year ended December 31, 1996, the greatest portion of the
Company's sales were derived from its Apollo steel golf shafts and Reynolds
cycle tubing. Apollo is the only manufacturer of seamless steel golf shafts in
the world. Management believes that the physical integrity of the seamless
golf shaft is superior to a welded golf shaft made by its competitors.
Seamless tubes can be manufactured using a greater variety of high carbon
alloys which the Company believes increase golf shaft consistency and permits
greater design versatility. Apollo has a strong OEM customer base, including
in alphabetical order, such brand names as Callaway Golf, Inc., Cobra Golf,
Inc., Focus Golf, Harris International, Karsten, Knight Golf, MacGregor Golf,
Mizuno Golf Company, Northwestern Golf, and Wilson Sporting Goods Company.
Reynolds ranks as one of the leading suppliers of premium brand cycle tubing
serving such customers as GT Bicycle, Inc., Kona Bicycles USA, Raleigh Bicycle
Company, Ltd. and Trek Bicycle Corp. Twenty-seven of the last 39 Tour de
France races were won with bikes made from Reynolds' tubing.

Coyote's business objective is to become a leading provider of sports
equipment and recreational products. Coyote management intends to build a
consolidated group of companies engaged in related and complementary
businesses that work together to compete effectively in the sports equipment
and recreational product industry. The Company intends to purchase companies
in the sports equipment and recreational products industry, which it believes
are undervalued, having experienced management that have well-established
brand names and product lines, and strong engineering and design capabilities.
Management intends to strengthen and foster the growth of these companies
through the introduction of additional manufacturing capabilities and
techniques, expanded sales and marketing efforts and vertical integration of
Company wide manufacturing and distribution capabilities. In furtherance of
this strategy, Coyote has acquired sole ownership of three companies (i.e.,
Apollo, Apollo U.S., and Reynolds) and a controlling interest in three other
companies (i.e., ICE, Sierra Materials and Pentiumatics) since September 1,
1996. The following table provides summary information about each of these
acquired companies.

27
<PAGE>

<TABLE>
<CAPTION>
% OF PRO FORMA(/1/)
REVENUE
% OWNED BY PRINCIPAL -----------------------
NAME LOCATION DATE ACQUIRED THE COMPANY PRODUCTS OR ACTIVITY 12/31/96 6/30/97
---- ----------------- ---------------- ----------- ---------------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Apollo Golf, Inc. New Jersey 9/18/96 100% U.S. distributor 47% 49%
corporation for certain
located in Company
Chicago, IL products,
primarily golf
shafts
Apollo Sports UK (Oldbury, 9/18/96 100% Steel golf shafts; 28% 25%
Technologies, England) javelins
Limited

Sierra Materials, LLC(2) Colorado limited 3/27/97 (Date of 80% Graphite 14% 18%
liability company acquisition of composite
located in San shares of Cape materials;
Diego, CA Composites Inc.) advanced
composite
materials
Reynolds Cycle UK (Tyseley, 9/18/96 100% Steel cycle tubesets 9% 7%
Technology, Limited England)
ICE*USA LLC Colorado limited 9/18/96 80% Composite ski 2% 1%
liability company poles; aluminum
located in Utah ski poles; ski helmets
and San Diego,
CA
Pentiumatics Sdn., Bhd. Malaysia 4/1/97 77% Extruded aluminum -- --
</TABLE>
- --------
(1) Pro forma financial information for the year ended December 31, 1996 is
based upon the historical consolidated financial statements of the Company
for the year ended December 31, 1996, the historical combined financial
statements of Apollo, Apollo U.S., Reynolds and an acquired manufacturing
facility for the nine months ended September 30, 1996 (collectively, the
"Apollo entities"), and the historical financial statements of Sierra
Materials for the period March 1, 1996 to December 31, 1996. Pro forma
financial information for the six months ended June 30, 1997 is based upon
the historical consolidated financial statements of the Company for the
six months ended June 30, 1997 and the historical financial statements of
Sierra Materials for the three months ended March 31, 1997. See "Financial
Statements--Pro Forma Combined Financial Statements (unaudited)." For
geographic operating information, see Note 11 to Consolidated Financial
Statements.
(2) Owns 100% of Cape Composites Inc.

THE APOLLO GROUP--GOLF PRODUCTS

Acquisition Opportunities

Management perceives that the acquisition of Apollo presents the Company
with a number of opportunities: (i) to be a participant in the growing market
for golf equipment spawned by the recent popularity in this sport; (ii) to
capture a larger share of the golf shaft market by concentrating its marketing
efforts on the unique features and advantages of the seamless golf shaft in
comparison to its competitors' welded golf shafts, advantages that
historically have not been well communicated to its customers; (iii) to
increase manufacturing capability and profitability through more efficient
utilization of plant capacity; and (iv) to penetrate the growing graphite golf
shaft business by using its strong OEM customer base, its well recognized
brand name and established sales and distribution channels to increase sales
and profitability.

History and Market

In 1913, Accles and Pollock of England, the predecessor to Apollo, secured
the first patent for seamless tapered steel golf shafts. Unfortunately, the
Royal and Ancient, golf's governing body in the United Kingdom, banned the use
of steel golf shafts and Accles and Pollock had to sell overseas. As steel
golf shafts grew in popularity, the future King of England agreed to play a
round with them in 1929. Subsequently, the Royal and Ancient found the golf
shafts to be acceptable after all. Apollo remains the only steel golf shaft
manufacturer using a seamless tube, preferring its versatility and
consistency.

28
<PAGE>

Most golf clubs have golf shafts constructed from steel or graphite.
Although some other materials are used, they represent an insignificant
percent of the total world-wide market. Apollo sells its golf shafts to golf
club manufacturers, and in the retail after market through catalogs and custom
club makers. According to management estimates, steel golf shafts represent a
total worldwide wholesale market of approximately 29.5 million units,
representing $74 million in gross sales. The market for steel golf shafts has
decreased over the last ten years due to the introduction of graphite golf
shafts. In spite of this market decrease, Apollo's unit sales have remained
relatively constant, and as a result management believes that Apollo's market
share has significantly increased. Management believes that the decline in the
steel golf shaft market has stopped and that both the size and the overall
value of the steel golf shaft segment will grow over the next few years. This
is largely due to the introduction of new innovative steel golf shaft
products.

Graphite golf shafts were introduced in the early 1970's as the first major
change in golf shaft technology since steel replaced wood in the 1930's.
According to the Company's internally prepared market study, graphite golf
shafts accounted for approximately 46% of all golf shaft unit sales in
calendar 1996. Management believes that the exploitation of the graphite golf
shaft market segment is a major opportunity for Apollo. According to
management estimates, graphite golf shafts represent a total worldwide
wholesale market of approximately 26 million units, representing approximately
$164 million in gross revenues.

Apollo manufactures, in its 132,000 square foot Oldbury, England facility,
seven to eight million steel golf shafts a year, representing, in management's
estimate, approximately 24% of the world's supply of steel golf shafts by
units. Approximately 58% of Apollo's steel golf shaft products are sold in the
United States through Apollo U.S., which management believes represents
approximately 18% of the U.S. market. Approximately 42% are sold in Europe and
the rest of the world, which management believes represents approximately 47%
of the steel golf shaft market in Europe and approximately 25% of the steel
golf shaft market in the rest of the world.

Sales of golf equipment is highly seasonal with models traditionally
introduced in October and phased out by September of the following year.
Selling concentration is somewhat weighted towards the first half of the year,
when component purchase decisions are made for the following season. Larger
manufacturers place orders by schedule for future delivery, but as much as 40%
of Apollo U.S.'s sales can be generated by spot sales for immediate delivery
to small and medium sized assemblers.

Historically, Apollo focused almost exclusively on the steel golf shaft
market. Today, Apollo is positioning itself to penetrate the larger, in sales,
graphite golf shaft market. To leverage its sales and distribution channels,
Apollo has contracted with a third party manufacturer to supply graphite golf
shafts made and engineered to Apollo's specifications and under Apollo's
supervision and quality control.

According to the National Golf Foundation, U.S. golfers spend more than $15
billion a year on equipment, related merchandise and playing fees. World
demand for golf shafts is forecast to grow from 55.6 million golf shafts in
1996 to 59.0 million golf shafts in 1998 in line with the increase in golfer
population in the U.S.A. The European golfer population has grown 56% from 1.6
million in 1988 to 2.5 million in 1995 and is forecast to grow to 2.9 million
by 1998. According to the United States Golf Association, golf is played today
by people from all walks of life. Approximately 43% of all golfers come from
households headed by professionals or managers and another approximately 38%
come from homes headed by blue-collar and clerical workers. The remaining
approximately 19% consists of retirees and other persons. The U.S. golfer
population currently stands at approximately 25 million players, of which
approximately 11 million are core golfers, those that play 8 or more rounds
per year. Of these core golfers, approximately 5 million play 25 or more
rounds per year. Approximately 48% of all golfers are between the ages of 18
and 39. Senior golfers (over age 50) make up approximately 26% of the golf
population.

Apollo Products

Apollo is the only manufacturer of seamless steel golf shafts in the world.
Management believes that the physical integrity and consistency of the golf
shaft is superior using a seamless tube. For this reason, a seamless

29
<PAGE>

tube is usually specified for safety-critical applications, such as power
generation plants. Seamless tubes provide a more homogeneous shaft which
produces a more consistent product and reduces the potential for structural
defects. Seamless tubing also gives more opportunities to use a greater
variety of high carbon, high strength alloy steels as compared to welded
shafts. Apollo also uses high carbon alloys to maximize strength for golf
shafts which are not obtainable in a welded form.

Apollo manufactures a variety of unique steel golf shafts tailored to each
customer's needs and specifications. Its golf shafts are used by some of the
most well known golf club manufacturers. The Company's steel golf shafts are
generally designed and engineered by Apollo in partnership with its club
manufacturer customers. Although the majority of the Company's sales have been
concentrated among its top ten golf club manufacturer customers, no one
customer accounted for more than 10% of the Company's sales for the year ended
December 31, 1996.

Apollo also manufactures unique products to meet the needs of the retail
after market consisting of the catalog and custom club maker market. For this
market, Apollo manufactures eleven varieties of steel golf shafts and markets
five varieties of graphite golf shafts. Each variety is available in differing
flexes, kick points, torques and weights. Apollo provides a range of
innovative, high-quality products designed to maximize the performance of
golfers at every skill level. Additionally, Apollo supplies high performance
alloy steel tubing for use by Reynolds in the manufacture of cycle frame
tubesets and specialized tubing for other uses, such as wheelchairs and
javelins.

Apollo Engineering, Design and Manufacturing

The larger golf club manufacturers each require exclusively designed golf
shafts for their club systems which comprise golf shafts, heads and grips
engineered to work together. Apollo also designs specialty putter golf shafts
which involve a high level of manufacturing complexity. Apollo's activities in
the areas of product and process development are managed by its Technical
Director, Graeme Horwood, an industry recognized expert. Apollo has an
advanced test and inspection facility, which uses "in-house" designed test
equipment and a computer aided design package for golf shaft design. Apollo
U.S. has its own test and inspection laboratory. Considerable technical
support is provided to sales by product development engineers, involving
frequent customer visits and presentations. Development of manufacturing
processes is crucial to new product initiatives and is carried out by a senior
development engineer with the support of two development engineers and a
design engineer. The Company's manufacturing processes involves a number of
specialized processes requiring specific know-how.

Apollo manufactures its steel golf shafts in a 132,000 sq. ft. facility in
Oldbury, England. The Company owns the land, building and equipment used in
manufacturing its steel golf shafts. In the manufacturing process,
the tube is drawn down to produce the blank for forming the golf shaft through
a series of highly productive draw benches. Intermediate heat treatment,
lubrication and cleaning processes are crucial to achievement of final golf
shaft characteristics. High quality golf shafts are subjected to a final draw
pass on benches customized by Apollo's own engineers to guarantee close
control of weight and weight distribution. Premium golf shafts are
manufactured to within weight tolerance of +/- 2 grams. Tube lengths are
precision cut to produce blanks for step forming. Sophisticated heat treatment
is conducted in a furnace, which creates the resilience required for the
application, while keeping the component straight. Golf shaft straightness is
crucial and automatic straightening machines are an important feature of the
process. Final production operations include polishing, nickel/chromium
plating, inspection and packing.

All other manufacturers of steel golf shafts in the world produce steel golf
shafts using a weld mill. A weld mill starts with a flat sheet of steel which
is then rolled into the shape of a tube which is then welded, producing a tube
shaped product with a seam. Management believes that Apollo's seamless golf
shaft production methods provides a more uniform and consistent product.

30
<PAGE>

Apollo Sales and Marketing

Apollo ranks as one of the three leading steel golf shaft manufacturers in
the world and is the only one which has a manufacturing facility located in
Europe. Management believes that Apollo dominates the European market for
steel golf shafts. The market for golf clubs, and therefore golf shafts, is
driven not only by the growth in the golfing population, but also by the
frequency of club purchases, which is determined principally by product
innovation. In the United States and Europe, the Company sells and markets its
steel golf shafts through a salaried sales force directly to golf club
manufacturers and custom club makers. Apollo's sales force consists of four
full time employees in the United States and one full time employee in Europe.
Apollo U.S., responsible for U.S. sales, has expanded its sales force to
strengthen its sales and marketing efforts for steel golf shafts and to expand
into the marketing and sale of graphite golf shafts. Apollo's investment in
promotional activities has succeeded in strengthening its image with new
products. Current strategy focuses on the use of Apollo golf shafts by
European and U.S. Tour professionals. Apollo's Tour professional conversion
program includes one European consultant and two U.S. consultants who follow
the professional circuits in order to promote the use of Apollo golf shafts.

Competition

The steel golf shaft market has three significant competitors consisting of
True Temper (U.S.A.), FM Precision (U.S.A.) and Apollo (UK). Nippon Golf Shaft
has progressively withdrawn from the market and Apollo has purchased from it
equipment at economical prices. There are large capital entry barriers
associated with the manufacture of steel golf shafts and Apollo does not
anticipate additional capacity coming on line in the foreseeable future.

Graphite golf shafts are manufactured by approximately 30 companies
worldwide and competition is intense. The industry is maturing and management
anticipates a consolidation will occur over the next three years. In the end,
management believes that the number of competitors will be reduced
significantly as consolidation within the industry takes place. Technology,
price, quality and service will be determining factors. The major competitors
today are Aldila, HST, Unifiber, Fujikura, Grafalloy and True Temper.

REYNOLDS CYCLE TECHNOLOGY LIMITED--CYCLE PRODUCTS

Acquisition Opportunities

Management perceives that the acquisition of Reynolds presents the Company
with a number of opportunities. Reynolds is one of the oldest established
premium brands in cycling and its name recognition provides an opportunity to
introduce new products, principally aluminum cycle tubesets, bike parts,
handle bars and wheel frames into new and existing markets.

History and Market

Reynolds and its predecessor businesses have been manufacturing steel tubing
for high end bicycle frames for 99 years. Reynolds cycle tubing has been the
winning bike in 27 of the last 39 Tour De France races. Currently, Reynolds
has under contract the U.S.A. National Road Racing Team (which generally
comprises a significant portion of the U.S.A. Olympic Team), the Saturn Racing
Team and the Shaklee Racing Team. Using Reynolds cycle tubing, these teams
have consistently finished within the top five places in the U.S.A. and within
the top ten places worldwide. Through Reynolds' strong brand name recognition
and reputation for innovation, Reynolds has established itself as a supplier
to many major OEM customers including, alphabetically, such brands as GT
Bicycle, Inc., Kona Bicycles USA, Raleigh Bicycle Company, Ltd., and Trek
Bicycle Corp.

According to the 1995 Interbike industry report, more than 100 million
Americans of all ages rode bicycles in 1993, which was up from approximately
72 million in 1983. The worldwide cycle industry produces approximately 108
million bicycles annually. Of those, 86% (93 million) are utility, low price
point bikes sold primarily in low income countries for transportation at under
$200 per cycle. Approximately 9% (10 million) of

31
<PAGE>

all bicycles sold are in the $200 to $400 range. While in general these bikes
use lower cost steel and are sold through mass merchants for recreational use,
there are some examples of branded components appearing on the higher end of
these models. Approximately 5% (5 million) of all bicycles sold are sold for
greater than $400, mainly through specialist dealer networks. The latter
models are Reynolds targeted market since these bikes are sold on a
combination of performance, tensile strength, endurance, brand and price to
sports and recreation enthusiasts with above average income and education
levels. Both bicycle brands and branded components tend to predominate in this
segment, as potential purchasers will research competing specifications. In
addition, the specialist dealer network also sells high margin aftermarket
accessories (for example, stems, seat posts, and wheels). These items often
provide over 40% of the cycle revenue to the specialist dealer and represent a
market into which Reynolds can extend its brand through introduction of new
products. Geographically, the major markets for the top 5% of bicycles sold
are Western Europe and the U.S., while the largest producers are physically in
Taiwan and Italy. Management believes that the tubeset market has annual
revenue of approximately $50 to $100 million worldwide. This includes steel,
aluminum, titanium and carbon fiber. Steel and aluminum tubesets account for
approximately 90% of such annual revenues.

Reynolds Products

Reynolds produces cycle tubing for a wide variety of cycle applications. The
tubing is used for road racing bicycles, road track bicycles and time trial
bicycles, competition touring bicycles, all-terrain bicycles and tandems.
Reynolds shares its research and development function with its main steel
tubing supplier, Apollo. Through this joint effort, the Reynolds
853(TM)/631(TM) "Air Hardened" products were developed. These products give an
exceptional weight to strength and stiffness ratio not normally seen with
conventional steel alloys that is achieved by a unique air hardening process
that concentrates the stiffness in the frame geometry and strength in the
joint, where it is most needed. Reynolds cycle tubes are all manufactured from
high quality alloy steels, which also contributes to the high strength and
stiffness to weight ratio. In addition to the 853(TM)/631(TM) products,
Reynolds also manufactures its 753(TM)/531(TM) manganese molybdenum series and
its 725(TM)/525(TM) and its 501(TM)/500(TM) chrome molybdenum series tubesets.
The higher the number the higher the tensile strength and stiffness to weight
ratio. As a consequence, the 853(TM) gives the greatest tensile strength and
stiffness to weight ratio and the greatest performance features of tubesets in
Reynolds product line.

