ADAMS GOLF INC, 424B4, 1998-07-13

ADAMS GOLF INC
424B4, 1998-07-13
SPORTING & ATHLETIC GOODS, NEC

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<PAGE>
FILED PURSUANT TO RULE 424(b)(4)
REG. NOS. 333-51715, 333-58917

PROSPECTUS

6,000,000 SHARES

[LOGO]

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

Of the 6,000,000 shares of common stock, par value $.001 per share (the
"Common Stock"), being offered hereby 4,000,000 shares are being offered by
Adams Golf, Inc. (the "Company") and 2,000,000 shares are being offered by
certain stockholders of the Company (the "Selling Stockholders"). The Company
will not receive any of the proceeds from the sale of shares by the Selling
Stockholders. See "Principal and Selling Stockholders."

Prior to the offering made hereby (the "Offering"), there has been no public
market for the Common Stock of the Company. See "Underwriting" for a discussion
of the factors to be considered in determining the initial public offering price
of the Common Stock. The Common Stock has been approved for listing on the
Nasdaq National Market under the symbol "ADGO."

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

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
-------------------

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

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO PROCEEDS TO SELLING
PUBLIC AND COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
Per Share................ $16.00 $1.12 $14.88 $14.88
Total(3)................. $96,000,000 $6,720,000 $59,520,000 $29,760,000
</TABLE>

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

(2) Before deducting estimated expenses of the Offering payable by the Company
of $1,250,000.

(3) The Company and certain of the Selling Stockholders have granted the
Underwriters a 30-day option to purchase up to an aggregate of 900,000
additional shares of Common Stock on the same terms and conditions as set
forth above, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company and Proceeds to Selling Stockholders will
be $110,400,000, $7,728,000, $60,078,000 and $42,594,000, respectively. See
"Underwriting."

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

The shares of Common Stock offered by this Prospectus are offered severally
by the Underwriters, subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
Underwriters and to certain further conditions. It is expected that delivery of
the certificates for the shares of Common Stock will be made at the offices of
Lehman Brothers Inc., New York, New York, on or about July 15, 1998.

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

LEHMAN BROTHERS

NATIONSBANC MONTGOMERY SECURITIES LLC

FERRIS, BAKER WATTS

INCORPORATED

July 9, 1998
<PAGE>
[ON THIS PAGE APPEAR SEVERAL PHOTOGRAPHS OF THE COMPANY'S PRODUCTS AND CERTAIN
PERSONS AFFILIATED WITH THE COMPANY INCLUDING B. H. (BARNEY) ADAMS, NICK FALDO
AND HANK HANEY. CERTAIN OF THE PHOTOGRAPHS CONTAIN CAPTIONS INDICATING THE
CONTENTS THEREOF.]

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

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

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF COMMON STOCK FOLLOWING THE
PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON STOCK
OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

The Company has registered the trademarks Adams-Registered Trademark- (with
triangle design), Tight Lies-Registered Trademark- and Assault-Registered
Trademark-, and currently has pending trademark applications for registration of
a configuration of the heel portion of a golf club head, and an overall
configuration of a golf club head. This Prospectus also includes trademarks of
companies other than the Company.
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY AND SHOULD
BE READ IN CONJUNCTION WITH THE MORE DETAILED INFORMATION AND THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL SHARE AMOUNTS, PER
SHARE AMOUNTS AND OTHER INFORMATION IN THIS PROSPECTUS HAVE BEEN ADJUSTED TO
GIVE RETROACTIVE EFFECT TO A 2-FOR-1 STOCK SPLIT OF THE COMMON STOCK AND ASSUME
NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. REFERENCES IN THIS
PROSPECTUS TO THE "COMPANY" OR "ADAMS" ARE, UNLESS THE CONTEXT OTHERWISE
REQUIRES, TO ADAMS GOLF, INC., A DELAWARE CORPORATION, AND ITS SUBSIDIARIES.

THE COMPANY

Adams designs, manufactures and markets premium quality, technologically
innovative golf clubs. The Company's design objective is to produce golf clubs
that deliver meaningful performance benefits and inspire player confidence. The
Company believes that its most successful product line to date, the Tight Lies
fairway woods, meets this objective by providing golfers with the ability to hit
the ball from virtually any lie while maximizing distance. The patented Tight
Lies fairway woods feature an upright trapezoidal head, a shallow face and a
lower center of gravity as compared to conventional fairway woods. The complete
Tight Lies line of products includes the original, Strong 3, Strong 5, Strong 7
and Strong 9 fairway woods. According to the Golf Market Research Institute, the
Tight Lies fairway woods were the top-selling single fairway woods in the U.S.
on a unit volume basis during the three months ended March 31, 1998. During this
period, the Company achieved a 27% market share of the single fairway woods
category.

Adams has developed a marketing model that integrates direct response and
traditional image-based advertising to generate brand awareness and drive retail
sales. The Company's advertising includes a 30-minute informative television
commercial ("infomercial") and print advertising in publications such as GOLF
DIGEST, USA TODAY and THE WALL STREET JOURNAL. For the three months ended March
31, 1998, approximately 79% of the Company's sales occurred at the retail level.
To preserve the integrity of its image and reputation, the Company currently
limits its distribution to retailers that market premium quality golf equipment
and provide a high level of customer service and technical expertise. The
Company currently sells its products to on- and off-course golf shops and
selected sporting goods retailers. The Company believes its selective retail
distribution helps its retailers to maintain profitable margins and maximize
sales of Adams' products.