Reynolds Engineering, Design and Manufacturing

Reynolds currently manufactures its tubesets in a 20,000 square foot leased
facility in Tyseley, England. The Company designs unique tubesets or various
pieces of a frame set to the specifications of its customers. Typically, the
tubesets are bid and specified twelve months before the actual production of
the cycle takes place. For example, in early 1997, the design and engineering
team at Reynolds was prototyping tubes sets for 1998 models. Once specified
into a specific bike model, manufacturing the tubeset is accomplished by a
series of cold forming, butting, heat treating and manipulations. The
engineers at Reynolds work closely with the design teams of its customers to
ensure compliance with tight tolerances and quality specifications.

In the future the Company plans to expand its manufacturing into Southeast
Asia for both aluminum and steel. This will provide a competitive advantage to
increase market share, primarily with the U.S. OEM customers.

Reynolds Sales and Marketing

In the U.S. and Europe, sales and marketing is accomplished using a salaried
sales force located in Elk Grove Village, Illinois for its U.S. sales and in
its Tyseley, England factory for its European sales. The design engineers work
closely with the Reynolds sales staff and the OEM customers. Reynolds markets
its product line through advertising in several cycling trade journals.
Reynolds plans to introduce a line of aluminum cycle tubes in 1998, through
the Pentiumatics facility in Southeast Asia, targeting its marketing at the
premium branded aluminum cycle tube market. Sales and marketing for Southeast
Asia will be done from the Pentiumatics facility.

32
<PAGE>

Reynolds Competition

The majority of branded cycle tubing is supplied by six manufacturers
worldwide. Easton is a U.S. based manufacturer, specializing in aluminum;
Columbus is an Italian-based manufacturer, primarily using steel; Dedacciai is
an Italian-based manufacturer, primarily using steel; True Temper, is a U.S.
based manufacturer, primarily using steel; Tange, is a Japanese based
manufacturer, primarily using steel; and Reynolds, a U.K. based manufacturer
primarily using steel and is planning to introduce an aluminum cycle tubing
product line.

SIERRA MATERIALS--ADVANCED COMPOSITE MATERIALS

Acquisition Opportunities

Management perceives that the acquisition of Sierra Materials presents the
Company with a number of opportunities. Sierra Materials is a manufacturer of
graphite and other advanced composite materials, and a supplier of products
that are essential to ever expanding uses by manufacturers. The market for
Sierra Materials products is expanding because the products are being used in
a greater variety of applications. A significant portion of the production
capacity of Sierra Materials has been sold and management believes that the
additional manufacturing capacity planned to be acquired, in significant part
through the proceeds of this offering, will result in increased sales and
profitability.

Overview and Markets

Sierra Materials is a supplier of graphite and other advanced composite
materials primarily for use in the sports and recreational markets. A
composite material is a structural system comprised of different types or
forms of materials. In common usage today, the term "composite" refers to a
matrix of one type of material, such as an epoxy resin, reinforced with a
fibrous form of another material, such as carbon fiber, fiberglass, or
Kevlar(TM). Nature has successfully used this structural concept in its own
composite structural material--wood. Wood is comprised of a fibrous material
(cellulose) which reinforces a matrix of lignin (sap). The most common type of
composite used commercially today is glass fiber reinforced plastic ("GFRP").
Commonly referred to as fiberglass, GFRP has been used for decades in boats,
pickup truck caps and sporting goods, among other items.

Advanced composites is a term given to high performance fibers combined with
polymers (resins). Fibers which fall into this category include carbon fiber,
boron, Kevlar(TM) and Spectra(TM), along with high strength glass fibers and
some ceramics. Sierra Materials is a manufacturer of unidirectional pre-
impregnated material ("prepreg") made primarily from carbon fiber and
fiberglass; and coated fabrics, primarily woven fiberglass and Kevlar(TM). The
Company's finished composite materials are principally sold in rolls and are
subsequently incorporated by Sierra Materials' customers into manufactured
products.

Advanced composites have been used for years in military and aerospace
applications. Now that these advanced materials have been proven in the
demanding environments of military and aerospace applications, an increasing
number of manufacturers are implementing composite materials in their
products. Commercial aircraft, including the new Boeing 777, are using
composite materials in primary structural elements such as the tail wings and
floor beams.

Because carbon fiber is as strong and durable as metal but lighter and more
versatile, it is used in many sporting goods applications where weight and
performance are critical factors. Sierra Materials' composite materials are
capable of being incorporated in a wide range of sports equipment and
recreational product applications. Uses of advanced composites currently
include the manufacture of golf shafts, fishing rods, hockey sticks, skis, ski
poles, snow boards, water skis, surfboards, sailboats, and tennis racquets.
Commercial applications other than sporting equipment include automotive
components such as drive shafts and body panels; medical devices, such as
prosthetics; industrial uses, such as tanks and containers; electronic
components, such as circuit boards and antennae; infrastructure projects such
as reinforcements; and security systems, such as body armor and armored
vehicles.

Over the last two decades, there has been significant growth in the use of
graphite and other advanced composite materials as a result of improvements in
applications engineering, advances in composites technology and declining
costs to the customer in manufacturing final products.

<PAGE>

Sierra Materials Engineering, Design and Manufacturing

The most common method of advanced composites fabrication involves the use
of prepreg. This is a term given to preimpregnated materials, either
unidirectional fiber material or woven fabrics impregnated with resins. The
raw graphite comes into the factory in the form of a spool of yarn, where each
strand of yarn has between 1,000 to 50,000 filaments, depending on the
specifications ordered. The unidirectional prepreg is manufactured by
spreading these thousands of filaments (carbon or fiberglass) onto a resin
coated paper and, by using pressure and heat, impregnating the filaments with
the resin. Both types of materials are sold in roll form to meet specific
customer requirements for size and weight. The woven fabric prepreg is
manufactured primarily of fiberglass, carbon fiber or Kevlar(TM).

In 1997, the limiting factor affecting Sierra Materials' sales and earnings
growth is expected to be the availability of carbon fiber yarn. In 1995,
sports equipment and recreational products companies were fully embracing
carbon fiber as the material of choice. Usage of carbon fiber in the aerospace
industry was up significantly, and signs of an impending shortage of fiber
began to appear. However, the fiber manufacturers which had been burdened by
overcapacity in the past were hesitant to invest once again in new plant and
equipment. No plans for additional capacity were announced until late 1996. At
present, most of the new capacity will not be available to meet anticipated
customer demand for carbon fiber until early in 1998.

In 1997, management estimates that, on an industry basis, up to 30% of total
carbon fiber demand will go unfilled. Aerospace programs which command higher
margins are being supplied first, with any remaining capacity going to
commercial and recreational suppliers.

Sierra Materials is presently operating at near manufacturing capacity and
its sales are, accordingly, limited. A portion of the proceeds of this offerng
will be used to expand its manufacturing capacity.

Sierra Materials Sales and Marketing

According to the Suppliers of Advanced Composites Materials Association,
worldwide shipments of carbon fiber materials for the first half of 1995 was
over 12,000,000 pounds valued at over $280,000,000 with annual growth
estimates averaging 15% over the next 5 years. This growth is being fueled by
two primary industries; the aerospace industry which accounts for
approximately 78% of total sales, and sporting goods manufacturers which
account for approximately 18% of total sales. The remaining sales were divided
between a variety of developmental projects, including automotive, medical,
and infrastructure applications.

The composite materials market can be broken down into three segments: raw
materials suppliers, such as suppliers of carbon fiber and resins; converters
(prepreggers), such as Sierra Materials, which convert the raw
materials into a useable state; and end users, such as golf club shaft
manufacturers, which form the prepreg into a finished product. While some
companies, such as the golf shaft manufacturer Aldila, have integrated into
producing its own prepreg materials, very few companies have fully integrated
from basic materials to end product.

Sierra Materials' sales to date have been realized with a limited formal
marketing program. Its sales have been primarily accomplished by industry
reputation. As of June 30, 1997, backlog of unfulfilled orders exceeded
$4,000,000.

Sierra Materials Competition

There are approximately 24 suppliers of carbon fiber prepreg worldwide.
Large suppliers include ICI Fiberite, Inc., Toray Composites America, Hexcel
Corp., Cytec Engineered Materials, Inc. and Newport Adhesive and Composites,
Inc. Currently, Toray Composites America, Hexcel Corp. and Newport Adhesives
and Composites, Inc. all have parent companies which own fiber manufacturing
facilities.

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<PAGE>

ICE--SKI PRODUCTS

Acquisition Opportunities

Management perceives that the acquisition of ICE presents the Company with a
number of opportunities. ICE is a recognized brand name in that portion of the
composite ski pole market that is serviced through a large number of specialty
shops selling premium high end sports equipment. The ICE brand name can be
expanded to other premium products for distribution through this unique
channel.

ICE is a manufacturer and marketer of premium composite and aluminum ski
poles. ICE markets its ski poles in the United States directly to
approximately 450 speciality shops nationwide and in Canada and Japan through
independent distributors. During the 1996-1997 ski season, ICE had
approximately 3% of the unit market share and approximately 6% of the dollar
market share for specialty shops in the United States according to the March
1997 U.S. Ski and Snowboard Industry Report. ICE has a limited presence in
chain stores.

Most ski poles are manufactured from extruded aluminum alloys. In recent
years, graphite ski poles have been introduced and have grown in unit sales
each year. As in most sporting goods categories, the use of carbon fiber
composites is growing due primarily to lighter weight, superior strength and
greater versatility.

In 1996-1997, ICE introduced a line of ski helmets to the market. The
Company plans to introduce a new aluminum ski pole line which it intends to
manufacture at Pentiumatics. See "Business--Pentiumatics--Extruded Aluminum
Alloys."

The key strategy for ICE is to expand its existing product line. Over the
past few years, the use of helmets in the ski industry has increased
dramatically. Management believes that this trend will continue and that in
the next few years helmets will be the single fastest growing segment in ski
equipment. During the 1996-1997 season and in response to this increased
demand, ICE introduced a new line of Department of Transportation approved
helmets which it purchases for resale. Aluminum poles have historically been
the largest single segment of the ski pole business. Previously, ICE has not
manufactured a ski pole for this market. During the 1997-1998 season, ICE will
introduce a line of high end aluminum poles to augment its traditional
composite product.

ICE Industry

According to the February 1996 issue of American Demographics Magazine, more
than 10 million Americans aged seven and older participated in downhill skiing
in 1994, making it the nation's most popular winter sport. The period between
1988 and 1994 was not a good one for the ski industry with both the number of
skiers and the percent who ski at least once a year, declining. However the
introduction of the new "shaped" ski's in 1995-1996 has had a very positive
impact on the industry as a whole. As a consequence, the sale of Alpine skis
rose 36.6% during the 1996-1997 season compared against 1995-1996. Total
retail spending on snow sports rose 17.4% to approximately $2 billion (source
Sporting Goods Intelligence--May 12, 1997).

The Company employs independent sales representatives to sell and promote
its products to approximately 450 specialty shops nationwide. The ICE brand of
ski poles has one of the highest average retail prices in the industry. The
ICE ski pole is a premium product and is marketed as such.

The Company is moving aggressively toward vertical integration and, by the
end of 1998, the Company plans to be manufacturing aluminum ski poles and have
contractual control over the third party manufacture of composite poles
through the Pentiumatics Southeast Asian facility (see "Business--Apollo" and
"Business--Pentiumatics Extruded Aluminum Alloys"). This manufacturing
capability will give ICE greater control over quality, cost and innovation
which management believes will create opportunities in the OEM market as well.
The Company believes this kind of vertical integration will allow it to have a
competitive cost structure and better control over the quality of the finished
product.

35
<PAGE>

ICE Competition

Major competitors, in alphabetical order, are Goode Ski Technologies, Kerma
Ski Poles, Leki USA, Scott USA and Smith Sport Optics, Inc. Of these, the
Company views Leki and Kerma as its major competitors in the high technology,
high priced composite ski pole market.

PENTIUMATICS--PROPOSED EXTRUDED ALUMINUM ALLOYS FACILITY

In April of 1997, the Company purchased all of the outstanding shares of
Pentiumatics for approximately $200,000 cash. At that time, Pentiumatics was
an existing Malaysian company that owned no significant assets other than
certain contract rights to purchase land and equipment. Subsequent to the
Company's initial purchase, the Company contributed approximately $2,200,000
to Pentiumatics for stock in order to assist Pentiumatics in acquiring land
and constructing a building at a cost of approximately $3,200,000 and
equipment at a cost of approximately $670,000. The land and equipment
purchases and building construction contract were entered into with
unaffiliated third parties on an arms-length basis. The Company intends to use
these assets to build and operate an aluminum extrusion factory. In June of
1997, Insular Mart Sdn Bhd, a Malaysian company ("Insular"), contributed
approximately $600,000 into Pentiumatics to finalize the above transactions,
resulting in an ownership of 23% by Insular and 77% ownership by the Company.

It is the Company's expectation that the 30,000 square foot factory will be
completed in 1997. The Company anticipates that a significant percentage of
this new plant's output will eventually be used by Reynolds and ICE. In
addition, the Company plans to produce other extruded aluminum parts for
regional manufacturers of sports equipment.

The addition of Pentiumatics is expected to enhance the Company's strategy
by adding extruded aluminum alloy to its manufacturing base. This would mean
that the Company could produce steel tubing, graphite and other advanced
composite pre-preg and extruded aluminum alloy. These are the main materials
used in most sporting goods products worldwide. If the Company is successful
in completing the construction of the factory, the Company would be in a
position to be vertically integrated in all the main materials used in the
manufacturing of golf shafts, cycle tubing and ski poles, the main businesses
of the Company. There can be no assurance that the Company will finish the
construction of the aluminum extrusion factory or that the Company will
produce extruded aluminum alloy.

GOVERNMENTAL REGULATIONS

UNITED KINGDOM

Apollo and Reynolds are established in England and are, accordingly, subject
to the laws of the European Community and those of England and Wales with
regard to their activities generally. These laws relate to employment,
including, for example, employee rights against unfair dismissal and
discrimination on the basis of race, sex or disability, taxation, company
administration, consumer protection and planning matters. Specific regulations
which apply to Apollo and Reynolds as manufacturing companies include:

Environment. The activities of Apollo and Reynolds are regulated by the
Environmental Protection Act of 1990. This Act requires Apollo to obtain
licenses to carry out its nickel coating process for golf shafts and to
produce, store and dispose of industrial waste of various descriptions. In
addition, consent is required from the local rivers authority under the Water
Resources Act of 1991 and The Water Industry Act of 1991 regarding discharge
of overflow water from its property into the public sewers. The Company
believes that it is currently in compliance with all licenses and consents.
When the Environment Act of 1995 is fully implemented, the relevant authority
will have significantly increased powers to order persons and companies to
clean contaminated land. However, these increased powers may only be exercised
if the contamination poses a serious risk to health or property. No cleanup
proceedings have been threatened against Apollo and Reynolds, nor are such
proceedings anticipated.

36
<PAGE>

Health and Safety. The principal United Kingdom statute is the Health and
Safety At Work Act of 1974 ("Health and Safety Act"), which imposes a duty on
employers to maintain a "a safe system of work." This obligation is
supplemented by various regulations requiring employers to establish
procedures for assessing hazards to safety and for reducing or eliminating
risk. Apollo and Reynolds have regular contact with the Factory Inspectorate,
the statutory body which administers the Health and Safety Act. No proceedings
are in existence or threatened against the United Kingdom companies by the
Factory Inspectorate.

Although management believes it is currently in compliance with the above
regulations, the Company's future operations could expose it to the risk of
claims with respect to environmental or health and safety matters. Although
compliance with governmental requirements relating to the protection of the
environment or health and safety has not had a material adverse effect on the
Company's financial condition or results of operations to date, there can be
no assurance that material costs or liabilities will not be incurred in
connection with such environmental or health and safety matters in the future.

UNITED STATES

Environmental Regulations. The Company's operations which are located in the
United States, including ICE, Sierra Materials and Apollo U.S., are subject to
governmental, environmental and health and safety laws and regulations that
impose workplace standards and limitations on the discharge of pollutants into
the environment and establish standards for the handling, generation,
emission, release, discharge, treatment, storage and disposal of certain
materials, substances and wastes. These laws include, for example, the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), the Clean Air Act, as amended, and the Resource
Conservation and Recovery Act of 1976, as amended. Management believes the
Company is in compliance with United States environmental laws and
regulations. Although compliance with governmental requirements relating to
the protection of the environment has not had a material adverse effect on the
Company's financial condition or results of operations to date, there can be
no assurance that material costs or liabilities will not be incurred in
connection with such environmental matters in the future.

EMPLOYEES AND CONSULTANTS

The Company has 317 full time employees and one part time employee. The
Company will hire additional employees as may be required to support expansion
of the Company's operations.

There are three different unions that have collective bargaining agreements
with Apollo and Reynolds. All hourly paid Apollo employees and 18 hourly paid
Reynolds employees are members of a union. Several union agreements apply to
all hourly employees of both companies.

Except for the hourly paid agreement, which is negotiated annually, there
are no termination dates to the above agreements. The above agreements
continue to apply until otherwise renegotiated between the parties. Management
believes that the relationship with its employees is good.

INTELLECTUAL PROPERTY

The Company's success depends and will continue to depend in part on the
goodwill associated with its various trademarks including "APOLLO",
"ACCULITE", "MATCHFLEX", "MASTERFLEX", "SHADOW", and others. The Company has
sought and obtained trademark registrations, or has applications currently
pending, for these and other marks in the United States through the United
States Patent and Trademark Office and for a portion of these marks in many
foreign countries as well.