Another important element of the Company's success to date has been its
sales and customer service infrastructure. Rather than relying on independent
sales representatives, as do many other golf equipment companies, Adams
maintains an inside sales department that currently consists of 25 employees who
are in regular telephone contact with the Company's over 7,000 retailers. These
sales representatives are supported by 13 field-based Regional Account
Coordinators who maintain personal contact with the Company's retailers
nationwide. The Company believes that using and carefully managing its own sales
force enables it to significantly reduce selling expenses. Adams also has a
separate 30-seat customer call center that provides customer service to
retailers and consumers. The majority of the Company's sales and customer
service personnel are experienced golfers. The Company believes interaction with
its knowledgeable representatives promotes customer satisfaction and helps to
strengthen the Adams brand.

In 1997, wholesale sales of golf equipment in the U.S. reached an estimated
$2.4 billion. Wholesale sales of golf clubs increased at an estimated compound
annual growth rate of approximately 13% over the 5-year period from 1992 to
1997. The Company believes that a number of trends are likely to further
increase the demand for Adams' products. These trends include: (i) significant
growth in the number of golf courses; (ii) increasing interest in golf from
women, junior and minority golfers; (iii) the large numbers of golfers entering
their 40s and 50s, the age when most golfers begin to play more often and
increase their spending on the sport; (iv) the correspondingly large population
of "Echo Boomers," who are beginning to

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<PAGE>
enter their 20s, the age when golfers generally take up the sport; and (v) the
rapid evolution of golf club designs and materials.

The Company recently established a relationship with internationally
recognized, professional golfer Nicholas A. Faldo, who currently uses the Tight
Lies fairway woods. Mr. Faldo was inducted into the World Golf Hall of Fame in
May 1998 and has won more major championships in the 1990s than any other
golfer. Pursuant to the terms of the agreement, Mr. Faldo has agreed to, among
other things, (i) exclusively endorse the Company's golf clubs and undertake
certain other promotional activities on behalf of the Company and (ii) assist in
the design and field testing of a new line of golf clubs. In exchange for his
services, Mr. Faldo was granted 900,000 shares of Common Stock and is entitled
to receive certain minimum royalties. Absent an early termination event, the
agreement with Mr. Faldo continues throughout his lifetime. The Company believes
that Mr. Faldo's comprehensive knowledge of the game of golf and reputation for
technical excellence complement the Company's capabilities and strong brand
identity. See "Certain Transactions."

The Company intends to develop proprietary new technologies and product
designs that provide golfers with meaningful performance benefits. Capitalizing
on the technical knowledge and expertise gained through the Tight Lies fairway
woods, the Company is currently testing prototypes of a potential new driver.
This new product is expected to combine the distance of a driver with the
playability of a fairway wood. The Company currently expects the new driver to
be introduced after the end of fiscal year 1998. The Company is working with Mr.
Faldo to design and test this new driver as well as other potential new
products.

The Company's goal is to establish itself as a leading developer of
technologically innovative, performance-oriented golf clubs. To achieve this
goal the Company intends to (i) build its share of the premium fairway woods
market; (ii) leverage the success, performance and reputation of the Tight Lies
fairway woods; (iii) expand international sales; and (iv) develop new
technologies and product designs.

The address of the Company's principal executive office is 300 Delaware
Avenue, Suite 548, Wilmington, Delaware 19801. The Company's telephone number at
this address is (302) 427-5892. Adams' principal manufacturing and management
headquarters are located at 2801 East Plano Parkway, Plano, Texas 75074 and its
telephone number at this location is (972) 673-9000. The Company's World Wide
Web site is located at www.adamsgolf.com. The contents of the Company's Web site
shall not be deemed to be part of this Prospectus.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by:
The Company.......................................... 4,000,000 shares
The Selling Stockholders............................. 2,000,000 shares
Total Common Stock Offered......................... 6,000,000 shares
Common Stock to be outstanding after the Offering(1)... 23,099,282 shares
Use of net proceeds to the Company..................... Working capital and general
corporate purposes
Nasdaq National Market Symbol.......................... ADGO
</TABLE>

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(1) Excludes 423,666 shares of Common Stock issuable upon the exercise of
outstanding stock options at May 31, 1998.

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table sets forth summary consolidated financial data of the
Company and should be read in conjunction with the Consolidated Financial
Statements and related Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA(1):
Net sales................................................. $ 1,125 $ 3,522 $ 36,690 $ 1,475 $ 24,511
Gross profit.............................................. 369 1,932 26,699 888 18,649
Operating expenses (excluding stock compensation and bonus
award).................................................. 613 1,709 15,826 823 9,777
Stock compensation and bonus award(2)..................... -- 214 14,842 -- --
--------- --------- --------- --------- ---------
Operating income (loss)................................... (244) 9 (3,969) 65 8,872
Net income (loss)......................................... $ (243) $ 13 $ (4,654) $ 45 $ 5,642
--------- --------- --------- --------- ---------
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Income (loss) per common share(3):
Basic................................................... $ (0.05) $ -- $ (0.37) $ -- $ 0.32
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Diluted................................................. $ (0.05) $ -- $ (0.37) $ -- $ 0.31
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average common shares(3):
Basic................................................... 4,423 11,238 12,519 11,873 17,662
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Diluted................................................. 4,423 11,238 12,519 11,873 18,340
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

<TABLE>
<CAPTION>
AT MARCH 31, 1998
-------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED(4)
--------- --------------
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............................................................ $ 602 $ 58,872
Working capital...................................................................... 12,299 70,569
Total assets......................................................................... 25,793 84,063
Total debt (including current maturities)............................................ 1,135 1,135
Stockholders' equity................................................................. 14,667 72,937
</TABLE>

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

(1) This table excludes summary financial information for the fiscal years ended
December 31, 1993 and 1994 because operations in those years were not
comparable in size or scope to current operations.

(2) Consists primarily of a stock award to the Company's founder, Chief
Executive Officer and President. See "Certain Transactions" and Note 9 of
Notes to Consolidated Financial Statements.

(3) See Note 1 of Notes to Consolidated Financial Statements for information
concerning the calculation of income (loss) per common share and weighted
average common shares outstanding.

(4) Gives effect to the sale of 4,000,000 shares of Common Stock offered by the
Company hereby and the application of the estimated net proceeds therefrom
(based on an initial public offering price of $16.00 per share). See "Use of
Proceeds" and "Capitalization."

5
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. PROSPECTIVE PURCHASERS OF COMMON STOCK OFFERED HEREBY SHOULD CONSIDER
CAREFULLY THE FOLLOWING FACTORS IN ADDITION TO OTHER INFORMATION IN THIS
PROSPECTUS. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS AND THE TIMING OF CERTAIN
EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED BY SUCH FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS DISCUSSED IN THIS PROSPECTUS,
INCLUDING THE FACTORS SET FORTH BELOW AND IN "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS." SEE
"DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS."

DEPENDENCE ON NEW PRODUCT INTRODUCTIONS; UNCERTAIN CONSUMER ACCEPTANCE

During the years ended December 31, 1996 and 1997 and the three months ended
March 31, 1998, approximately 47.2%, 94.3% and 97.3%, respectively, of the
Company's net sales were derived from the sale of Tight Lies fairway woods.
Sales of this product line are expected to account for a substantial portion of
the Company's net sales for some time. A decline in demand for, or average
selling prices of, the Tight Lies line of products would have a material adverse
effect on the Company's business, operating results and financial condition.
Accordingly, the Company's continued growth and success depend, in large part,
on its ability to successfully develop and introduce new products accepted in
the marketplace. Historically, a large portion of new golf club technologies and
product designs have been met with consumer rejection. No assurance can be given
that the new driver currently under development will meet with market acceptance
or that the Company will be able to continue to design, manufacture and
introduce new products that will meet with market acceptance. Failure by the
Company to identify and develop innovative new products that achieve widespread
market acceptance would adversely affect the Company's future growth and
profitability. Additionally, successful technologies, designs and product
concepts are likely to be copied by competitors. Accordingly, the Company's
operating results could fluctuate as a result of the amount, timing and market
acceptance of new product introductions by the Company or its competitors. The
design of new golf clubs is also greatly influenced by the rules and
interpretations of the U.S. Golf Association ("USGA"). Although the golf
equipment standards established by the USGA generally apply only to competitive
events sanctioned by that organization, the Company believes that it is critical
for its future success that new clubs introduced by the Company comply with USGA
standards. In an effort to anticipate emerging technology while maintaining the
fundamental challenge of the game of golf, the USGA has recently announced that
it will create a new standard for golf equipment by the year 2000. While this
new standard would be set at a level that makes all currently approved clubs
legal under the Rules of Golf, the testing methods being used to establish the
standard are uncertain, therefore, it may take considerable time to define and
promote the standard, which could delay research and development and the
subsequent introduction of new products by the Company. No assurance can be
given that any new products will receive USGA approval or that existing USGA
standards will not be altered in ways that adversely affect the sales of the
Company's products. See "--Historical Dependence on Television Advertising."

LIMITED HISTORY OF PROFITABILITY

The Company has a limited history of profitability. Although the Company
generated net income during the year ended December 31, 1996 and the three
months ended March 31, 1998, it has historically experienced net losses from
operations. There can be no assurance that the Company will be able to sustain
profitability on a quarterly or annual basis in the future. The Company's
prospects must be considered in light of the significant risks, challenges and
difficulties frequently encountered by companies experiencing rapid growth. To
address these risks, the Company must, among other things, successfully increase
the scope of its operations, respond to competitive and technological
developments, continue to attract, retain and motivate qualified personnel and
continue to develop and obtain market acceptance of its products. There can be
no assurance that the Company will be successful in addressing these risks and
challenges. See "--Dependence on New Product Introductions; Uncertain Consumer
Acceptance,"

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"--Ability to Manage Growth," "--Highly Competitive Industry," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