The Company owns no issued patents which relate to its technology or
products. As to the golf shafts produced and sold by the Company, there is one
currently pending application for a patent in Great Britain which relates to
producing frequency-matched shafts from a universal blank.

37
<PAGE>

The Company has certain confidential and proprietary information including
confidential information relating to the operation of the Company's business,
sales and customer information, supplier information, and certain portions of
the manufacturing process which may be proprietary. While the Company has
taken reasonable steps to safeguard such information, there can be no
assurance that the steps that have been and are taken by the Company in this
regard will be adequate to prevent misappropriation of its technology or that
the Company's competitors will not independently develop technologies that are
substantially equivalent or superior to the Company's technology.

RESEARCH AND DEVELOPMENT

Expenditures relating to the development of new products and processes,
including significant improvements and refinements to existing products
amounted to approximately $220,000 for the time period from September 18,
1996, the date that Apollo and Reynolds were acquired by Coyote to December
31, 1996. During the nine months prior to the Company's acquisition of Apollo,
approximately $400,000 was spent on development of new products and processes.

FACILITIES

The Company's executive offices are located in Boulder, Colorado pursuant to
a lease terminating in July, 1998. Apollo operates its golf shaft
manufacturing in a facility in Oldbury, England, which is a heavy industrial
area. The Company owns the land, building and equipment used in manufacturing
its steel golf shafts. Reynolds' currently manufactures its tubesets in a
20,000 square foot leased facility in Tyseley, England. Apollo U.S. operates a
8,153 square foot facility in Elk Grove, Illinois, pursuant to a lease which
expires January 31, 2000. Sierra conducts its manufacturing operations in a
10,284 sq. ft. facility in San Diego, California, pursuant to a sublease which
expires in February 1999. ICE operates two 1,000 square foot facilities in
Heber, Utah, pursuant to two leases, both of which expire on November 14,
1997.

LITIGATION

The Company is not currently subject to any material litigation nor, to the
Company's knowledge, is any material litigation threatened against the
Company. The Company is subject to the normal kind of claims from employees in
heavy industrial manufacturing operations. See "Risk Factors--Industrial
Injuries".

ACQUISITION HISTORY

Coyote was incorporated under the laws of the State of Nevada on October 24,
1994. From its inception through December 31, 1994, the founders of Coyote
contributed a total of $51,000 to the capital of Coyote, which capital
contributions were used to pay various organizational and startup expenses
incurred by Coyote. During the fiscal year ended December 31, 1995, Coyote's
majority shareholder ("former majority shareholder") at that time contributed
an additional $304,923 to the capital of Coyote to fund additional
organizational and startup expenses. During the partial year ended December
31, 1994 and the year ended December 31, 1995, Coyote's sole activity was the
organization of its business and development of its business strategy to
purchase companies in the sports equipment and recreational products industry.
During such period, Coyote did not own any subsidiaries or business assets and
was not conducting any business activities.

The organizational and startup stage of the Company continued until
September 18, 1996, when the Company acquired Apollo, Reynolds, Apollo Golf
and ICE. During 1996, Coyote's former majority shareholder at that time
contributed an additional $5,783,815 to the capital of Coyote to fund the
acquisition of the four operating subsidiaries and otherwise provide funds for
Coyote's working capital requirements. During the six month period, ended June
30, 1997, Coyote's former majority shareholder at that time contributed an
additional $2,211,045 to Coyote's capital to finance Coyote's acquisition of
Sierra Materials and Pentiumatics and fund Coyote's working capital
requirements. In addition, on April 4, 1997, Coyote borrowed a total of
$1,500,000 from two Bridge Lenders to provide working capital for Apollo,
Reynolds and Sierra Materials and fund its working capital requirements. See
"Private Placement."

38
<PAGE>

On September 18, 1996, the Company through a wholly-owned subsidiary,
acquired three affiliated entities, Apollo, a company registered in England
and Wales, Reynolds, a company registered in England and Wales, and Apollo
Golf, a New Jersey corporation, and purchased certain associated properties
for a total purchase price of U.S. $5,135,305. In addition, on September 18,
1996, the Company formed ICE to acquire certain intangible assets, consisting
primarily of registered trademarks and certain other intangible assets, owned
by Expedition Trading Company, L.L.C., a Utah limited liability company
("Expedition"). This purchase was consummated on September 18, 1996 and
resulted in ICE acquiring the intangible assets from Expedition in exchange
for ICE's promissory note in the amount of $1,500,000 payable to Expedition
over a six year period and the issuance to Expedition of a 20% interest in
ICE. The Company has retained an 80% interest in ICE. See "Risk Factors--
Substantial Purchase Obligation".

On March 27, 1997, the Company formed Sierra Materials, a Colorado limited
liability company which acquired all of the outstanding common stock of Cape
Composites, Inc. ("Cape"). Sierra Materials assumed all the assets and
liabilities of Cape and granted a 20% ownership interest to the former owners
of Cape, the Company retaining a 80% interest in Sierra Materials.

In April 1997, the Company first acquired an ownership interest in an
existing Malaysian company, Pentiumatics. The Company and another unaffiliated
party subsequently financed the purchase by Pentiumatics of land, building and
equipment which will be incorporated into a proposed aluminum extrusion
facility which the Company believes should be completed in the fourth quarter
of 1997. See "Pentiumatics--Proposed Extruded Aluminum Alloys Facility".

39
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The names, ages and positions of the officers, directors and certain key
employees of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Mel S. Stonebraker(1)... 45 Chief Executive Officer, President and Chairman
of the Board
James M. Probst(2)...... 39 Chief Operating Officer, Chief Financial Officer,
Secretary/Treasurer and Director
John Paul McNeill....... 26 Controller
James A. Pfeil.......... 42 Vice President
Jeffrey T. Kates(1)(2).. 36 Director
Don A. Forte(1)(2)...... 49 Director
</TABLE>
- --------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee

Mel S. Stonebraker, co-founder of the Company, has been an officer and
director of the Company since its incorporation in 1994 and is currently
President, Chief Executive Officer and Chairman of the Board. From 1983 to
1994, Mr. Stonebraker was International Business Development Manager for
Schuller International Corporation, a wholly owned subsidiary of Manville
Corporation. In that position, he was responsible for corporate activities
throughout the Pacific Rim countries. He was a resident in Singapore from 1984
to 1989. Mr. Stonebraker received a B.A. degree from the University of
Colorado in 1977 and a Masters of International Administration from the
American Graduate School for International Management (Thunderbird) in 1983.

James M. Probst, co-founder of the Company, has been an officer of the
Company since February 1995 and is currently Chief Operating Officer, Chief
Financial Officer, Secretary/Treasurer and a Director. From 1986 to 1995, Mr.
Probst was employed by Schuller International Corporation, a wholly owned
subsidiary of Manville Corporation. During that time, Mr. Probst held several
positions ranging from research and development Engineer to Business Manager
of a unit with approximately $30 million in revenues. Mr. Probst received a
B.S. degree in Mechanical Engineering from the University of Colorado, Denver
in 1986 and an M.B.A. from the University of Denver in 1990.

James A. Pfeil joined the Company in May 1997 as Vice President, primarily
responsible for overseeing ICE, Sierra Materials and Pentiumatics. From May
1995 to May 1997, Mr. Pfeil was Vice President of Operations of Cobra Golf,
Inc., a wholly-owned subsidiary of American Brands. From May 1992 to May 1995,
he was Vice President, General Manager of West Coast Composites, a wholly
owned subsidiary of Cobra Golf, Inc. West Coast Composites manufactures all of
the graphite golf shafts used by Cobra Golf, Inc. From May 1990 to May 1992 he
was Materials Manager for Cobra Golf, Inc. From 1985 to 1990 he worked as a
consultant with over 100 clients dealing with manufacturing issues and
assisting in materials requirement planning ("MRP") system implementations.
Mr. Pfeil received a B.S. in Business from San Diego State University in 1980.

John Paul McNeill, C.P.A. joined the Company in July 1997 as Controller.
Previously, Mr. McNeill was Assistant Controller of Cobra Golf, Inc., a
wholly-owned subsidiary of American Brands. Prior to his position at Cobra
Golf, Inc., he spent four years with the accounting firm of Ernst & Young LLP,
one year in the United Kingdom and three years in San Diego, California. Mr.
McNeill is knowledgeable in both U.S. and U.K. generally accepted accounting
principles. Mr. McNeill graduated high honors with a B.B.A. from the
University of Notre Dame in 1992.

40
<PAGE>

Jeffrey T. Kates became a director of the Company in May 1997. From August
1996 to the present, Mr. Kates has been the Chief Operating Officer of
Plastics Research Corp. a firm with annual revenues of $35 million. From
October 1994 to August 1996, Mr. Kates was President and a director of Harloc
Incorporated, a subsidiary of the Tesa Group in Irun, Spain, which attained
annual revenues of $150 million. Mr. Kates received a B.S. degree in
Agricultural Engineering from the University of Illinois in 1984 and an M.B.A.
from the University of Denver in 1988.

Don A. Forte became a director of the Company in June 1997. For the past 25
years, Mr. Forte has been employed by Johns Manville (JM) a leading
manufacturer of building products. Mr. Forte has held numerous positions in
his career with JM. His present position is Vice President of Manufacturing
and Engineering for the Insulation Group. Mr. Forte is currently responsible
for 16 manufacturing plants located in North America which manufacture fiber
glass insulation products for residential and commercial applications. Prior
to this assignment, Mr. Forte was the Vice President and General Manager of
JM's Filtration Division. The Filtration Division manufactures products in
four U.S. plant locations and distributes to customers worldwide. Mr. Forte
received his B.S. degree from Northern Illinois University in 1970 and an
M.B.A. degree from Xavier University in 1982.

Executive officers of the Company are appointed by, and serve at the
discretion of, the Board of Directors and are elected annually. There is no
family relationship between any director of the Company and any other director
or officer of the Company.

The Company has agreed, for a period of two years from the date of this
Prospectus, if so requested by the Representative, to nominate and use its
best efforts to elect a designee of the Representative as a director of the
Company or, at the Representative's option, to appoint such designee as a non-
voting adviser to the Company's Board of Directors. The Representative has not
identified any potential designee. The Company's officers, directors and
controlling stockholders have agreed to vote their shares of Common Stock in
favor of such designee. The Representative does not intend to exercise its
right to designate such a person until shortly before the call of the
Company's first annual meeting of shareholders following the completion of
this offering.

The following persons are key employees of the Company's subsidiaries:

Paul Andy Taylor, 49, has been the Managing Director of Apollo and Reynolds
since September 1990 and is responsible for all strategic and operational
activities of those companies. Mr. Taylor joined Apollo as Sales and Marketing
Director in August 1986 as part of a new management team which dramatically
expanded the company's activities through the late 1980s. Prior to joining
Apollo, he was engaged in international sales and marketing for the TI Group,
a United Kingdom owned global conglomerate. Key areas of activity included
Europe, Comecon, China/Far East and North America. Mr. Taylor received a B.A.
degree with honors in Russian Studies from Nottingham University, England in
1968 and holds a management diploma from London Business School.

David Nelson, 43, has been the Financial Director of Apollo and Reynolds
since 1993 and is responsible for the financial control of Apollo and
Reynolds, managing relationships with external providers of finance and
ensuring statutory compliance. Mr. Nelson's previous positions were as
divisional Financial Director within United Kingdom quoted companies. He
previously worked for Ernst & Young in Kuwait, and Peat Marwick in Zambia. He
received a B.S. Degree with honors in Civil Engineering from Loughborough
University in 1975, and is a chartered accountant (FCA).

Graeme Horwood, 52, has been the Technology Director of Apollo and Reynolds
since July 1986 and is responsible for Product and Process development in the
Company's golf shaft, cycle and athletic divisions. He is the focus of
Apollo's relationship on new product development with key customers. Prior to
joining the Company, Mr. Horwood was Engineering Design Manager at the Raleigh
Bicycle Co. Nottingham, England, Group leader in a research and development
team at TI Groups' Research facility at Cambridge, England. He served a
Technical Apprenticeship with GEC, England and received a B.S. Degree in
Mechanical Engineering from Rugby College of Engineering, Rugby, England in
1968.

41
<PAGE>

Keith Noronha, 41, has been the Director and General Manager of Reynolds
since September 1996 and is responsible for the strategic and operational
growth of Reynolds. Mr. Noronha joined Apollo in November 1988 as Financial
Director until 1993 when he transferred to the U.S. to be Vice President and
General Manager of Apollo U.S., which he successfully repositioned and grew
through 1996. Mr. Noronha returned to the United Kingdom in August 1996 to
develop and implement an aggressive global strategy. Prior to joining Apollo
in 1988 he worked as Financial Director at several United Kingdom companies
notably BKB Electricals, BSR and was an engineering graduate with the Rover
Group, after obtaining an B.S. Degree with honors in Mechanical Engineering at
Queen Mary College, London University in 1978. He holds the FCMA Professional
Management Accounting qualifications.

Stewart Tibbatts, 49, has been the Manufacturing Director of Apollo and
Reynolds since January 1996 and is responsible for the effective operation of
the Company's manufacturing activities in golf shafts, cycle tubing and
athletic products. Mr. Tibbatts joined Apollo in 1995 having previously been
Director and General Manager of Reynolds at Tyseley for six years. Mr.
Tibbatts began his career as an apprentice at Reynolds in 1965 and
successfully worked his way up through the company. He also received an HNC in
Mechanical Engineering from North Birmingham Poly in 1969, and Diploma in
Management Studies from the University of Central England in 1983.

David B. Abrams, 32, has been the President, Chief Financial Officer,
Treasurer and a director of Sierra Materials since March 1996. His current
responsibilities include overseeing all of the subsidiary's activities and
operations, with specific responsibility for corporate finances, including
profit and loss management, materials procurement, sales and marketing and
long term strategic planning. From December 1992 to March 1996, Mr. Abrams was
the Senior Associate for acquisitions at Zimmerman Holdings, Inc., a private
investment firm. Previously, he was Manager of Business Development at Westech
Gear Corporation, a Zimmerman subsidiary. Mr. Abrams received his B.A. degree
from the University of Rochester in 1987 and his M.B.A. from the University of
Southern California in 1996. Mr. Abrams owns 10% of Sierra Materials.

Mark H. Snyder, 30, has been the Executive Vice President, Secretary and a
director of Sierra Materials since March 1996. His current responsibilities
include overseeing all of the subsidiary's manufacturing operations, research
and development and legal and regulatory affairs. From May 1992 to March 1996,
he was a Senior Associate with Sheridan Ross and McIntosh, a Denver
intellectual property law firm. Mr. Snyder received his B.S. in Chemical
Engineering from the University of Rochester in 1988 and his J.D. and M.B.A.
degrees from Boston College in 1992. Mr. Snyder owns 10% of Sierra Materials.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company has an Audit Committee and a Compensation Committee. The Board
of Directors does not have a Nominating Committee and the functions of such a
committee are performed by the Board of Directors.

Audit Committee. The functions of the Audit Committee include
recommendations to the Board of Directors with respect to the engagement of
the Company's independent certified public accountants and the review of the
scope and effect of the audit engagement. Messrs. Kates, Forte and Probst are
the current members of the Company's Audit Committee.

Compensation Committee. The function of the Compensation Committee is to
make recommendations to the Board with respect to compensation of management
employees. The Compensation Committee also administers plans and programs
relating to stock options, pension and other retirement plans, employees
benefits, incentives and compensation and determines the persons to whom
options should be granted under the Company's Option Plan and the number of
options to be granted to each person. Messrs. Kates, Forte and Stonebraker are
the current members of the Company's Compensation Committee.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Company's Articles of Incorporation authorizes the Company to indemnify
its directors for certain breach of fiduciary duty to the Company and its
stockholders, and other liabilities, subject to certain limitations.

42
<PAGE>

Such indemnification does not apply to acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or the payment of
unlawful distributions to stockholders.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.

SUMMARY COMPENSATION

The following table sets forth certain information regarding compensation
earned or awarded to the Chief Executive Officer and certain key employees of
the Company who received in excess of $100,000 of salary and bonus from the
Company during the year ended December 31, 1996 (the "Named Executive
Officers"):

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------------- ---------------------
OTHER ANNUAL SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($) COMPENSATION($) OPTIONS/# OF SHARES
- --------------------------- ---- ---------- -------- --------------- ---------------------
<S> <C> <C> <C> <C> <C>
Mel S. Stonebraker...... 1996 $115,000 -0- $ 6,529(1) -0-
Chief Executive Officer 1995 $115,000 -0- $ 6,805(1) -0-
1994 -0- -0- $ 572(1) -0-
Paul Andrew Taylor...... 1996 $ 91,470 $34,100 $14,474(2) -0-
Managing Director 1995 $ 86,818 $43,093 $13,791(2) -0-
Apollo & Reynolds 1994 $ 82,919 $30,821 $12,252(2) -0-
</TABLE>
- --------
(1) Includes the annual cost of a company car.
(2) Includes the annual cost of a company car, pension plan benefits, private
health insurance and an educational grant earned by Mr. Taylor.

COMPENSATION OF DIRECTORS

Directors are not currently paid fees for attending meetings, although they
may be paid annual retainer fees in cash or options in the future. Directors
are reimbursed for their out-of-pocket expenses for attending Board meetings.