PATENTS AND PROTECTION OF PROPRIETARY TECHNOLOGY

The Company's ability to compete effectively in the golf club market will
depend, in large part, on its ability to maintain the proprietary nature of its
technologies and products. The Company currently holds six U.S. patents relating
to certain of its products and proprietary technologies and has two patent
applications pending. Assuming timely payment of maintenance fees, if any, the
Company expects that the six currently issued patents will expire on various
dates between 2009 and 2013. There can be no assurance, however, as to the
degree of protection afforded by these patents or as to the likelihood that
patents will be issued from the pending patent applications. Moreover, these
patents may have limited commercial value or may lack sufficient breadth to
adequately protect the aspects of the Company's products to which the patents
relate. The Company does not hold any foreign patents and no foreign patent
applications are pending. The U.S. patents held by the Company do not preclude
competitors from developing or marketing products similar to the Company's
products in international markets.

There can be no assurance that competitors, many of which have substantially
greater resources than the Company and have made substantial investments in
competing products, will not apply for and obtain patents that will prevent,
limit or interfere with the Company's ability to make and sell its products. The
Company is aware of numerous patents held by third parties that relate to
products competitive to the Company's, including products competitive with the
Tight Lies fairway woods. There is no assurance that these patents would not be
used as a basis to challenge the validity of one or more of the Company's patent
rights, to limit the scope of the Company's patent rights or to limit the
Company's ability to obtain additional or broader patent rights. A successful
challenge to the validity of the Company's patents may adversely affect the
Company's competitive position. Moreover, there can be no assurance that such
patent holders or other third parties will not claim infringement by the Company
with respect to current and future products. Because U.S. patent applications
are held and examined in secrecy, it is also possible that presently pending
U.S. applications will eventually issue with claims that will be infringed by
the Company's products or technologies. The defense and prosecution of patent
suits is costly and time-consuming, even if the outcome is favorable. This is
particularly true in foreign countries where the expenses associated with such
proceedings can be prohibitive. An adverse outcome in the defense of a patent
suit could subject the Company to significant liabilities to third parties,
require the Company to cease selling products or require disputed rights to be
licensed from third parties. Such licenses may not be available on satisfactory
terms, or at all. The Company also relies on unpatented proprietary technology.
Third parties could develop the same or similar technology or otherwise obtain
access to the Company's proprietary technology.

Despite the Company's efforts to protect its patent and other intellectual
property rights, unauthorized parties have attempted and are expected to
continue to attempt to copy all, or certain aspects of, the Company's products.
Policing unauthorized use of the Company's intellectual property rights can be
difficult and expensive, and while the Company takes appropriate action whenever
it discovers any of its products or designs have been copied, knock-offs and
counterfeit products are a persistent problem in the performance-oriented golf
club industry. There can be no assurance that the Company's means of protecting
its patent and other intellectual property rights will be adequate. See
"Business--Patents."

ABILITY TO MANAGE GROWTH

The Company has recently experienced a period of rapid growth that has
resulted in new and increased responsibilities for existing management
personnel. Further, the Company has recently employed a number of additional
senior management personnel and, accordingly, numerous members of the management
team have worked together for only a short time. The Company's growth has
placed, and is expected to continue to place, a significant strain on the
Company's management and operating and financial systems. To accommodate this
recent growth and to compete effectively and manage future

7
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growth, if any, the Company will be required to continue to implement and
improve its operational, financial and management information systems,
procedures and controls on a timely basis and to expand, train, motivate and
manage its workforce. The Company's growth has required increasing amounts of
working capital that, to date, have been funded from current operations and
available borrowing sources. There can be no assurance that the Company's
personnel, systems, procedures, controls and working capital will be adequate to
support its existing or future operations. Any failure to implement and improve
the Company's operational, financial and management systems, to expand, train,
motivate or manage employees or to maintain adequate working capital could have
a material adverse effect on the Company's business, operating results or
financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources,"
"Business--Information Systems" and "Management."

DEPENDENCE ON KEY PERSONNEL AND ENDORSEMENTS

The Company's success depends to a significant extent upon the performance
of its senior management team, particularly the Company's founder, Chief
Executive Officer and President, B. H. (Barney) Adams. In addition to his
direction and supervision of the day-to-day affairs of the Company, Mr. Adams
spearheads the Company's product development efforts. The loss or unavailability
of Mr. Adams would adversely affect the Company's business and prospects. None
of the Company's officers or employees, including Mr. Adams, is bound by an
employment agreement and the relationships of such officers and employees are,
therefore, at will. The Company has a $2.0 million key man life insurance policy
on the life of Mr. Adams; however, there can be no assurance that the proceeds
of such policy could adequately compensate the Company for the loss of his
services. In addition, there is strong competition for qualified personnel in
the golf club industry, and the inability to continue to attract, retain and
motivate other key personnel could adversely affect the Company's business,
operating results or financial condition.

The Company has recently entered into an agreement with Nick Faldo, an
internationally recognized professional golfer and winner of numerous U.S. and
international championships. The agreement provides that Mr. Faldo will provide
a variety of services to the Company including endorse certain of the Company's
products. This agreement requires the Company to make certain significant
payments to Mr. Faldo, whether or not his endorsement results in increased sales
of the Company's products. Specifically, Mr. Faldo is entitled to receive a
royalty of 5% of the net sales price of all Adams golf clubs (other than certain
specialty items for which the royalty equals 10% of the net sales price) sold
outside the U.S. throughout the term of the agreement. The agreement provides
for a minimum royalty of $1.5 million in 1999 escalating to $4.0 million for the
years 2004 through 2008. From 2009 through 2014, the minimum royalty is $1.5
million, as adjusted for changes in the consumer price index. After 2014, the
agreement does not provide for a minimum royalty. Commencing with 2009, however,
the agreement provides for a maximum royalty of $4.0 million, as adjusted for
changes in the consumer price index. Absent an early termination event, the
agreement with Mr. Faldo continues throughout his lifetime. The Company believes
that the future success of its marketing strategy may be affected by the
continued professional success of Mr. Faldo. The inability of the Company to
maintain its relationship with Mr. Faldo or the inability of Mr. Faldo to
maintain an acceptable level of professional success, could have a material
adverse effect on the Company's business, operating results or financial
condition. See "Business--Business Strengths," "-- Growth Strategy,"
"--Marketing" and "Certain Transactions."

HIGHLY COMPETITIVE INDUSTRY

The market for golf clubs is highly competitive. The Company's competitors
include a number of established companies, many of which have greater financial
and other resources than the Company. The purchasing decisions of many golfers
are often the result of highly subjective preferences, which can be influenced
by many factors, including, among others, advertising, media, promotions and
product endorsements. The Company could therefore face substantial competition
from existing or new competitors that introduce and successfully promote golf
clubs that achieve market acceptance. Such competition could

8
<PAGE>
result in significant price erosion or increased promotional expenditures,
either of which could have a material adverse effect on the Company's business,
operating results and financial condition. There can be no assurance that Adams
will be able to compete successfully against current and future sources of
competition or that its business, operating results or financial condition will
not be adversely affected by increased competition in the markets in which it
operates. See "Business--Competition."

HISTORICAL DEPENDENCE ON TELEVISION ADVERTISING

In April 1997 the Company debuted a 30-minute infomercial concerning the
original Tight Lies fairway wood, and, immediately thereafter, sales of this
product grew significantly. Although, consistent with the Company's marketing
model, the Company has subsequently increased its use of traditional image-based
advertising, sales of the Company's products at both the retail and direct
response levels have been, and may continue to be, highly dependent on the
success of the Company's infomercial. The Company believes that its current
television advertising strategy, like other advertising campaigns, will reach a
point of diminishing return and will therefore need to be replaced or abandoned.
No assurance can be given that an alternative infomercial or other equally
effective advertising strategy can be timely developed or that, if developed,
such infomercial or alternative strategy will achieve the same level of success
as that previously enjoyed by the Company's original infomercial. Further,
certain companies have attempted to emulate the Company's marketing strategy. To
the extent the Company believes that these additional infomercials may have the
effect of diluting the Company's message, the Company may be forced to adopt a
new marketing strategy. A decline in effectiveness of the Company's marketing
strategy could have a material adverse effect on the Company's business,
operating results or financial condition.

SOURCES OF SUPPLY

The Company relies on a limited number of suppliers for a significant
portion of the component parts used in the manufacture of its golf clubs,
including the manufacture of its Tight Lies line of fairway woods. The Company
could in the future experience shortages of components or periods of increased
price pressures, which could have a material adverse effect on the Company's
business, operating results or financial condition. In addition, failure to
obtain adequate supplies or fulfill customer orders on a timely basis could have
a material adverse effect on the Company's business, operating results or
financial condition. See "Business--Manufacturing and Assembly."

UNSPECIFIED USE OF PROCEEDS

Although the Company intends to use the net proceeds of this Offering for
working capital and general corporate purposes, including capital expenditures,
expansion of the Company's product development efforts, additional advertising
and expansion of the Company's international sales efforts, the Company
currently has no definite plan for the use of the net proceeds. In addition, the
Company may use all or a portion of the net proceeds derived from the Offering
for possible acquisitions. Accordingly, management will have broad discretion
with respect to the expenditure of such proceeds. Purchasers of shares of Common
Stock in the Offering will be entrusting their funds to the Company's
management, upon whose judgment they must depend, with limited information
concerning the specific purposes to which the funds will ultimately be applied.
See "--Risks Associated with Acquisitions" and "Use of Proceeds."

RISKS ASSOCIATED WITH ACQUISITIONS

While the Company has no current agreements or negotiations underway with
respect to any acquisition, the Company may make acquisitions of complementary
services, technologies, product designs or businesses in the future. There can
be no assurance that any future acquisition will be completed or that, if
completed, any such acquisition will be effectively assimilated into the
Company's business. Acquisitions involve numerous risks, including, among
others, loss of key personnel of the acquired company, the difficulty associated
with assimilating the personnel and operations of the acquired company, the
potential disruption of the Company's ongoing business, the maintenance of
uniform standards, controls, procedures

9
<PAGE>
and policies, and the impairment of the Company's reputation and relationships
with employees and customers. In addition, any future acquisitions could result
in the issuance of dilutive equity securities, the incurrence of debt or
contingent liabilities, and amortization expenses related to goodwill and other
intangible assets, any of which could have a material adverse effect on the
Company's business, operating results or financial condition.