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with Messrs. Stonebraker
and Probst expiring on May 31, 2000, pursuant to which they are employed as
officers of the Company. The agreements automatically renew for additional two
year periods unless either party notifies the other party that it does not
intend to renew the agreement. The employment agreements provide for
employment of Messrs. Stonebraker and Probst on a full-time basis at annual
salaries of $150,000 and $125,000, respectively, beginning September 1, 1997.
The officers are entitled to receive a bonus based on certain objectives to be
established by the Board of Directors and incentive stock options to purchase
45,000 shares each over a five year term which were granted on the effective
date of this offering at $5.50. The options will vest over a three year period
if the Company achieves 90% of its targeted earnings before deduction of
interest, taxes, depreciation and amortization as established by the Board of
Directors. The officers have the right to purchase their pro-rata share of any
new offerings of the Company's equity securities after December 31, 1997.
Messrs. Stonebraker and Probst may be terminated by the Company for cause,
which is defined as excessive unauthorized absenteeism, actual fraud or
material acts of dishonesty, destruction of material Company property; willful
disclosure of Company proprietary information, or a material violation of
internal controls or procedures. If the officers voluntarily terminate prior
to the end of the original contract term, they are required to reimburse the
Company up to $62,500 each, on a pro-rata basis depending on the date of
termination. If the Company terminates Messrs. Stonebraker or Probst without
cause, they are each entitled to 18 months' salary as a severance payment. If
termination without cause occurs after the

43
<PAGE>

end of the original contract term, they are each entitled to 12 months'
salary. The employment agreements provide that the officers may not compete
with the Company for a period of the greater of (i) nine months subsequent to
their termination date, or (ii) the severance pay period. The officers also
have a change of control agreement with the Company pursuant to which the
officers are entitled to a continuation of salary and benefits if their
employment is terminated by the Company without cause or by them for good
reason (such as a reduction in their compensation) within two years after a
change of control.

Apollo has an employment agreement with Paul Andrew Taylor pursuant to which
he serves as Managing Director of Apollo. The agreement provides for a salary
of 65,000 pound sterling per year ($111,200 based upon the conversion rate on
December 31, 1996). Mr. Taylor also participates in an executive bonus program
at Apollo for 1997 with maximum bonus potential of 150% of annual salary. The
executive bonus program at Apollo is based on earnings for the steel golf
shaft business. During the year ended December 31, 1996, Mr. Taylor earned a
$34,100 bonus based upon this program. Mr. Taylor's employment agreement is
subject to termination by the Company upon twelve months notice or by Mr.
Taylor upon six months notice. Mr. Taylor may be terminated by the Company for
gross default or misconduct and other breaches of conduct. His agreement
provides that he will not compete with Apollo within the United Kingdom or the
United States for a period of six months after termination of employment. Mr.
Taylor is provided life insurance equal to four times annual base salary and
has the use of a company car.

1997 STOCK OPTION PLAN

The Company's 1997 Stock Option Plan (the "Option Plan") was adopted by the
Board of Directors and stockholders on June 10, 1997. The Plan provides for
the grant of options to purchase up to 500,000 shares of the Company's Common
Stock that are intended to qualify as either incentive stock options within
the meaning of Section 422 of the Internal Revenue Code or as options that are
not intended to meet the requirements of such section ("Nonstatutory Stock
Options"). Nonstatutory Stock Options may not be granted at an exercise price
of less than 85% of fair market value of the Company's underlying shares of
Common Stock on the date of grant. Options to purchase shares may be granted
under the Plan to persons who, in the case of Incentive Stock Options, are
employees (including officers of the Company or its subsidiaries), or, in the
case of Nonstatutory Stock Options, are employees (including officers of the
Company or its subsidiaries), non-employee directors or consultants of the
Company.

The Plan is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee has full discretionary authority,
subject to certain restrictions, to determine the number of shares for which
Incentive Stock Options and Nonstatutory Stock Options may be granted and the
individuals to whom, and the times at which, and the exercise prices for which
options will be granted. On September 18, 1997, the Board of Directors granted
options to purchase 337,500 shares to certain employees, directors and
consultants, including Messrs. Stonebraker and Probst, who will receive
options to purchase 45,000 shares each under the employment agreements entered
into with the Company.

PENSION PLAN BENEFITS

The employees of Apollo and Reynolds participate in a multi-employer defined
benefit pension plan. The plan provides defined benefits to substantially all
salaried and hourly employees of Apollo and Reynolds. The Company contributed
approximately $208,000 for the three month period ended December 31, 1996, to
this plan. The Company is required to implement its own defined benefit plan
during 1997.

CERTAIN TRANSACTIONS

Mr. Stonebraker has loaned approximately $200,155 to the Company at various
times during the years ended December 31, 1996 and 1995 and after June 30,
1997. The loans are evidenced by notes that are unsecured and bear interest
rates ranging from 12% to 25% per annum. Interest is payable monthly on the
notes and any

44
<PAGE>

principal amounts outstanding are due between August 1998 and October 1999.
The Company intends to repay these notes from the proceeds of this offering.
These loans were made by Mr. Stonebraker at his actual cost of money.

Mel S. Stonebraker and another person who is no longer a stockholder of the
Company were the founders of the Company. Mr. Stonebraker and such other
stockholder subscribed to 1,035,000 and 2,415,000 shares (i.e. as determined
after the 3,450 to one forward stock split), respectively, of Common Stock on
average for $2.42 per share. Subsequently, such other stockholder transferred
his shares to a third party ("former majority shareholder"). During the period
from November 1994 through June 30, 1997, the former majority stockholder, who
may be considered a founder of the Company, contributed a total of
approximately $8,349,783 to the Company's capital to pay organizational and
start up expenses, provide funds for the Company's working capital needs and
to finance the purchases of the Company's six (6) operating subsidiaries. The
former majority stockholder did not receive any additional shares of Common
Stock for his capital contributions to the Company.

In August 1996, Mr. Stonebraker and the former majority stockholder
transferred 172,500 shares and 345,000 shares (i.e., as determined after the
forward stock split), respectively, of the Common Stock owned by them to James
M. Probst. As a result of such transfer, the number of shares of Common Stock
owned by the former majority stockholder and Messrs. Stonebraker and Probst
was 2,070,000, 862,500 and 517,500 shares of Common Stock respectively.

On March 27, 1997, the Company established a new entity, Sierra Materials.
Sierra is 80% owned by the Company and 20% owned by David B. Abrams and Mark
H. Snyder, officers and directors of Sierra Materials. Sierra was established
to acquire Cape Composites, Inc. The shares of Sierra Materials are pledged as
collateral for certain outstanding debt of approximately $650,000 of Sierra
Materials which must be paid or the personal guarantees of the prior
stockholders of Sierra Materials must be removed prior to September 23, 1997
or the shares of Sierra Materials will revert to the previous owners of Sierra
Materials.

On April 4, 1997, the Company entered into two secured promissory notes with
lenders. The amounts of the notes are $1,355,000 and $145,000 and are due on
June 16, 1997, or they may be extended to the earlier of December 31, 1997 or
five days subsequent to the Company completing an initial public offering. The
interest rates on the notes are 8% and may be increased if the Company
defaults on the terms of the notes. As additional consideration for the
lenders making the notes, the Company will also issue 75,000 shares of the
Company's common stock at the initial public offering price for no additional
consideration and warrants to purchase 125,000 shares of the Company's common
stock subsequent to the Company's initial public offering. Accordingly, the
Company recorded debt financing costs of approximately $550,000 in other
income (expense) for the period ending June 30, 1997. The notes are secured by
a Stock Pledge Agreement whereby the assets of the Company in Apollo U.S. and
in Apollo are pledged as collateral. In addition, the notes are secured by the
personal guaranty of two of the stockholders of the Company.

On July 9, 1997, the former majority stockholder of the Company, who is no
longer affiliated with the Company, sold all of his 2,070,000 shares of Common
Stock to Messrs. Stonebraker and Probst, each of whom purchased 1,035,000
shares. Each purchaser paid $4,250,000 for shares purchased by him, payable in
the form of a promissory note bearing interest at 6 1/2% per annum due July 9,
2004. No payments of principal or interest are payable until January 1, 2001
at which time all accrued interest is due and payable. Thereafter, interest
shall be paid annually in arrears until July 9, 2004 when all accrued interest
and the full principal is due and payable. The holder of the notes agrees
that, upon any default in the notes, he will not seek to execute against or
make any claims of ownership to any capital shares of the Company or any of
its subsidiaries.

Pursuant to the Share Return, on July 23, 1997, Messrs. Stonebraker and
Probst returned to the Company for cancellation 467,500 and 382,500 shares of
Common Stock, respectively, which were previously owned by them.

45
<PAGE>

All ongoing and future transactions by the Company with officers, directors,
5% stockholders and their affiliates will be entered into only if the Company
believes that such transactions are reasonably expected to benefit the Company
and the terms of such transactions are no less favorable to the Company than
could be obtained from unaffiliated third parties as determined by independent
directors of the Company. Furthermore, any ongoing and future loans or other
transactions, including forgiveness of loans, will be required to be approved
by a majority of the Company's independent disinterested directors.

PRIVATE PLACEMENT

On April 4, 1997, the Company entered into two secured promissory notes with
the Bridge Lenders in the aggregate amount of $1,500,000. The notes are due on
the earlier of December 31, 1997, or five days subsequent to the Company
completing an initial public offering. The interest rate on the notes is 8%
per annum. Such notes are referred to as the "8% Notes." As additional
consideration for the lenders making the 8% Notes, the Company will also issue
75,000 shares of its Common Stock and 250,000 warrants to purchase 125,000
shares at the time the Company first offers shares of its capital stock
pursuant to a public offering. Such shares of Common Stock and warrants and
the shares underlying the warrants are subject to a lock up arrangement. See
"Additional Registered Shares" and "Description of Securities - Bridge
Warrants." The notes are secured by a Stock Pledge Agreement whereby the
entire interest of the Company in Apollo and Apollo U.S. are pledged as
collateral. In addition, the notes are secured by the personal guaranties of
Messers. Stonebraker and Probst, the Company's two existing stockholders.

46
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth as of the date of this Prospectus, and as
adjusted to reflect the sale of the Shares of Common Stock offered hereby,
certain information regarding beneficial ownership of the Company's Common
Stock by (i) each person known by the Company to be the beneficial owner of
more than 5% of the outstanding Common Stock, (ii) each director of the
Company, (iii) each Named Executive Officer, and (iv) all executive officers
and directors of the Company as a group. The following information assumes
that the named individuals will not be purchasing any Shares of Common Stock
in this offering.

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP PERCENT OF CLASS
----------------- -----------------------
NAME AND ADDRESS BEFORE AFTER
OF BENEFICIAL OWNER SHARES(1) OFFERING(1) OFFERING(1)
- ------------------- ----------------- ----------- -----------
<S> <C> <C> <C>
Mel S. Stonebraker.................. 1,430,000(1) 55.0% 39.2%
2291 Arapahoe Avenue
Boulder, CO 80302
James M. Probst..................... 1,170,000(1) 45.0% 32.0%
2291 Arapahoe Avenue
Boulder, CO 80302
Jeffrey T. Kates.................... 0(2) -- --
3200 Robert T. Longway Blvd.
Flint, MI 48506
Don A. Forte........................ 0(2) -- --
717 Seventeenth Street
Denver, CO 80202
All executive officers and directors
as a group (4 Persons)............. 2,600,000(1) 100.0% 71.2%
</TABLE>
- --------
(1) Excludes five year options to purchase up to 45,000 shares each to be
granted to Messrs. Stonebraker and Probst on September 18, 1997 at $5.50
per share. The options vest in three equal annual increments commencing
one year from the date of grant if the Company achieves 90% of its
targeted earnings before deduction of interest, taxes, depreciation and
amortization as established by the Board of Directors.
(2) Excludes seven year options to purchase up to 15,000 shares to be granted
to Messrs. Kates and Forte on September 18, 1997 at $5.00. The options
vest in three equal annual increments commencing September 18, 1998.

ADDITIONAL REGISTERED SHARES

The shares of Common Stock issuable to the Bridge Lenders who are Deere Park
Capital Management, Inc. and Steven Kerr, which are not being offered hereby,
aggregating 75,000 shares, the 250,000 warrants to purchase 125,000 shares as
well as the 125,000 shares underlying those warrants are all being registered
simultaneously with this offering for resale by the Bridge Lenders from time
to time. The Bridge Lenders have agreed that they will not offer to sell,
contract to sell, or otherwise sell or dispose of the 75,000 shares, the
250,000 warrants or the 125,000 shares underlying the warrants for a period of
six months following the Effective Date of the Offering. In addition, the
Bridge Lenders have agreed that they will not offer to sell, contract to sell
or dispose of the 75,000 shares for a second six month period after the first
six month period without the prior written consent of the Representative,
except that such shares will be released from the second six month lock up if
the Common Stock trades at 150% or more of the public offering price for three
consecutive days.

There are no material relationships between either of the Bridge Lenders and
the Company, nor have any such material relationships existed within the past
three years. The Company has been informed by the Representative that there
are no agreements between any of the Underwriters and any Bridge Lender
regarding the distribution of their Common Stock or warrants.

47
<PAGE>

The sale of the Common Stock or warrants by the Bridge Lenders may be
effected from time to time in transactions (which may include block
transactions by or for the account of the Bridge Lenders) in the over-the-
counter market or in negotiated transactions, a combination of such methods of
sale or otherwise. Sales may be made at fixed prices which may be changed, at
market prices prevailing at the time of sale, or at negotiated prices.

The Bridge Lenders may effect such transactions by selling their securities
directly to purchasers through broker-dealers acting as agents for the Bridge
Lenders or to broker-dealers who may purchase shares as principals and
thereafter sell the securities from time to time in the over-the-counter
market, in negotiated transactions or otherwise. Such broker-dealers, if any,
may receive compensation in the form of discounts, concessions or commissions
from the Bridge Lenders and/or the purchasers from whom such broker-dealers
may act as agents or to whom they may sell as principals or otherwise (which
compensation as to a particular broker-dealer may exceed customary
commissions).

The Bridge Lenders and broker-dealers, if any, acting in connection with
such sales might be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act and any commissions received by them and any
profit on the resale of the securities may be deemed underwriting discounts
and commissions under the Securities Act.

DESCRIPTION OF SECURITIES

The following description of the Company's securities is qualified in its
entirety by reference to the Company's Articles of Incorporation and Bylaws,
copies of which have been filed as exhibits to the Registration Statement of
which this Prospectus is a part. As of the date of this Prospectus, the Common
Stock was held of record by two stockholders. See "Additional Information."

Upon the closing of this offering, the authorized capital stock of the
Company will consist of 29,000,000 shares of capital stock, $.001 par value,
of which 25,000,000 shares are designated as Common Stock and of which
4,000,000 shares are designated as Preferred Stock.

COMMON STOCK

As of the date of this Prospectus, the Company had 2,600,000 shares of
Common Stock issued and outstanding. The holders of the Common Stock (i) have
equal ratable rights to dividends from funds legally available therefor, when,
as and if declared by the Board of Directors of the Company; (ii) are entitled
to share ratably in all the assets of the Company available for distribution
to holders of the Common Stock upon liquidation, dissolution or winding up of
the affairs of the Company; (iii) do not have preemptive rights; and (iv) are
entitled to one vote per share on all matters which stockholders may vote on
at all meetings of stockholders.

Holders of Common Stock do not have cumulative voting rights, which means
that the holders of a majority of such outstanding shares voting for the
election of directors can elect all of the directors of the Company to be
elected, if they so choose. In such event, the holders of the remaining shares
will not be able to elect any of the Company's directors.

PREFERRED STOCK

As of the date of this Prospectus, no shares of Preferred Stock were
outstanding. Under governing Nevada law and the Company's Articles of
Incorporation, no action by the Company's stockholders is necessary, and only
action of the Board of Directors is required, to authorize the issuance of any
of the Preferred Stock. The Board of Directors is empowered to establish and
to designate the name of, each class or series of the shares and to set the
terms of such shares (including terms with respect to redemption, sinking
fund, dividend, liquidation, preemptive, conversion and voting rights and
preferences). Accordingly, the Board of Directors, without

48
<PAGE>

stockholder approval, may issue preferred stock with terms (including terms
with respect to redemption, sinking fund, dividend, liquidation, preemptive,
conversion and voting rights and preferences) that could adversely affect the
voting power and other rights of holders of the Common Stock.

The existence of Preferred Stock may have the effect of discouraging an
attempt, through acquisition of a substantial number of shares of Common
Stock, to acquire control of the Company with a view to effecting a merger,
sale or exchange of assets or a similar transaction. The anti-takeover effects
of the Preferred Stock may deny stockholders the receipt of a premium on their
Common Stock and may also have a depressive effect on the market price of the
Common Stock.

In August, 1997, the Company under an amendment to its Articles of
Incorporation elected not to be governed by the anti-takeover provisions under
Nevada law, the Company's state of incorporation. As such, the Nevada anti-
takeover statutory provisions would only apply to the Company's capital stock
if the Company's Articles of Incorporation were subsequently amended.

8% NOTES

In April 1997, the Company issued $1,500,000 aggregate principal amount of
the 8% Notes. Interest on the 8% Notes, and the aggregate outstanding
principal amount of the 8% Notes, are payable on the maturity date, which is
the earlier of December 31, 1997, or five days after the Company's initial
public offering.

BRIDGE WARRANTS

An aggregate of 250,000 warrants which will be exercisable for an aggregate
of 125,000 shares of Common Stock will be issued to the Bridge Lenders shortly
after the consummation of this public offering. These warrants will have a
three year term and an exercise price equal to 150% of the public offering
price. The warrants will be subject to redemption by the Company for $0.10 per
warrant if the closing high bid price of the Common Stock exceeds the warrant
exercise price by at least 50% during a period of at least 20 out of 30
trading days and if certain other conditions are satisfied. The Bridge Lenders
have agreed that they will not offer to sell, contract to sell, or otherwise
sell or dispose of the 250,000 warrants or the 125,000 shares underlying the
warrants for a period of six months following the Effective Date of the
offering.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 3,650,000 Shares of
Common Stock outstanding (3,807,500 shares if the Representative's over-
allotment option with respect to the Shares is exercised in full). In
addition, 75,000 shares will be issued to the Bridge Lenders shortly after
this offering. The Bridge Lenders under a lock up arrangement may not offer to
sell, contract to sell, or otherwise sell or dispose of the 75,000 shares for
a period of six months following the completion of the offering and will not,
without the written consent of the Representative, offer to sell, contract to
sell, or otherwise sell or dispose of the 75,000 shares for one year following
the offering, provided, however, that they will be released from the second
lock up if the Common Stock trades at 150% or more of the public offering
price for three consecutive days. The 1,050,000 Shares sold in this offering
will be freely transferable and tradeable without restriction or further
registration under the Securities Act except for any shares purchased or held
by any "affiliate" of the Company, which will be subject to the resale
limitation of Rule 144 promulgated under the Securities Act.