SEASONALITY AND QUARTERLY FLUCTUATIONS; DISCRETIONARY CONSUMER SPENDING

Golf generally is regarded as a warm weather sport and sales of golf
equipment historically have been strongest during the second and third quarters,
with the weakest sales occurring during the fourth quarter. In addition, sales
of golf clubs are dependent on discretionary consumer spending, which may be
affected by general economic conditions. A decrease in consumer spending
generally could result in decreased spending on golf equipment, which could have
a material adverse effect on the Company's business, operating results and
financial condition. In addition, the Company's future results of operations
could be affected by a number of other factors, such as unseasonal weather
patterns; demand for and market acceptance of the Company's existing and future
products; new product introductions by the Company's competitors; competitive
pressures resulting in lower than expected average selling prices; and the
volume of orders that are received and that can be fulfilled in a quarter. Any
one or more of these factors could result in the Company failing to achieve its
expectations as to future sales or net income.

Because most operating expenses are relatively fixed in the short term, the
Company may be unable to adjust spending sufficiently in a timely manner to
compensate for any unexpected sales shortfall, which could materially adversely
affect quarterly results of operations. If technological advances by competitors
or other competitive factors require the Company to invest significantly greater
resources than anticipated in research and development or sales and marketing
efforts, the Company's business, operating results or financial condition could
be materially adversely affected. Accordingly, the Company believes that period-
to-period comparisons of its results of operations should not be relied upon as
an indication of future performance. In addition, the results of any quarter are
not indicative of results to be expected for a full fiscal year. As a result of
fluctuating operating results or other factors discussed above and below, in
certain future quarters the Company's results of operations may be below the
expectations of public market analysts or investors. In such event, the market
price of the Company's Common Stock would be materially adversely affected. See
"--Absence of Public Market for Common Stock and Volatility" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

CERTAIN RISKS OF CONDUCTING BUSINESS ABROAD

The Company imports a significant portion of its component parts, including
heads, shafts, headcovers and grips, from companies in Taiwan, China and Mexico.
In addition, the Company is rapidly increasing its international sales efforts.
The Company's international business is currently centered in Canada, Japan and
the United Kingdom. The Company intends to focus its international expansion
efforts in Japan and the United Kingdom and, to a lesser extent, in South Africa
and Australia. The Company's business is subject to the risks generally
associated with doing business abroad, such as foreign government regulations,
foreign consumer preferences, import and export control, political unrest,
disruptions or delays in shipments and changes in economic conditions and
exchange rates in countries in which the Company purchases components or sells
its products.

CONTROL BY PRINCIPAL STOCKHOLDERS

Following the closing of the Offering, the Company's existing stockholders,
certain of whom are directors, officers or employees of the Company, will own
approximately 74.0% of the outstanding Common Stock without giving effect to any
purchases of Common Stock in the Offering by such persons. As a result, the
existing stockholders will be in a position to exercise control of matters
submitted to the Company's stockholders, including the election of directors. In
addition, the Company's founder, Chief Executive Officer and President, B.H.
(Barney) Adams, and Royal Holding Company, Inc. ("Royal"), the

10
<PAGE>
Company's largest single stockholder, will own approximately 15.4% and 30.1%,
respectively of the outstanding Common Stock immediately following the Offering
and through their respective stock ownership and positions or representations on
the Board of Directors may be able to exercise a controlling influence over the
Company. See "Management," "Certain Transactions" and "Principal and Selling
Stockholders."

SHARES ELIGIBLE FOR FUTURE SALE; ISSUANCE OF ADDITIONAL SHARES

Future sales of shares of Common Stock by the Company and its stockholders
could adversely affect the prevailing market price of the Common Stock. The
Company's directors, officers and certain stockholders, including the Selling
Stockholders, holding an aggregate of 18,025,835 shares of Common Stock as of
the date of this Prospectus have agreed not to sell, offer, contract to sell,
grant any option or right for the sale of or otherwise dispose of any Common
Stock or any securities convertible, exercisable or exchangeable into shares of
Common Stock, nor any options or right to acquire any shares of Common Stock,
including any sale pursuant to Rule 144 or Rule 144A promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), for a period of 180
days after the date of this Prospectus without the prior written consent of
Lehman Brothers Inc. (the "Lock-up Agreement"). After such time, based upon
stock ownership at the date of this Prospectus, approximately 16,199,282 shares
of Common Stock will be eligible for sale pursuant to Rule 144 promulgated under
the Securities Act.

In addition, the Company has granted registration rights that will be
effective after the Offering to stockholders holding as of the date of this
Prospectus an aggregate of 17,797,087 shares of Common Stock. These stockholders
have the right, subject to certain conditions, to demand that their stock be
registered under the Securities Act on any three occasions commencing generally
one year after the date of this Prospectus. The stockholders also have certain
additional piggyback registration rights, and subject to certain conditions, may
participate in future registrations by the Company of shares of Common Stock
under the Securities Act.