Of the Company's 2,600,000 shares of Common Stock outstanding immediately
prior to the date of this Prospectus, all are "restricted securities" as that
term is defined under Rule 144 of the Securities Act. Holders of all said
2,600,000 shares have agreed that they will not, without the consent of the
Representative, offer to sell, contract to sell, or otherwise sell or dispose
of their stock for one year following this offering. Restricted securities may
be sold in open market transactions in compliance with Rule 144 if the
conditions of such rule are satisfied. Under Rule 144, as amended effective
April 29, 1997, any person (or persons whose shares are aggregated) who has
beneficially owned restricted shares for at least one year is entitled to
sell, within any three-month period, a number of shares that does not exceed
the greater of (i) 1% of the then outstanding shares of the

49
<PAGE>

Company's Common Stock (36,500 shares immediately after this offering), or
(ii) the average weekly trading volume during the four calendar weeks
immediately preceding the date on which notice of the sale is filed with the
Commission. Sales pursuant to Rule 144 are also subject to certain
requirements relating to the manner of sale, notice and availability of
current public information about the Company. A person who is not deemed to
have been an affiliate of the Company at any time during the 90 days
immediately preceding the sale and whose restricted shares have been fully
paid for two years since the later of the date they were acquired from the
Company or the date they were acquired from an affiliate of the Company may
sell such restricted shares under Rule 144(k) without regard to the
limitations described above.

Upon the consummation of this offering, the Company will issue 75,000 shares
and 250,000 warrants to purchase an additional 125,000 shares to the Bridge
Lenders. These shares, warrants and shares underlying the warrants are being
registered simultaneously with this offering for resale by the holders thereof
from time to time. The holders have agreed that they will not during the six
month period after the Effective Date sell, either publicly or privately, any
shares, warrants or shares underlying warrants, and during the second six
month period ending one year after the Effective Date, offer to sell, contract
to sell, or otherwise sell or dispose of the 75,000 shares, without the prior
written consent of the Representative, provided, however, that they will be
released from the lock-up for the second six month period if the Common Stock
trades at 150% or more of the public offering price for three consecutive
days.

The Company is authorized to issue additional options to purchase up to
500,000 shares of Common Stock under the Company's Option Plan. The Company
plans to register for sale under the Securities Act all shares issuable upon
exercise of options granted under the Option Plan. Following completion of the
offering, in addition to the warrants issuable to the Bridge Lenders, the
Company will have outstanding warrants exercisable to purchase 105,000 shares
of Common Stock which will be issued to the Representative. The Company has
undertaken to register for sale under the Securities Act all shares issuable
upon exercise of those warrants. No prediction can be made to the effect, if
any, that sales of shares of Common Stock or the availability of such shares
for sale will have on the market prices prevailing from time to time.
Nevertheless, the possibility that substantial amounts of Common Stock may be
sold in the public market in the future may adversely affect prevailing market
prices of the Common Stock and could impair the Company's ability to raise
capital in the future through the sale of equity securities. Actual sales or
the prospect of future sales of shares of Common Stock under Rule 144 may have
a depressive effect upon the price of the Common Stock and the market for such
securities.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar with respect to the Company's Common Stock
is American Securities Transfer & Trust, Inc., 938 Quail Street, Suite 101,
Lakewood, Colorado 80215.

50
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, a copy of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part, the Underwriters named below (the "Underwriters"), have
severally agreed through Cohig & Associates, Inc., the Representative, to
purchase and the Company has agreed to sell the Underwriters the aggregate
number of Shares as set forth opposite their respective names below:

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
------------ ----------------
<S> <C>
Cohig & Associates, Inc. ..................................... 550,000
Argent Securities, Inc. ...................................... 50,000
First Liberty Investment...................................... 50,000
Joseph Charles & Associates, Inc. ............................ 150,000
National Securities Corporation............................... 100,000
Paulson Investment Company.................................... 100,000
Redstone Securities, Inc. .................................... 50,000
---------
TOTAL....................................................... 1,050,000
=========
</TABLE>

The Shares are being offered by the several Underwriters, subject to prior
sale, when, as, and if delivered to and accepted by the Underwriters and
subject to their rights to reject orders in whole or in part and subject to
approval of certain legal matters by counsel and to various other conditions.
The nature of the Underwriters' obligation is such that they must purchase all
of the Shares offered hereby if any are purchased.

The offering price of the Shares was negotiated between the Company and the
Representative. Among the factors considered in determining the offering price
were the equity investment of the founding stockholders of the Company, the
Share Return, the market for the Company's products, the general economic
environment, prospects of the Company, the background and ability of the
management of the Company and other factors. However, there is no public
trading market for the Shares and the offering price of the Shares does not
necessarily bear any relationship to the Company's assets, book value, or
financial condition, and may not be indicative of the actual value of the
Company. See "Risk Factors."

The Company has granted the Representative an option, exercisable within 45
days from the effective date of the Registration Statement, to purchase up to
an additional number of Shares as will be equal to not more than 15% of the
total number of Shares initially offered at the initial public offering price
less the underwriting discount of $0.50 per Share. The Representative may
exercise such option only for the purpose of covering any over-allotment in
the sale of the Shares offered hereby.

The Underwriters have advised the Company that the Underwriters propose to
offer the Shares directly to the public at the initial public offering price
set forth on the cover page of this Prospectus, and to selected dealers at the
price, less a concession of not more than $0.25 per Share. After the initial
public offering, the price to the public and the concession may be changed by
the Underwriters.

The Underwriters have informed the Company that they do not expect to sell
any Shares offered hereby to accounts over which they exercise discretionary
authority as to such sale.

The Company will pay the Representative a non-accountable expense allowance
of 3% of the offering proceeds, which will include proceeds from the
overallotment option to the extent exercised. The Company has paid to the
Representative $40,000 against the non-accountable expense allowance. The
Representative's expenses in excess of the non-accountable expense allowance
will be borne by the Representative. To the extent that the expenses of the
Representative are less than the non-accountable expense allowance, the excess
shall be deemed to be compensation to the Representative.

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<PAGE>

The Company and the Underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the 1933 Act, and, if such
indemnifications are unavailable or insufficient, the Company and the
Underwriters have agreed to damage contribution agreements between them based
upon relative benefits received from this offering and relative fault
resulting in such damages. The Company has also agreed with the Underwriters
that the Company will use its best efforts to cause a registration statement
pursuant to Section 12(g) of the Exchange Act to become effective no later
than the date of this Prospectus.

The Company will enter into a two-year consulting agreement with the
Representative pursuant to which the Representative will be paid $3,000 per
month. The entire consulting fee is payable upon the closing of this offering.

Although there is no contractual agreement or other obligation to do so,
officers, directors and affiliates of the Company may be sold a portion of the
Shares, but only on the same terms and conditions as will be offered to the
public. Such persons will be required to represent that purchases by such
persons, if any, will be for investment purposes only with no present intent
to sell.

The foregoing does not purport to be a complete statement of the terms and
conditions of the Underwriting Agreement, copies of which are on file at the
offices of the Representative, the Company and the Commission. See "Available
Information."

REPRESENTATIVE'S WARRANTS

At the closing of the offering, the Company will sell and deliver to the
Representative for an aggregate purchase price of $105, warrants (the
"Representative's Warrants"), consisting of 105,000 warrants to purchase
105,000 shares of Common Stock at a price that is equal to 125% of the initial
public offering price for the Common Stock.

The Representative's Warrants shall be issued to the Representative and
thereafter may be transferred to officers and employees of the Representative
who are also shareholders of the Representative or by will, pursuant to the
laws of descent and distribution, or by the operation of law. Such
Representative's Warrants will be non-transferable for a period of one year
following the date of this Prospectus except to the Underwriters, selling
group members participating in the offering, and their respective bona fide
officers or partners. Each certificate representing the Representative's
Warrants subsequently issued shall bear a restrictive legend providing that
such securities shall remain non-transferable for the remainder of the one
year period following the date of this Prospectus. The Representative's
Warrants will also contain anti-dilution provisions for stock splits,
recombinations and reorganizations, a one-time demand registration provision
(at the Company's expense), piggyback registration rights (both of which
expire five years from the date of the Prospectus), a cashless exercise
provision, and will otherwise be in form and substance satisfactory to the
Representative. The Representative's Warrants will be exercisable during the
four-year period commencing one year after the date of this Prospectus.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Chrisman, Bynum & Johnson, P.C., Boulder, Colorado 80302. Certain
legal matters will be passed upon by counsel for the Underwriters, Clanahan,
Tanner, Downing & Knowlton, P.C., 1600 Broadway, Suite 2400, Denver, Colorado
80202.

The consolidated financial statements Coyote Sports, Inc. as of and for the
years ended December 31, 1995 and 1996 have been included herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.

AVAILABLE INFORMATION

Prior to this offering, the Company has not been subject to the reporting
requirements of the Securities Exchange Act of 1934. The Company has filed
with the Commission a Registration Statement under the Securities Act of 1933,
as amended, with respect to the sale of the Shares. This Prospectus, which is
part of the Registration Statement, does not contain all of the information
set forth in the Registration Statement and the

52
<PAGE>

exhibits thereto, certain portions of which have been omitted as permitted by
the rules and regulations of the Commission. For further information with
respect to the Company and the Shares, reference is hereby made to such
Registration Statement, including the exhibits thereto. Statements contained
in this Prospectus as to the contents of any contract or other document
referred to are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement. The Registration Statement and exhibits thereto may be
inspected by anyone without charge at the public reference facilities
maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street,
N.W, Washington, D.C. 20549, or at one of the Commission's regional offices:
Northwestern Atrium Center, 500 West Madison, Suite 1400, Chicago, Illinois
60661-2511, and 7 World Trade Center, 13th Floor, New York, New York 10048, or
on the SEC website: http://www.sec.gov. Copies of all or any part of such
material may be obtained, upon payment of the prescribed fees, from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C.

53
<PAGE>

INDEX TO FINANCIAL STATEMENTS

COYOTE SPORTS, INC. AND SUBSIDIARIES

<TABLE>
<S> <C>
PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)
Pro Forma Condensed Combined Balance Sheet as of June 30, 1997.......... F-3
Pro Forma Condensed Combined Statements of Operations for the year ended
December 31, 1996...................................................... F-4
Pro Forma Condensed Combined Statements of Operations for six months
ended June 30, 1997.................................................... F-5
Notes to Pro Forma Condensed Combined Financial Statements.............. F-6

HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report............................................ F-7
Consolidated Balance Sheets as of December 31, 1995 and 1996 and June
30, 1997 (unaudited)................................................... F-8
Consolidated Statements of Operations for the years ended December 31,
1995 and 1996 and six months ended June 30, 1996 and 1997 (unaudited).. F-9
Consolidated Statements of Stockholders' Equity (Deficit) for the years
ended December 31, 1995 and 1996 and six months ended June 30, 1997
(unaudited)............................................................ F-10
Consolidated Statements of Cash Flows for the years ended December 31,
1995 and 1996 and six months ended June 30, 1996 and 1997 (unaudited).. F-11
Notes to Consolidated Financial Statements.............................. F-12

TI APOLLO LIMITED, APOLLO GOLF, INC. AND TI REYNOLDS 531 LIMITED
HISTORICAL COMBINED FINANCIAL STATEMENTS
Independent Auditors' Report............................................ F-21
Combined Balance Sheets as of December 31, 1995 and September 30, 1996.. F-22
Combined Statements of Operations for the year ended December 31, 1995
and the nine months ended September 30, 1996........................... F-23
Combined Statements of Stockholders' Equity for the year ended December
31, 1995 and the nine months ended September 30, 1996.................. F-24
Combined Statements of Cash Flows for the year ended December 31, 1995
and the nine months ended September 30, 1996........................... F-25
Notes to Combined Financial Statements.................................. F-26
</TABLE>

F-1
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(UNAUDITED)

The following unaudited pro forma condensed consolidated financial
statements have been prepared to give effect to the completion of the offering
and the acquisitions of the entities described below.

On September 18, 1996, Coyote Sports, Inc. (the "Company" or "Coyote")
acquired three affiliated entities, TI Apollo Limited, TI Reynolds 531 Limited
and Apollo Golf, Inc., (collectively, the "Apollo Entities") and a
manufacturing facility. The transaction has been accounted for as a purchase
and the results of operations of the Apollo Entities are included in the
operations of the Company beginning October 1, 1996. The pro forma condensed
combined statements of operations for the year ended December 31, 1996 assume
the offering and the acquisition were consummated on January 1, 1996.

On March 27, 1997, the Company established a new entity, Sierra Materials,
LLC ("Sierra"). Sierra is 80% owned by the Company and 20% owned by two
individuals not previously related to the Company. Sierra was established to
acquire Cape Composites, Inc. (d/b/a Sierra Materials). Sierra Materials is a
supplier of graphite and other advanced composite materials for use in the
sports and recreational markets. The acquisition of Sierra Materials coincided
with the formation of Sierra on March 27, 1997. The shares of Sierra Materials
are pledged as collateral for certain outstanding debt of Sierra Materials
which must be paid by or personal guarantees of the previous owners of
indebtedness existing on March 27, 1997 removed by the Company prior to
September 23, 1997 or the shares of Sierra Materials will revert back to the
previous owners of Sierra Materials. The unaudited pro forma condensed
consolidated statements of operations for the year ended December 31, 1996 and
the six months ended June 30, 1997 of the Company assume the offering and
acquisition occurred on January 1, 1996 and January 1, 1997, respectively.

The accompanying pro forma condensed consolidated balance sheet assumes the
offering and related debt repayments was completed on June 30, 1997.

In management's opinion, all material adjustments necessary to reflect the
transactions are presented in the pro forma adjustments for the year ended
December 31, 1996 and the six months ended June 30, 1997 which are based upon
available information. The pro forma statements do not purport to present the
Company's results of operations or financial position that would have resulted
had the transactions to which pro forma effect is given been consummated as of
the dates or for the periods indicated and do not purport to project the
Company's financial position or results of operations at any future date or
for any future period, and should be read in conjunction with the Company's
consolidated financial statements and the combined financial statements of the
Apollo Entities.

F-2
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED COMBINED BALANCE SHEET

JUNE 30, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
COYOTE ADJUSTMENTS COMBINED
----------- ----------- ----------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash.................................... $ 1,806,705 1,708,280 (a) 3,514,985
Receivables, net........................ 4,271,039 4,271,039
Inventories............................. 3,773,656 3,773,656
Prepaid expenses and other current as-
sets................................... 587,550 587,550
----------- ----------
Total current assets.................. 10,438,950 12,147,230
----------- ----------
Property, plant and equipment, net........ 8,310,059 8,310,059
Intangible assets, net.................... 967,746 967,746
----------- ---------- ----------
$19,716,755 1,708,280 21,425,035
=========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable........................... $ 4,726,940 (1,967,468)(a) 2,759,472
Current portion of long term debt....... 582,388 (19,947)(a) 562,441
Current portion of obligation payable
under purchase agreement............... 87,000 87,000
Current portion of related party notes
payable................................ 112,496 (112,496)(a) --
Payables to related parties............. 21,164 21,164
Accounts payable........................ 2,917,850 2,917,850
Taxes payable........................... 287,000 287,000
Accrued expenses........................ 2,376,263 2,376,263
----------- ----------
Total current liabilities............. 11,111,101 9,011,190
----------- ----------
Long term debt, net of current portion.. 348,521 (46,809)(a) 301,712
Obligation payable under purchase
agreement, net of current portion...... 728,000 728,000
Related party notes payable, net of
current portion ....................... 815,602 815,602
Deferred tax liability.................. 444,000 444,000
----------- ----------
Total liabilities..................... 13,447,224 11,300,504
Minority interests in net assets of sub-
sidiaries................................ 755,823 755,823
Stockholders' equity:
Common stock............................ 3,450 200 (a) 3,650
Additional paid-in capital.............. 8,347,333 3,854,800 (a) 12,202,133
Accumulated deficit..................... (2,991,075) (2,991,075)
Foreign currency translation
adjustment............................. 154,000 154,000
----------- ----------
Total stockholders' equity............ 5,513,708 9,368,708
----------- ---------- ----------
$19,716,755 1,708,280 21,425,035
=========== ========== ==========
</TABLE>

See accompanying notes to pro forma condensed combined financial statements.

F-3
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
HISTORICAL
APOLLO SIERRA
ENTITIES MATERIALS
PERIOD FROM PERIOD FROM
HISTORICAL JANUARY 1, MARCH 1, 1996
COYOTE 1996 TO TO
DECEMBER 31, SEPTEMBER 30, DECEMBER 31, PRO FORMA PRO FORMA
1996 1996 1996 ADJUSTMENTS COMBINED
---------------------- ------------- ------------- ----------- ------------
(AS RESTATED, NOTE 14)
<S> <C> <C> <C> <C> <C>
Net sales............... $ 5,453,117 14,787,052 3,281,936 23,522,105
Cost of goods sold...... (4,168,665) (10,789,428) (2,923,260) (17,881,353)
----------- ----------- ---------- ------------
Gross profit.......... 1,284,452 3,997,624 358,676 5,640,752
Selling, general, and
administrative
expenses............... (2,308,141) (3,997,959) (562,677) 13,000(b) (6,855,777)
----------- ----------- ---------- ------------
Operating loss........ (1,023,689) (335) (204,001) (1,215,025)
----------- ----------- ---------- ------------
Other income (expense):
Interest expense...... (34,897) (238,677) (48,781) 36,000(c) (286,355)
Gains on forward
exchange contracts,
net.................. 126,570 54,000 -- 180,570
----------- ----------- ---------- ------------
91,673 (184,677) (48,781) (105,785)
----------- ----------- ---------- ------------
Loss before income
taxes and minority
interest............. (932,016) (185,012) (252,782) (1,320,810)
Income tax expense...... -- (248,000) -- (248,000)
Minority interest in
subsidiaries (income)
loss................... (5,938) -- -- (5,938)
----------- ----------- ---------- ------ ------------
Net loss.............. $ (937,954) (433,012) (252,782) 49,000 (1,574,748)
=========== =========== ========== ====== ============
Net loss per share...... $ (0.27) (0.43)
=========== ============
Weighted average shares
outstanding............ 3,450,000 3,650,000
=========== ============
</TABLE>

See accompanying notes to pro forma condensed combined financial statements.

F-4
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
SIERRA
MATERIALS
THREE MONTHS
ENDED PRO FORMA PRO FORMA
COYOTE MARCH 31, 1997 ADJUSTMENTS COMBINED
----------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales............... $12,750,168 932,948 13,683,116
Cost of goods sold...... (9,784,535) (819,532) (18,000)(b) (10,622,067)
----------- -------- -----------
Gross profit.......... 2,965,633 113,416 3,061,049
Selling, general, and
administrative
expenses............... (4,071,540) (161,525) (4,233,065)
----------- -------- -----------
Operating loss........ (1,105,907) (48,109) (1,172,016)
----------- -------- -----------
Other income (expense):
Interest expense...... (199,617) (14,028) 42,000(c) (171,645)
Loss on forward
exchange contracts,
net.................. (39,000) -- (39,000)
Debt financing costs.. (550,000) -- (550,000)
----------- -------- -----------
(788,617) (14,028) (760,645)
----------- -------- -----------
Loss before taxes and
minority interest.... (1,894,524) (62,137) (1,932,661)
Income tax benefit...... 181,000 -- 181,000
Minority interests in
losses of
subsidiaries........... 48,042 -- 12,427(d) 60,469
----------- -------- ------- -----------
Net loss.............. $(1,665,482) (62,137) 36,427 (1,691,192)
=========== ======== ======= ===========
Net loss per share.... $ (0.48) (0.46)
=========== ===========
Weighted average
shares outstanding... 3,450,000 3,650,000
=========== ===========
</TABLE>

See accompanying notes to pro forma condensed combined financial statements.

F-5
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(UNAUDITED)

(1) BASIS OF PRESENTATION

On September 18, 1996, Coyote acquired all of the outstanding common stock
of TI Apollo Limited, Apollo Golf, Inc. and TI Reynolds 531 Limited. In
addition, the Company acquired a manufacturing facility located in Oldbury,
U.K. (the "Oldbury property"). These entities and manufacturing facility are
collectively referred to as the Apollo Entities. Consideration paid for the
Apollo Entities was $5,135,305 in cash.

On March 27, 1997, the Company and two previously unrelated individuals
established Sierra Materials which acquired all of the outstanding common
stock of Cape Composites, Inc. (d/b/a "Sierra Materials"). The Company is
obligated to repay or remove the personal guarantees of the prior stockholders
of Sierra Materials in the amount of approximately $534,000 at June 30, 1997.
The personal guarantees must be removed prior to September 23, 1997 or the
shares of Sierra Materials will revert to the previous owners of Sierra
Materials.

(2) PRO FORMA ADJUSTMENTS

The following pro forma adjustments give effect to the offering and
acquisition of the Apollo Entities, and Sierra Materials as of the beginning
of each period presented for the statement of operations and the effect of the
offering as of June 30, 1997 for the balance sheet.

(a) Reflects the estimated net proceeds of the offering of $3,855,000,
repayment of notes payable to stockholder of $112,496 and long term debt
and notes payable of $2,034,224. Subsequent to June 30, 1997, the Company
retired 850,000 shares of Common Stock.

(b) Reflects the net decrease in depreciation expense for the Apollo
Entities, based on the lower carrying values of property, plant and
equipment for the year ended December 31, 1996. The lower carrying values
resulted from the allocation of purchase price to monetary assets and
liabilities based on their fair values with the amount remaining to
allocate to long lived assets being less than historical carrying values.
Reflects the increase in depreciation expense for the increase in Sierra
Material's fixed assets due to purchase accounting for the six months ended
June 30, 1997.

(c) Reflects the decrease in interest expense due to pay down of the
Sierra indebtedness and repayment of the stockholder notes payable.

(d) Reflects the adjustment for minority interests in Sierra Materials
for the three months ended March 31, 1997.

(3) PENTIUMATICS SDN., BHD.

Coyote purchased Pentiumatics Sdn., Bhd. on April 1, 1997. This transaction
is reflected in the historical information for the six months ended June 30,
1997.

F-6
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Coyote Sports, Inc.:

We have audited the accompanying consolidated balance sheets of Coyote
Sports, Inc. and subsidiaries (the "Company") as of December 31, 1995 and
1996, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material, respects the financial position of Coyote
Sports, Inc. and subsidiaries as of December 31, 1995 and 1996, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Boulder, Colorado
May 19, 1997, except
for Note 8 and Note 14 which are
as of June 11, 1997 and August 1, 1997, respectively

F-7
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1995 AND 1996 AND JUNE 30, 1997 (UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1995 1996 1997
--------- ---------- -------------
<S> <C> <C> <C>
ASSETS (UNAUDITED)
Current assets:
Cash................................... $ 29,497 305,006 1,806,705
Trade receivables, less allowance for
doubtful accounts of $340,000 in 1996
and $224,000 in 1997.................. -- 2,681,626 4,171,134
Receivables from related parties....... -- 91,418 99,905
Inventories (as restated, note 14)..... -- 3,931,718 3,773,656
Prepaid expenses and other assets...... -- 245,623 587,550
--------- ---------- -------------
Total current assets................. 29,497 7,255,391 10,438,950
--------- ---------- -------------
Property, plant and equipment:
Land................................... -- 816,000 794,000
Building............................... -- 110,000 3,434,940
Machinery and equipment................ 7,195 2,628,302 4,320,430
Furniture and fixtures................. 2,122 19,122 46,790
--------- ---------- -------------
9,317 3,573,424 8,596,160
Less accumulated depreciation.......... (2,477) (31,677) (286,101)
--------- ---------- -------------
Net property, plant and equipment.... 6,840 3,541,747 8,310,059
--------- ---------- -------------
Intangible assets, net of accumulated
amortization of $16,979 in 1996 and
$51,004 in 1997......................... -- 1,001,771 967,746
--------- ---------- -------------
$ 36,337 11,798,909 19,716,755
========= ========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Notes payable.......................... $ -- 1,038,000 4,726,940
Current portion of long term debt...... -- -- 582,388
Current portion of obligation payable
under purchase agreement.............. -- 87,000 87,000
Current portion of related party notes
payable............................... -- -- 112,496
Payables to related parties............ 17,817 22,291 21,164
Accounts payable....................... -- 2,687,427 2,917,850
Taxes payable.......................... -- 638,000 287,000
Accrued expenses....................... 4,604 823,077 2,376,263
--------- ---------- -------------
Total current liabilities............ 22,421 5,295,795 11,111,101
--------- ---------- -------------
Long term debt, net of current portion... -- -- 348,521
Obligation payable under purchase
agreement, net of current portion....... -- 728,000 728,000
Related party notes payable, net of
current portion......................... 45,632 112,861 815,602
Deferred tax liability................... -- 426,000 444,000
--------- ---------- -------------
Total liabilities.................... 68,053 6,562,656 13,447,224
Minority interests in net assets of
subsidiaries............................ -- 209,688 755,823
Stockholders' equity (deficit):
Preferred stock, $.001 par value.
Authorized 4,000,000 shares, none
issued or outstanding................. -- -- --
Common stock, $.001 par value.
Authorized 25,000,000 shares,
3,450,000 shares issued and
outstanding........................... 3,450 3,450 3,450
Additional paid-in capital............. 352,473 6,136,288 8,347,333
Accumulated deficit (as restated, note
14)................................... (387,639) (1,325,593) (2,991,075)
Foreign currency translation
adjustment............................ -- 212,420 154,000
--------- ---------- -------------
Total stockholders' equity
(deficit)........................... (31,716) 5,026,565 5,513,708
--------- ---------- -------------
Commitments and contingencies (notes 1,
2, 5, 6, 9, 12 and 13).................. $ 36,337 11,798,909 19,716,755
========= ========== =============
</TABLE>

See accompanying notes to consolidated financial statements.

F-8
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1995 AND 1996 AND
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------------------------
1995 1996 1996 1997
----------- ------------------------ ----------
AS RESTATED (UNAUDITED)
(NOTE 14)
<S> <C> <C> <C> <C>
Net sales.................. $ -- 5,453,117 19,601 12,750,168
Cost of goods sold......... -- (4,168,665) (22,780) (9,784,535)
----------- ------------ ---------- ----------
Gross profit............. -- 1,284,452 (3,179) 2,965,633
Selling, general and admin-
istrative expenses........ (370,873) (2,308,141) (238,288) (4,071,540)
----------- ------------ ---------- ----------
Operating loss........... (370,873) (1,023,689) (241,467) (1,105,907)
----------- ------------ ---------- ----------
Other income (expense):
Interest expense......... -- (34,897) -- (199,617)
Gain (loss) on forward
exchange contracts,
net..................... -- 126,570 -- (39,000)
Debt financing costs..... -- -- -- (550,000)
----------- ------------ ---------- ----------
91,673 -- (788,617)
----------- ------------ ---------- ----------
Loss before income taxes
and minority interest... (370,873) (932,016) (241,467) (1,894,524)
Income tax benefit......... -- -- -- 181,000
Minority interests in sub-
sidiaries (income) loss... -- (5,938) -- 48,042
----------- ------------ ---------- ----------
Net loss................. $ (370,873) (937,954) (241,467) (1,665,482)
=========== ============ ========== ==========
Net loss per share......... $ (0.11) (0.27) (0.07) (0.48)
=========== ============ ========== ==========
Weighted average shares
outstanding............... 3,450,000 3,450,000 3,450,000 3,450,000
=========== ============ ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-9
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

YEARS ENDED DECEMBER 31, 1995 AND 1996 AND
SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FOREIGN TOTAL
PREFERRED STOCK COMMON STOCK ADDITIONAL CURRENCY STOCKHOLDERS'
------------------ ---------------- PAID-IN ACCUMULATED TRANSLATION EQUITY
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT (DEFICIT)
------- -------- --------- ------ ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1,
1995................... -- $ -- 3,450,000 $3,450 47,550 (16,766) -- 34,234
Contributed capital..... -- -- -- -- 304,923 -- -- 304,923
Net loss................ -- -- -- -- -- (370,873) -- (370,873)
------- -------- --------- ------ --------- ---------- ------- ----------
BALANCES AT DECEMBER 31,
1995................... -- -- 3,450,000 3,450 352,473 (387,639) -- (31,716)
Contributed capital..... -- -- -- -- 5,783,815 -- -- 5,783,815
Net loss................ -- -- -- -- -- (937,954) -- (937,954)
Foreign currency
translation
adjustment............. -- -- -- -- -- -- 212,420 212,420
------- -------- --------- ------ --------- ---------- ------- ----------
BALANCES AT DECEMBER 31,
1996 (as restated, note
14).................... -- -- 3,450,000 3,450 6,136,288 (1,325,593) 212,420 5,026,565
------- -------- --------- ------ --------- ---------- ------- ----------
Contributed capital..... -- -- -- -- 2,211,045 -- -- 2,211,045
Net loss................ -- -- -- -- -- (1,665,482) -- (1,665,482)
Foreign currency
translation
adjustment............. -- -- -- -- -- -- (58,420) (58,420)
------- -------- --------- ------ --------- ---------- ------- ----------
BALANCES AT JUNE 30,
1997 (Unaudited)....... -- $ -- 3,450,000 $3,450 8,347,333 (2,991,075) 154,000 5,513,708
======= ======== ========= ====== ========= ========== ======= ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-10
<PAGE>
COYOTE SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1995 AND 1996 AND
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------- ---------------------
1995 1996 1996 1997
--------- ----------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss..................... $(370,873) (937,954) (241,467) (1,665,482)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization.............. 2,477 46,179 30 227,412
Deferred taxes............. -- -- -- 18,000
Minority interest in net
earnings of subsidiary.... -- 5,940 -- (48,042)
Contribution from minority
shareholder............... -- -- -- 594,177
Changes in operating assets
and liabilities (net of
acquisitions):
Trade receivables and
receivables from related
parties................. -- 1,640,799 (374,962) (1,196,449)
Inventories.............. -- (822,656) -- 587,025
Prepaid expenses and
other assets............ 900 (215,860) -- (288,300)
Payables to related
parties................. 17,817 4,474 60,464 --
Accounts payable......... 4,725 (137,696) 471,721 (466,810)
Taxes payable............ -- 63,000 -- (351,000)
Accrued expenses......... -- (763,530) 3,594 1,525,883
--------- ----------- -------- -----------
Net cash used in
operating activities.. (344,954) (1,117,304) (80,620) (1,063,586)
--------- ----------- -------- -----------
Cash flows from investing
activities:
Purchase of property, plant
and equipment............... (3,140) (25,105) (150) (3,832,660)
Acquisitions of businesses,
net of cash acquired of
$114,759.................... -- (5,020,546) -- (198,059)
--------- ----------- -------- -----------
Net cash used in
investing activities.. (3,140) (5,045,651) (150) (4,030,719)
--------- ----------- -------- -----------
Cash flows from financing
activities:
Proceeds from notes payable.. -- 375,000 -- 3,633,067
Leases....................... -- -- -- (4,925)
Borrowings (repayments) on
related party notes payable,
net......................... 45,632 67,229 -- 815,237
Capital contributions........ 304,923 5,783,815 40,766 2,211,045
--------- ----------- -------- -----------
Net cash provided by
financing activities.. 350,555 6,226,044 40,766 6,654,424
--------- ----------- -------- -----------
Effect of exchange rate changes
on cash....................... -- 212,420 -- (58,420)
--------- ----------- -------- -----------
Increase (decrease) in
cash.................. 2,461 275,509 (40,004) 1,501,699
Cash at beginning of period.... 27,036 29,497 29,497 305,006
--------- ----------- -------- -----------
Cash at end of period.......... $ 29,497 305,006 (10,507) 1,806,705
========= =========== ======== ===========
Supplemental disclosures of
cash flow information
Cash paid during the period
for:
Interest................. $ -- 23,000 217,427 126,247
========= =========== ======== ===========
Income taxes............. $ -- -- -- --
========= =========== ======== ===========
Noncash transactions--
acquisition of a subsidiary in
exchange for 20% of the stock
in that subsidiary and future
cash payments (note 2)
</TABLE>

See accompanying notes to consolidated financial statements.

F-11
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996

(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND 1997 IS UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

NATURE OF BUSINESS

Coyote Sports, Inc. and subsidiaries (the Company), is engaged in the
manufacture and sale of sporting good products. These sporting good products
include steel golf shafts (under the name Apollo), bicycle frame tubes (under
the name Reynolds), and high-end ski poles (under the name ICE). The Company
sells its golf shafts and bicycle frame tubes in wholesale markets and to
assemblers of finished products, and its ski poles to retail shops throughout
the United States. The Company's golf shaft and cycle tubing businesses
accounted for approximately 91% of the Company's revenue for the year ended
December 31, 1996. If the demand for golf products were to experience a
significant change it could have a significant impact on the Company's
financial performance.

The Company, in addition to the businesses described above, plans to expand
its existing product lines into other sporting good product lines in the
future. The Company plans to develop some of these products internally, as
well as, acquiring companies with existing products lines that complement the
Company's product lines.

Prior to 1996, the Company was a development stage enterprise as it was
devoting most of its activities to financial planning and identifying
acquisitions.

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The unaudited interim consolidated financial statements as of June 30, 1997
and for the six months ended June 30, 1996 and 1997, are unaudited but, in the
opinion of management, include all adjustments, consisting of normal recurring
adjustments, which are necessary for a fair presentation of financial
condition, results of operations, and cash flows. The operating results for
the six months ended June 30, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997.

LIQUIDITY

The Company incurred a loss of $937,954 in 1996. Notes payable to banks as
of December 31, 1996 contractually terminate April 30, 1998 and May 31, 1998.
Subsequent to December 31, 1996 the Company acquired two additional entities
in exchange for the assumption of indebtedness and entered into two new debt
agreements which contractually terminate on the earlier of December 31, 1997
or 5 days after the Company's initial public offering.

Management believes that the combination of extending the due dates of debt
agreements, entering into new debt agreements and the sale of equity will
provide sufficient cash to meet its obligations as they come due. However,
there can be no assurance that the debt agreements will be extended and that
new debt or equity will be sold. If the Company is unable to secure additional
financing or refinance existing debt, cash flows from operations might not be
sufficient to cover the Company's financial obligations during 1997.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of all
subsidiaries in which a controlling interest is held, including Apollo Sports
Holdings Ltd. and its subsidiaries, Apollo Golf, Inc. and ICE*USA LLC for the
year ended December 31, 1996. The Company purchased a controlling interest in
two other entities; Sierra Materials, LLC on March 27, 1997 and Pentiumatics
Sdn., Bhd on April 1, 1997. The accounts of these subsidiaries are included in
the consolidated financial statements for the six months ending June 30, 1997.
All significant intercompany balances and transactions have been eliminated in
consolidation.

F-12
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

TRADE RECEIVABLES

Prior to the year ended December 31, 1996, the Company had not recorded a
provision for doubtful accounts. During the year ended December 31, 1996, the
Company recorded a provision of approximately $33,000 and the remaining
$307,000 represents provisions for doubtful accounts carried over from the
Apollo acquisition.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or
market. Valuation allowances are provided for finished goods in excess of what
is expected to be sold and raw materials which are no longer used in
manufacturing.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost. Maintenance and repairs are
charged to expense as incurred. Depreciation is computed using the straight-
line method based on estimated useful lives of the assets, which range from 3
to 20 years.