Pursuant to its Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation"), the Company has the authority to issue
additional shares of Common Stock. The issuance of such shares could result in
the dilution of the voting power of Common Stock purchased in the Offering.
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales may occur, could have a material adverse effect on
the market price of the Common Stock. See "Shares Eligible for Future Sale,"
"Underwriting" and "Description of Capital Stock."

ANTI-TAKEOVER PROVISIONS

The Company's Certificate of Incorporation and Amended and Restated Bylaws
(the "Bylaws") contain, among other things, provisions establishing a classified
Board of Directors, authorizing shares of preferred stock with respect to which
the Board of Directors of the Company has the power to fix the rights,
preferences, privileges and restrictions without any further vote or action by
the stockholders, requiring that all stockholder action be taken at a
stockholders' meeting and establishing certain advance notice requirements in
order for stockholder proposals or director nominations to be considered at such
meetings. In addition, the Company is subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law (the "DGCL"). In general,
this statute prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
Such provisions could delay, deter or prevent a merger, consolidation, tender
offer, or other business combination or change of control involving the Company
that some or a majority of the Company's stockholders might consider to be in
its best interest, including offers or attempted takeovers that might otherwise
result in such stockholders receiving a premium over the market price for the
Common Stock. The potential issuance of preferred stock may have the effect of
delaying, deferring or preventing a change of control of the Company, may
discourage bids for the Common Stock at a premium over the market price of the
Common

11
<PAGE>
Stock and may adversely affect the market price of and the voting and other
rights of the holders of the Common Stock. The Company has not issued, and
currently has no plans to issue, shares of preferred stock. See "Description of
Capital Stock--Preferred Stock" and "--Delaware Law and Certain Charter and
Bylaw Provisions."

ABSENCE OF PUBLIC MARKET FOR COMMON STOCK AND VOLATILITY

Prior to the Offering there has been no public market for the Common Stock,
and there can be no assurance that an active trading market will develop or be
sustained after the Offering. The initial public offering price of the Common
Stock offered hereby will be determined through negotiations among the Company,
the Selling Stockholders and the Underwriters, and may not be indicative of the
market price for the Common Stock after the Offering. The market price for
shares of the Common Stock may be volatile depending on a number of factors,
including business performance, industry dynamics, news announcements or changes
in general market conditions. See "Underwriting."

DILUTION

The initial public offering price is substantially higher than the book
value per share of Common Stock. Investors purchasing shares of Common Stock in
the Offering will therefore incur immediate and substantial dilution in net
tangible book value per share of $12.71. To the extent outstanding options to
purchase the Company's Common Stock are exercised, there will be further
dilution. See "Dilution."

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus includes "forward-looking statements" including statements
containing the words "believes," "anticipates," "expects" and words of similar
import. All statements other than statements of historical fact included in this
Prospectus, including without limitation, such statements under "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" and located elsewhere
herein, regarding the Company or any of the transactions described herein,
including the timing, financing, strategies and effects of such transactions,
are forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from
expectations are disclosed in this Prospectus, including, without limitation, in
conjunction with the forward-looking statements in this Prospectus and/or under
"Risk Factors." The Company does not intend to update these forward-looking
statements.

12
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 4,000,000 shares of
Common Stock offered by the Company hereby, after deducting estimated Offering
expenses payable by the Company and the underwriting discounts and commissions,
are estimated to be approximately $58.3 million. The principal purposes of the
Offering are to provide working capital to fund the Company's long-term growth
strategy, to facilitate future access by the Company to the public equity
markets, to enhance the Company's ability to use the Common Stock as a means of
attracting, retaining and motivating senior managers and professionals and to
provide liquidity to its stockholders. The Company intends to use the net
proceeds for working capital and general corporate purposes, including capital
expenditures, expansion of the Company's product development efforts, additional
advertising and expansion of the Company's international sales efforts. In
addition, the Company may use all or a portion of the net proceeds from the
Offering for possible acquisitions. The Company has no current agreements or
specific plans with respect to any acquisition, but will consider acquisition
opportunities as they arise. Company management will have broad discretion with
respect to the proceeds of this Offering. Pending such uses, the Company intends
to invest the net proceeds of this Offering in short-term, interest-bearing,
investment-grade securities. The Company will not receive any of the proceeds
from the sale of Common Stock by the Selling Stockholders. See "Risk
Factors--Unspecified Use of Proceeds," "--Risks Associated with Acquisitions"
and "Principal and Selling Stockholders."

DIVIDEND POLICY

The Company has not paid cash dividends in the past and has no present
intention of declaring or paying any dividends in the foreseeable future. The
Company anticipates that any earnings will be retained for the foreseeable
future for use in the operations of the business. Any future determinations as
to the payment of dividends will be at the discretion of the Company's Board of
Directors and will depend on the Company's results of operations, financial
condition, contractual restrictions and other factors deemed relevant by the
Board of Directors. The Company's ability to pay dividends is restricted by
certain covenants set forth in its Revolving Credit Agreement with NationsBank
of Texas, N.A. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."