INTANGIBLE ASSETS

Intangible assets represent trade names for approximately $765,000 and
customer lists for approximately $254,000 and are amortized on a straight-line
basis over the expected period to be benefitted of 15 years. The Company
reviews the impairment of intangible assets as well as other long-lived assets
whenever changes in circumstances indicate that the carrying amount of such
assets may have been impaired which is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to be generated
by the asset. If such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of the
assets exceed the fair value of the assets.

REVENUE RECOGNITION

The Company recognizes sales upon shipment to customers.

RESEARCH AND DEVELOPMENT EXPENSES

Expenditures relating to the development of new products and processes,
including significant improvements and refinements to existing products, are
expensed as incurred. The amount charged against operations in 1996 was
approximately $220,000, which is included in selling, general and
administrative expenses.

TAXES PAYABLE

Taxes payable consist of employee withheld payroll taxes, of approximately
$359,000, for employees based in the United Kingdom. Additionally, as a part
of the purchase agreement of the Apollo entities (note 2) the Company is
obligated to pay income taxes of approximately $279,000 for the entities
domiciled in the United Kingdom for earnings prior to the acquisition.
Therefore, taxes payable were included as an increase in the cost of the
Apollo entities.

INCOME TAXES

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

F-13
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

ADVERTISING

The Company expenses advertising costs when incurred. Advertising expenses
recognized in the year ended December 31, 1996 approximated $335,000 and are
included in selling, general and administrative expenses.

USE OF ESTIMATES

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

FOREIGN EXCHANGE RISK AND FINANCIAL INSTRUMENTS

The accounts of the Company's foreign subsidiaries are measured using the
local currency as the functional currency. For those operations, assets and
liabilities are translated at period end exchange rates. Revenue and expense
accounts are translated at average monthly exchange rates. Net gains or losses
resulting from translation are excluded from results of operations and
accumulated as a separate component of stockholders' equity. Gains and losses
from foreign currency transactions are included in operations as incurred.

The Company enters into forward foreign exchange contracts on certain
foreign forward delivery commitments. Generally, open forward delivery
commitments are marked to market at the end of each accounting period and
corresponding gains and losses are recognized in other income (expense).

NET LOSS PER SHARE

Net loss per share is computed using the weighted average number of shares
outstanding during the year as adjusted for subsequent stock splits.

RECLASSIFICATIONS

Certain reclassifications have been made to conform to the June 30, 1997
presentation.

(2) ACQUISITIONS

On September 18, 1996, the Company acquired three affiliated entities, TI
Apollo Limited, a United Kingdom company, TI Reynolds 531 Limited, a United
Kingdom company, and Apollo Golf, Inc., a United States company, (the "Apollo
Entities") and a manufacturing facility for total consideration of 3,284,702
Pound Sterling (PS) ($5,135,305 U.S.) in cash. The transaction was accounted
for by the purchase method. The purchase price was allocated to monetary
current assets and liabilities based on the fair values and the remainder to
property, plant and equipment, which resulted in property, plant and equipment
being recorded at less than the appraised value. Accordingly, no goodwill was
recorded from this acquisition. According to the purchase agreement, the
seller has indemnified the Company for five years for environmental
obligations and related costs up to 500,000 PS. As a result of an independent
environmental evaluation, no charges are expected to be incurred in
conjunction with remediation of property. Therefore the indemnification is not
considered to be an asset and was not included in the purchase price
allocation by the Company.

Certain assets and liabilities of the acquired entities have been stated at
management's best estimate of fair value which may be adjusted once better
information becomes available. Once determined, the purchase price and related
allocations may be adjusted. Management believes any adjustments made to the
purchase price will not materially impact the Company's operations and
financial position.

On March 27, 1997, the Company established a new entity, Sierra Materials,
LLC ("Sierra"). Sierra is 80% owned by the Company and 20% owned by two
individuals. Sierra was established to acquire Cape Composites, Inc. (d/b/a
Sierra Materials). Sierra Materials is a supplier of graphite and other
advanced composite materials for use in the sports and recreational markets.
This acquisition of Sierra Materials coincided with the formation of Sierra on
March 27, 1997. The transaction was accounted for by the purchase method and
the shares of Sierra Materials are pledged as collateral for certain
outstanding debt, amounting to approximately $650,000 and $534,000 at March
27, 1997 and June 30, 1997, respectively, of Sierra Materials which must be
paid or

F-14
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

refinanced by the Company prior to September 23, 1997. The personal guarantees
of the prior stockholders of Sierra Materials must be removed by the Company
prior to September 23, 1997 or the Shares of Sierra Materials will revert back
to the previous owners of Sierra Materials. No cash was paid and no goodwill
was recorded as a result of this acquisition.

The following unaudited pro forma financial information for the years ended
December 31, 1995 and 1996 present the combined results of operations of the
Company and the Apollo Entities as if the acquisition had occurred as of the
beginning of 1995 and 1996, after giving effect to certain adjustments,
including amortization of intangible assets, reduced depreciation expense, and
related income tax effects. The following unaudited pro forma financial
information for the six months ended June 30, 1996 and 1997 presents the
combined results of operations of the Company and Sierra Materials as if the
acquisition had occurred as of the beginning of 1996 and 1997. The pro forma
financial information does not necessarily reflect the results of operations
that would have occurred had the Company, the Apollo Entities and Sierra
Materials constituted a single entity during such periods.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------- ---------------------
1995 1996 1996 1997
------------ ----------- --------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales..................... $ 22,280,546 23,522,105 9,672,897 13,683,116
============ =========== ========= ==========
Net loss...................... $ (699,869) (1,574,748) (355,702) (1,691,192)
============ =========== ========= ==========
Net loss per share............ $ (0.20) (0.46) (0.10) (0.49)
============ =========== ========= ==========
</TABLE>

Also, on September 18, 1996, the Company entered into an agreement to
acquire certain assets of Expedition Trading Company, LLC, a Utah Limited
Liability Company (Expedition). The Company established ICE*USA LLC, a
Colorado Limited Liability Company (ICE), in order to purchase certain
intangible assets from Expedition in exchange for consideration of $1.5
million, in the form of a note, and a 20% interest in ICE. The negotiated
terms of the transaction provided that the Company would own an 80% interest
in ICE and Expedition would own a 20% interest.

The $1.5 million unsecured obligation is payable to Expedition over six
years, and has been discounted at 15%. The present value is $1,018,750 as of
December 31, 1996. Expedition is entitled to receive a minimum payment of
$100,000 per year and a maximum of $200,000 per year through 2002. Annual
payment amounts are based on ICE sales. In 2003, the Company must pay
Expedition $1.5 million, less all amounts previously paid under the agreement.

(3) INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Raw materials and supplies................ $ 804,113
Work-in-process........................... 1,082,239
Finished goods............................ 2,661,366
----------
4,547,718
Valuation allowance....................... (616,000)
----------
$3,931,718
==========
</TABLE>

F-15
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(4) NOTES PAYABLE TO STOCKHOLDER

The Company has outstanding notes payable to one of its stockholders in the
amount of $112,861 at December 31, 1996. The notes are unsecured and bear
interest rates ranging from 12% to 25% per annum. Interest is payable monthly
on the notes and any principal amounts outstanding are due in August 1998.

(5) NOTES PAYABLE TO BANKS

Notes payable consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Note payable under line of credit, variable interest rate of 1.5%
over the bank's prime rate
(7.5% at December 31, 1996), interest payable quarterly.......... $ 738,000
Note payable under line of credit, variable interest rate equal to
the bank's prime rate (8.25% at December 31, 1996), interest
payable monthly.................................................. 300,000
----------
$1,038,000
==========
</TABLE>

In September 1996, the Company entered into a Credit Facility Agreement
("credit facility") which provides for borrowings under a foreign line of
credit up to 750,000 PS ($1,285,000 U.S.) with an interest rate of 1.5% over
the bank's prime rate. The credit facility also provides for borrowings of up
to 400,000 PS ($685,000 U.S.) for spot and forward foreign exchange
transactions and borrowings of up to 120,000 PS ($205,000 U.S.) for customs
bonds. Amounts outstanding on the credit facility are secured by substantially
all Apollo Sports Holdings Ltd.'s assets. As of December 31, 1996, $431,000 PS
($738,000 U.S.) was outstanding under the credit facility. The credit facility
is due on demand and is subject to review in May 1998.

In December 1996, the Company entered into a Loan and Security Agreement
("line of credit") which provides for borrowings under a line of credit up to
a maximum of $500,000, with an interest rate equal to the bank's prime rate.
Amounts outstanding on the line of credit are secured by substantially all
assets of Apollo Golf, Inc. As of December 31, 1996, $300,000 was outstanding
under this line of credit. The line of credit expires on May 31, 1998.

(6) LEASES

The Company has noncancelable operating leases for offices and equipment
that expire in various years through 2001. Lease expense on these operating
leases amounted to approximately $61,000 and $14,669 for the years ended
December 31, 1996 and 1995, respectively.

At December 31, 1996, future minimum lease payments for operating leases are
as follows:

F-16
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(7) INCOME TAXES

Income tax expense (benefit) is comprised of the following for the years
ended:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1995 1996
----- --------
<S> <C> <C>
Current:
U.S. Federal............................................ $ -- --
United Kingdom.......................................... -- (16,000)
State................................................... -- --
----- --------
-- (16,000)
----- --------
Deferred:
U.S. Federal............................................ -- --
United Kingdom.......................................... -- 16,000
State................................................... -- --
----- --------
-- 16,000
----- --------
$ -- --
===== ========
</TABLE>

Actual income tax expense (benefit) differs from the amounts computed using
the U.S. statutory tax rate of 34% as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
--------- --------
<S> <C> <C>
Computed tax at the expected
statutory rate............. $(126,000) (317,000)
Increase (decrease) in in-
come taxes resulting from:
State tax, net of federal
benefit and state tax
credits.................. (12,000) (27,000)
Increase in valuation al-
lowance.................. 137,000 414,000
Other, net................ 1,000 (70,000)
--------- --------
Income tax expense...... $ -- --
========= ========
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities are presented
below:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards....................... $ 142,000 480,000
Bad debts and inventory allowances..................... -- 111,000
--------- ---------
Total deferred tax assets............................ 142,000 591,000
Valuation allowance.................................... (142,000) (557,000)
--------- ---------
Net deferred tax assets.............................. -- 34,000
--------- ---------
Deferred tax liability--difference in book and tax bases
of property, plant and equipment from acquisition....... -- (460,000)
--------- ---------
Net deferred tax liability........................... $ -- (426,000)
========= =========
</TABLE>

F-17
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

At December 31, 1996, the Company has net operating loss carryforwards for
U.S. federal income tax purposes of $480,000 which are available to offset
future federal taxable income and expire in the following years. For the year
ended December 31, 1996, the Company generated negligible taxable income in
the U.K. All of the operating loss carryforwards were generated by U.S.
operations.

At December 31, 1996, management does not believe it is more likely than not
that the Company will realize the benefits of a substantial portion of its
deferred tax assets and recognized a valuation allowance.

(8) COMMON STOCK AND PREFERRED STOCK

On June 11, 1997, the stockholders approved an increase in the authorized
number of shares of common stock from 1,000,000 shares to 25,000,000 shares.
Also on that date, the Board of Directors of the Company declared 3,450 to 1
stock split of the Company's common stock. In the accompanying financial
statements, all numbers of common shares and per share amounts have been
adjusted to reflect the common stock split retroactively. The stockholders
also authorized preferred stock. The total amount of preferred stock
authorized is 4,000,000 shares with none issued or outstanding.

(9) EMPLOYEE BENEFIT PLAN

Two of the Company's acquired subsidiaries participate in a multi-employer
defined benefit pension plan. The plan provides defined benefits to
substantially all salaried and hourly employees in these two subsidiaries.
Amounts charged to pension expense and contributed to the plan in 1996 were
$208,000. The Company is required to implement its own defined benefit plan
during 1997. In accordance with the purchase agreement on the transfer date of
the newly formed defined benefit plan, the amount of assets transferred from
the multi-employer plan will be equal to the benefit obligation of the
Company's employees based upon an actuarial report to be performed as of the
transfer date.

(10) FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instrument equals the amount at which the
instrument could be exchanged in a current transaction between willing
parties. The carrying amounts of certain of the Company's financial
instruments, including cash, trade accounts receivable and accounts payable
approximate fair value because of their short maturity. The fair value of
notes payable approximate the carrying value because of the short maturity of
these notes and because the notes bear interest at variable interest rates
which approximate market rates.

FOREIGN CURRENCY INSTRUMENTS

The fair value of the Company's foreign exchange contracts is estimated
based on quoted market prices of comparable contracts.

<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------
CARRYING FAIR
AMOUNT VALUE
------------------
<S> <C> <C>
Foreign exchange contracts............................ $ 191,306 191,306
========= ========
</TABLE>

F-18
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(11) OPERATING INFORMATION BY GEOGRAPHIC REGION

The Company's operations are summarized by geographic region as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
Net sales:
United Kingdom............................................ $ 2,499,142
United States............................................. 2,953,975
-----------
$ 5,453,117
===========
Operating income (loss):
United Kingdom............................................ $ (722,000)
United States............................................. 212,713
-----------
(509,287)
General corporate expenses................................ (514,402)
-----------
$(1,023,689)
===========
Identifiable assets:
United Kingdom............................................ $ 7,950,943
United States, excluding corporate........................ 3,698,341
Corporate................................................. 149,625
-----------
$11,798,909
===========
</TABLE>

Operating income (loss) represents net sales less operating expenses. In
computing operating loss none of the following items have been added or
deducted: interest expense, gain (losses) on forward exchange contracts,
income taxes and minority interest.

(12) COMMITMENTS AND CONTINGENCIES

LITIGATION

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.

UNION AGREEMENTS

Substantially all of the employees of the Apollo Entities are unionized
under various contracts which are periodically renegotiated.

(13) SUBSEQUENT EVENTS

On March 27, 1997, the Company established a new entity, Sierra Materials,
LLC ("Sierra"). Sierra is 80% owned by the Company and 20% owned by two
individuals. Sierra was established to acquire Cape Composites, Inc. (d/b/a
"Sierra Materials"). The shares of Sierra Materials are pledged as collateral
for certain outstanding debt of approximately $650,000 of Sierra Materials
which must be paid or the personal guarantees of the prior stockholders of
Sierra Materials must be removed prior to September 27, 1997 or the shares of
Sierra Materials will revert to the previous owners of Sierra Materials.

F-19
<PAGE>

COYOTE SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

On April 1, 1997, the Company acquired all of the outstanding stock of
Pentiumatics Sdn. Bhd. ("Pentiumatics"), a Southeast Asian entity whose
principal operations have not commenced. The principal operations of
Pentiumatics will be the extrusion of various metals which will be sold to
third parties, primarily for the manufacture of sporting goods. The
consideration for Pentiumatics was equal to approximately $200,000 cash.
Pentiumatics is included in the Company's consolidated financial statements
beginning April 1, 1997. Subsequent to the acquisition the majority
stockholders contributed additional capital to the Company of approximately
$2,200,000. In June of 1997, Insular Mart Sdn Bhd, a Malaysian company,
contributed approximately $600,000 into Pentiumatics resulting in an ownership
interest of 23%.

On April 4, 1997, the Company entered into two secured promissory notes with
lenders. The amounts of the notes are $1,355,000 and $145,000 and are due on
June 16, 1997, or they may be extended to the earlier of December 31, 1997 or
five days subsequent to the Company completing an initial public offering. The
interest rates on the notes are 8% and may be increased if the Company
defaults on the terms of the notes. As additional consideration for the
lenders making the notes, the Company will also issue 75,000 shares of the
Company's common stock at the initial public offering price for no additional
consideration and warrants to purchase 125,000 shares of the Company's common
stock subsequent to the Company's initial public offering. Accordingly, the
Company recorded debt financing costs of approximately $550,000 in other
income (expense) for the period ending June 30, 1997. The notes are secured by
a Stock Pledge Agreement whereby the assets of the Company in Apollo Golf,
Inc. and in Apollo Sports Holdings are pledged as collateral. In addition, the
notes are secured by the personal guaranty of two of the stockholders of the
Company.

The minority stockholders of Pentiumatics loaned the Company $815,602 in
June 1997. The note bears interest at 5 percent. Principal is due July 25,
2002.

The Company's 1997 Stock Option Plan (the "Option Plan") was adopted by the
Board of Directors and stockholders on June 10, 1997. The Option Plan provides
for the grant of options to purchase up to 500,000 shares of the Company's
common stock. Stock options granted under the Option Plan may be either
incentive stock options granted to employees, or nonstatutory stock options,
granted to employees, non-employee directors or consultants of the Company.
The Plan is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee has full discretionary authority,
subject to certain restrictions, to determine the number of shares for which
incentive stock options and nonstatutory stock options may be granted and the
individuals to whom, and the times at which, the exercise prices and vesting
requirements for which options will be granted. On September 18, 1997, the
Board of Directors granted options to purchase 337,500 shares to certain
employees, directors and consultants.

Subsequent to June 30, 1997, the Company retired 850,000 shares of common
stock.

On August 4, 1997, the Company entered into a note payable with one of its
stockholders in the amount of $87,659. The note is unsecured and bears
interest at 12% per annum. Interest is payable monthly on the note and any
principal amounts outstanding are due in October 1999.

(14) RESTATEMENT

The Company has restated inventory, cost of goods sold and accumulated
deficit by $308,909 as the elimination of intercompany profits in inventory
was incorrectly stated as of December 31, 1996.

F-20
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Coyote Sports, Inc.

We have audited the accompanying combined balance sheets of TI Apollo
Limited, Apollo Golf, Inc. and TI Reynolds 531 Limited (collectively the
Apollo Entities) as of December 31, 1995 and September 30, 1996, and the
related combined statements of operations, stockholders' equity and cash flows
for the year ended December 31, 1995 and for the nine months ended September
30, 1996. These combined financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of TI Apollo
Limited, Apollo Golf, Inc. and TI Reynolds 531 Limited (collectively the
Apollo Entities) as of December 31, 1995 and September 30, 1996, and the
results of their operations and their cash flows for the year ended December
31, 1995 and for the nine months ended September 30, 1996, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP

Boulder, Colorado
June 5, 1997, except
for Note 10 which
is as of August 1, 1997

F-21
<PAGE>

TI APOLLO LIMITED, APOLLO GOLF, INC.
AND TI REYNOLDS 531 LIMITED

COMBINED BALANCE SHEETS

DECEMBER 31, 1995 AND SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash............................................. $ 1,214,407 114,757
Trade accounts receivable, less allowance for
doubtful accounts of $265,000 in 1995 and
$125,000 in 1996................................ 2,736,164 3,086,843
Inventories (as restated, note 10)............... 3,710,391 3,243,873
Prepaid expenses and other assets................ 282,939 204,761
----------- ----------
Total current assets........................... 7,943,901 6,650,234
----------- ----------
Property, plant and equipment:
Machinery and equipment.......................... 10,269,054 10,438,190
Furniture and fixtures........................... 578,000 582,000
----------- ----------
10,847,054 11,020,190
Less accumulated depreciation.................... (7,843,819) (8,320,485)
----------- ----------
Net property, plant and equipment.................. 3,003,235 2,699,705
----------- ----------
$10,947,136 9,349,939
=========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Notes payable to Former Parent................... $ 688,000 1,138,000
Accounts payable................................. 2,505,197 1,623,546
Taxes payable.................................... 947,000 575,000
Accrued expenses................................. 942,111 1,398,577
Dividends payable................................ 832,000 --
----------- ----------
Total current liabilities...................... 5,914,308 4,735,123
----------- ----------
Deferred tax liability............................. 540,000 525,000
----------- ----------
Total liabilities.............................. 6,454,308 5,260,123
Stockholders' equity
Common stock..................................... 1,600,057 2,292,057
Additional paid-in capital....................... 4,480,943 3,800,943
Accumulated deficit (as restated, note 10)....... (1,575,172) (2,008,184)
Foreign currency translation adjustment.......... (13,000) 5,000
----------- ----------
Total stockholders equity...................... 4,492,828 4,089,816
----------- ----------
Commitments and contingencies (notes 3, 4, 6 and
9)................................................ $10,947,136 9,349,939
=========== ==========
</TABLE>

See accompanying notes to combined financial statements.

F-22
<PAGE>

TI APOLLO LIMITED, APOLLO GOLF, INC.
AND TI REYNOLDS 531 LIMITED

COMBINED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -----------------
<S> <C> <C>
Net sales...................................... $ 22,280,546 14,787,052
Cost of goods sold............................. (16,342,961) (10,789,428)
------------ -----------
Gross profit................................. 5,937,585 3,997,624
Selling, general and administrative expenses... (5,493,276) (3,997,959)
------------ -----------
Operating income (loss)...................... 444,309 (335)
------------ -----------
Other income (expense):
Interest expense, net........................ (224,305) (238,677)
Gains (losses) on forward exchange contracts,
net......................................... (126,000) 54,000
------------ -----------
(350,305) (184,677)
------------ -----------
Income (loss) before income taxes............ 94,004 (185,012)
Income tax expense............................. (507,000) (248,000)
------------ -----------
Net loss..................................... $ (412,996) (433,012)
============ ===========
</TABLE>

See accompanying notes to combined financial statements.

F-23
<PAGE>

TI APOLLO LIMITED, APOLLO GOLF, INC.
AND TI REYNOLDS 531 LIMITED

COMBINED STATEMENTS OF STOCKHOLDERS EQUITY

FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL CURRENCY TOTAL
COMMON COMMON COMMON PAID-IN ACCUMULATED TRANSLATION STOCKHOLDERS
STOCK(1) STOCK(2) STOCK(3) CAPITAL DEFICIT ADJUSTMENT EQUITY
-------- --------- -------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES JANUARY 1, 1995
(as restated, note
10).................... $1,000 1,521,427 77,630 4,518,838 (1,162,176) (5,000) 4,951,719
Contributed Capital..... -- -- -- 808,105 -- -- 808,105
Dividends declared...... -- -- -- (846,000) -- -- (846,000)
Net loss................ -- -- -- -- (412,996) -- (412,996)
Foreign currency
translation
adjustment............. -- -- -- -- -- (8,000) (8,000)
------ --------- ------ --------- ---------- ------- ---------
BALANCES DECEMBER 31,
1995 $1,000 1,521,427 77,630 4,480,943 (1,575,172) (13,000) 4,492,828
====== ========= ====== ========= ========== ======= =========
Contributed capital..... -- 692,000 -- 12,000 -- -- 704,000
Dividends declared...... -- -- -- (692,000) -- -- (692,000)
Net loss................ -- -- -- -- (433,012) -- (433,012)
Foreign currency
translation
adjustment............. -- -- -- -- -- 18,000 18,000
------ --------- ------ --------- ---------- ------- ---------
BALANCES SEPTEMBER 30,
1996 $1,000 2,213,427 77,630 3,800,943 (2,008,184) 5,000 4,089,816
====== ========= ====== ========= ========== ======= =========
</TABLE>
- --------
(1) Common stock, no par value. Authorized 1,000 shares, 100 issued and
outstanding.
(2) Common stock, .25 Pound Sterling (PS) ($.39 at December 31, 1995 and
September 30, 1996) par value. Authorized 5,800,000 shares, 5,719,688 (par
value partially paid to .025 PS) and 5,719,688 (fully paid par value)
shares issued and outstanding at December 31, 1995 and September 30, 1996,
respectively.
(3) Common stock, .02 PS ($.03 at December 31, 1995 and September 30, 1996) par
value. Authorized 14,040,040 shares, 10,000,000 (par value partially paid
to .005 PS) shares issued and outstanding.

See accompanying notes to combined financial statements.

F-24
<PAGE>

TI APOLLO LIMITED, APOLLO GOLF, INC.
AND TI REYNOLDS 531 LIMITED

COMBINED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.......................................... $ (412,996) (433,012)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation.................................. 395,600 476,666
Deferred income taxes......................... (4,000) (15,000)
Changes in operating assets and liabilities:
Trade accounts receivable, net.............. 540,928 (350,679)
Inventories................................. (124,189) 466,518
Prepaid expenses and other assets........... (174,032) 78,178
Accounts payable............................ (305,427) (881,651)
Taxes payable............................... (179,000) (372,000)
Accrued expenses............................ (692,636) 456,466
----------- ----------
Net cash used in operating activities..... (955,752) (574,514)
----------- ----------
Cash flows used in investing activities--purchase
of property, plant and equipment................. (192,144) (173,136)
Cash flows from financing activities:
Proceeds from notes payable to Former Parent.... 688,000 450,000
Dividends paid.................................. (1,962,000) (832,000)
Capital contributions........................... 808,105 12,000
----------- ----------
Net cash used in financing activities..... (465,895) (370,000)
----------- ----------
Effect of exchange rate changes on cash........... (8,000) 18,000
----------- ----------
Net decrease in cash...................... (1,621,791) (1,099,650)
----------- ----------
Cash at beginning of period....................... 2,836,198 1,214,407
----------- ----------
Cash at end of period............................. $ 1,214,407 114,757
=========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest........................................ $ 11,050 53,788
=========== ==========
Income taxes.................................... $ 1,191,768 --
=========== ==========
</TABLE>

See accompanying notes to combined financial statements.

F-25
<PAGE>

TI APOLLO LIMITED, APOLLO GOLF, INC. AND TI REYNOLDS 531 LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND SEPTEMBER 30, 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES AND BASIS OF
PRESENTATION

NATURE OF BUSINESS AND BASIS OF PRESENTATION

TI Apollo Limited ("TAL"), Apollo Golf, Inc. ("AGI") and TI Reynolds 531
Limited ("TRL") (collectively, the "Apollo Entities", or "Company") formerly
wholly owned subsidiaries of TI Group plc ("Former Parent") are engaged in the
manufacture and sales of sporting goods products. These sporting good products
include steel golf shafts (under the name Apollo) and bicycle frame tubes
(under the name Reynolds). The Company sells its golf shafts and bicycle frame
tubes in wholesale markets and to assemblers of finished products primarily in
Europe and the United States. The Company's golf shaft business accounted for
approximately 88% of the Company's revenue for the nine months ended September
30, 1996. If the demand for golf products were to experience a significant
change it could have a significant impact on the financial performance of the
Apollo Entities.

The Apollo Entities have been combined as a result of the acquisition of
these entities by Coyote Sports, Inc. as described in note 11. These combined
financial statements are presented on a historical cost basis and do not
include the effects of purchase accounting. The purchase price paid by Coyote
Sports, Inc., for the Apollo Entities was less than the net book value
recorded in the combined financial statements.

All significant intercompany balances and transactions have eliminated in
combination.

ACCOUNTS RECEIVABLE

The provision for doubtful accounts was $269,167 and $101,003 and
uncollectible accounts charged to the allowance were $262,189 and $240,787 for
the year ended December 31, 1995 and the nine months ended September 30, 1996,
respectively. The allowance for doubtful accounts was $258,661 as of December
31, 1994.

INVENTORIES

PROPERTY, PLANT AND EQUIPMENT

DIVIDENDS

Dividends declared and paid are based on the operating results of TAL and TRL.
There is no restriction from paying dividends in loss years.

REVENUE RECOGNITION

The Company recognizes sales upon shipment to customers.

RESEARCH AND DEVELOPMENT EXPENSES

Expenditures relating to the development of new products and processes,
including significant improvements and refinements to existing products, are
expensed as incurred. The amount charged against operations during the year
ended December 31, 1995 and the nine months ended September 30, 1996 was
approximately $665,000 and $407,000, respectively, which is included in
selling, general and administrative expenses.

F-26
<PAGE>

TI APOLLO LIMITED, APOLLO GOLF, INC. AND TI REYNOLDS 531 LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

INCOME TAXES

The Apollo Entities account for income taxes under the asset and liability
method whereby deferred tax assets and liabilities are recognized for future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

In accordance with FAS 109, current and deferred income taxes were allocated
to the combined entities as if the combined entity was a separate taxpayer
independent of other TI Group plc entities.

ADVERTISING

The Apollo Entities expense advertising costs when incurred. Advertising
expense recognized in the year ended December 31, 1995 and the nine months
ended September 30, 1996 approximated $1,029,000 and $581,000, respectively,
and is included in selling, general and administrative expenses.

USE OF ESTIMATES

FOREIGN EXCHANGE RISK AND FINANCIAL INSTRUMENTS

The accounts of TAL and TRL are measured using the local currency (Pound
Sterling) as the functional currency. For those operations, assets and
liabilities are translated at period end exchange rates. Revenue and expense
accounts are translated at average monthly exchange rates. Net gains or losses
resulting from translation are excluded from results of operations and
accumulated as a separate component of stockholder's equity. Gains and losses
from foreign currency transactions are included in operations as incurred.

RECLASSIFICATIONS

Certain reclassifications have been made to conform to the September 30,
1996 presentation.

(2) INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Raw materials and supplies..................... $1,051,452 514,094
Work-in-progress............................... 766,022 866,239
Finished goods................................. 2,323,847 2,384,470
---------- ---------
4,141,321 3,764,803
Valuation allowance............................ (430,930) (520,930)
---------- ---------
$3,710,391 3,243,873
========== =========
</TABLE>

F-27
<PAGE>

TI APOLLO LIMITED, APOLLO GOLF, INC. AND TI REYNOLDS 531 LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(3) NOTES PAYABLE TO FORMER PARENT

The Former Parent had a senior bank facility which was used to fund the
working capital needs of the Apollo Entities, similar to a line of credit.
Amounts outstanding on the facility were the obligation of the Former Parent.
Amounts payable by the Apollo Entities were payable to the Former Parent.
These amounts were paid prior to the completion of the acquisition in note 11.

(4) LEASES

The Company has noncancelable operating leases for offices and equipment
that expire in various years through 2000. Lease expense on these operating
leases amounted to approximately $193,000 and $134,000 for the year ended
December 31, 1995 and the nine months ended September 30, 1996, respectively.

At September 30, 1996, future minimum lease payments for operating leases
are as follows:

(5) INCOME TAXES

Income tax expense (benefit) is comprised of the following for the years
ended:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Current:
U.S. Federal................................. $ -- --
United Kingdom............................... 543,000 263,000
State........................................ -- --
-------- -------
543,000 263,000
-------- -------
Deferred:
U.S. Federal................................. -- --
United Kingdom............................... (36,000) (15,000)
State........................................ -- --
-------- -------
(36,000) (15,000)
-------- -------
$507,000 248,000
======== =======
</TABLE>

F-28
<PAGE>

TI APOLLO LIMITED, APOLLO GOLF, INC. AND TI REYNOLDS 531 LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Actual income tax expense (benefit) differs from the amounts computed using
the U.S. statutory tax rate of 34% as follows:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Computed tax at the expected statutory rate.. $ 32,000 (63,000)
Increase (decrease) in income taxes from:
State tax, net of federal benefit and tax
credits................................... (16,000) (20,000)
Meals and entertainment expenses........... 22,000 19,000
Correction of a previously filed tax re-
turn...................................... -- 80,000
Increase in valuation allowance............ 448,000 264,000
Other, net................................. 21,000 (32,000)
-------- -------
Income tax expense....................... $507,000 248,000
======== =======
</TABLE>

Income tax expense is a result of income generated in the United Kingdom
without the benefit of the utilization of net operating losses generated in
the United States.

The tax effects of temporary differences which give rise to significant
portions of deferred tax assets and deferred tax liabilities are presented
below:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30
1995 1996
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards............. $ 294,000 524,000
Bad debts and inventory allowances........... 201,000 227,000
--------- --------
Total deferred tax assets.................. 495,000 751,000
Valuation allowance............................ (448,000) (712,000)
--------- --------
Net deferred tax assets.................... 47,000 39,000
--------- --------
Deferred tax liability--difference in book and
tax basis of property, plant and equipment
from acquisition.............................. (587,000) (564,000)
--------- --------
Net deferred tax liability................. $(540,000) (525,000)
========= ========
</TABLE>

At September 30, 1996, management does not believe it is more likely than
not that the Apollo Entities will realize the benefits of a substantial
portion of its deferred tax assets and recognized a valuation allowance.

(6) EMPLOYEE BENEFIT PLAN

The Apollo Entities participate in a multi-employer defined benefit pension
plan. The plan provides defined benefits to substantially all salaried and
hourly employees in these two subsidiaries. Amounts charged to pension expense
and contributed to the plan during the year ended December 31, 1995 and the
nine months ended September 30, 1996 were $30,996 and $20,250, respectively.

(7) FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument equals the amount at which the
instrument could be exchanged in a current transaction between willing
parties. The carrying amounts of certain of the Apollo Entities' financial
instruments, including cash, trade accounts receivable and accounts payable
approximate fair value because of their short maturity.

F-29
<PAGE>

TI APOLLO LIMITED, APOLLO GOLF, INC. AND TI REYNOLDS 531 LIMITED

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

FOREIGN CURRENCY INSTRUMENTS

The fair value of the Apollo Entities' foreign exchange contracts is
estimated based on quoted market prices of comparable contracts.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------
CARRYING FAIR
AMOUNT VALUE
---------- --------
<S> <C> <C>
Foreign exchange contracts............................ $ 80,252 80,252
========= ========
</TABLE>

(8) OPERATING INFORMATION BY GEOGRAPHIC REGION

The Apollo Entities' operations are summarized by geographic region as
follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
1996
-------------
<S> <C>
Net Sales:
United Kingdom............................................ $ 6,788,333
United States............................................. 7,998,719
-----------
14,787,052
===========
Operating income (loss):
United Kingdom............................................ (1,349,667)
United States............................................. 1,349,332
-----------
(335)
===========
Identifiable assets:
United Kingdom............................................ 6,321,000
United States............................................. 3,260,067
-----------
$ 9,581,067
===========
</TABLE>

(9) COMMITMENTS AND CONTINGENCIES

LITIGATION

The Apollo Entities are involved in various claims and legal actions arising
in the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Apollo Entities' combined financial position, results of operations or
liquidity.

UNION AGREEMENTS

Substantially all of the employees of TAL and TRL are unionized under
various contracts which are periodically renegotiated.

(10) RESTATEMENT

The Company has restated the January 1, 1995 inventory balance and the
accumulated deficit by $231,128 as of January 1, 1995 as the elimination of
intercompany profits in inventory was incorrectly stated as of January 1,
1995.

(11) ACQUISITION BY COYOTE SPORTS, INC.

On September 18, 1996, all of the outstanding shares of the Apollo Entities
were sold to Coyote Sports, Inc. In addition to these shares of the Apollo
Entities, Coyote Sports, Inc. acquired a manufacturing facility which is used
by TI Apollo Limited to manufacture golf shafts.

F-30
<PAGE>

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE IN-
FORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CON-
NECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OF-
FER TO SELL, OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THE AFFAIRS OF THE COMPANY SINCE THAT DATE HEREOF OR 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
Use of Proceeds.......................................................... 15
Capitalization........................................................... 16
Dividend Policy.......................................................... 16
Dilution................................................................. 17
Selected Consolidated Financial Data..................................... 18
Management's Discussion and Analysis of Financial Condition & Results of
Operations.............................................................. 20
Business................................................................. 27
Management............................................................... 40
Certain Transactions..................................................... 44
Private Placement........................................................ 46
Principal Stockholders................................................... 47
Additional Registered Shares............................................. 47
Description of Securities................................................ 48
Shares Eligible for Future Sale.......................................... 49
Underwriting............................................................. 51
Legal Matters............................................................ 52
Available Information.................................................... 52
Index to Financial Statements............................................ F-1
</TABLE>

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

UNTIL OCTOBER 13, 1997, ALL DEALERS EFFECTING TRANSACTIONS IN SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

1,050,000
SHARES OF COMMON STOCK

COYOTE SPORTS, INC.

[LOGOS OF REYNOLDS, APOLLO, AND ICE.USA APPEAR HERE]

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

PROSPECTUS

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

COHIG & ASSOCIATES, INC.

SEPTEMBER 18 , 1997

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