13
<PAGE>
DILUTION

At March 31, 1998, the Company's net tangible book value was $14,659,000 or
$0.81 per share. Net tangible book value per share represents the amount of the
Company's total tangible assets less the Company's total liabilities, divided by
the number of shares of Common Stock outstanding. Without taking into account
any other changes in such net tangible book value after March 31, 1998, other
than to give effect to the sale of 4,000,000 shares of Common Stock offered by
the Company hereby (after deduction of estimated expenses payable by the Company
and underwriting discounts and commissions), the net tangible book value of the
Company on March 31, 1998 would have been $72,929,000 or $3.29 per share. This
represents an immediate increase in net tangible book value of approximately
$2.48 per share to the Company's existing stockholders and an immediate dilution
in net tangible book value of $12.71 per share to new investors in the Offering.
The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share...................................... $ 16.00
Net tangible book value per share before the Offering...................... $ 0.81
Increase in net tangible book value per share attributable to new
investors................................................................ 2.48
---------
Net tangible book value per share after the Offering......................... 3.29
---------
Dilution per share to new investors.......................................... $ 12.71
---------
---------
</TABLE>

The following table sets forth, at May 31, 1998, the difference between
existing stockholders and the new investors in the Offering with respect to the
number of shares purchased from the Company, the total consideration paid and
the average price per share paid.

<TABLE>
<CAPTION>
SHARES PURCHASED
FROM THE COMPANY TOTAL CONSIDERATION AVERAGE
------------------------- --------------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------------ ----------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders................................ 19,099,282 82.7% $ 4,838,636 7.0% $ 0.25
New investors........................................ 4,000,000 17.3 64,000,000 93.0 $ 16.00
------------ ----- -------------- -----
Total.............................................. 23,099,282 100.0% 68,838,636 100.0%
------------ ----- -------------- -----
------------ ----- -------------- -----
</TABLE>

The above computations exclude 423,666 shares of Common Stock issuable upon
exercise of stock options outstanding at May 31, 1998. At May 31, 1998, an
additional 518,000 shares of Common Stock are reserved for issuance under the
Company's 1998 Stock Incentive Plan (the "Incentive Plan"). To the extent that
any outstanding options are exercised, or additional options are issued, there
will be further dilution to new investors in the Offering. See
"Management--Benefit Plans," "Description of Capital Stock," "Shares Eligible
for Future Sale" and "Underwriting."

14
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company at March
31, 1998 and as adjusted as of that date to give effect to the sale of 4,000,000
shares of Common Stock by the Company in the Offering and the application of the
estimated net proceeds therefrom. See "Use of Proceeds." This table should be
read in conjunction with the Company's Consolidated Financial Statements and
Notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AT MARCH 31, 1998
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................................................. $ 602 $ 58,872
--------- -----------
--------- -----------
Note payable--current..................................................................... $ 913 $ 913
--------- -----------
Note payable--non-current................................................................. 222 222
--------- -----------
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized; none outstanding.......... -- --
Common stock, $.001 par value, 50,000,000 shares authorized; 18,199,282 shares (actual)
and 22,199,282 shares (as adjusted) issued(1)......................................... 18 22
Additional paid-in capital.............................................................. 16,032 74,298
Common stock subscription............................................................... (231) (231)
Deferred compensation................................................................... (981) (981)
Accumulated deficit..................................................................... (171) (171)
--------- -----------
Total stockholders' equity............................................................ 14,667 72,937
--------- -----------
Total capitalization................................................................ $ 14,889 $ 73,159
--------- -----------
--------- -----------
</TABLE>

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

(1) Excludes 313,666 shares subject to outstanding options at March 31, 1998.

15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following selected financial data at and for the fiscal years ended
December 31, 1995, 1996 and 1997 are derived from the Consolidated Financial
Statements of the Company, which have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. The selected financial information for
the three months ended March 31, 1997 and 1998 are derived from unaudited
Consolidated Financial Statements of the Company. In the opinion of management,
all adjustments consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations, have been
included in such unaudited Consolidated Financial Statements. Results for the
three months ended March 31, 1998 may not be indicative of the results expected
for the year ended December 31, 1998. The Consolidated Financial Statements at
December 31, 1996 and 1997 and for each of the years in the three-year period
ended December 31, 1997, and the independent auditors' report are included
elsewhere in this Prospectus. The selected financial data should be read in
conjunction with the Consolidated Financial Statements, the related Notes
thereto, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the other financial information included elsewhere
herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENTS OF OPERATIONS DATA(1):
Net sales................................................. $ 1,125 $ 3,522 $ 36,690 $ 1,475 $ 24,511
Cost of goods sold........................................ 756 1,590 9,991 587 5,862
Gross profit.............................................. 369 1,932 26,699 888 18,649
Operating expenses (excluding stock compensation and bonus
award).................................................. 613 1,709 15,826 823 9,777
Stock compensation and bonus award(2)..................... -- 214 14,842 -- --
--------- --------- --------- --------- ---------
Operating income (loss)................................... (244) 9 (3,969) 65 8,872
Income (loss) before taxes................................ (243) 13 (4,071) 61 8,773
Net income (loss)......................................... $ (243) $ 13 $ (4,654) $ 45 $ 5,642
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income (loss) per common share(3):
Basic................................................... $ (.05) $ -- $ (.37) $ -- $ .32
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Diluted................................................. $ (.05) $ -- $ (.37) $ -- $ .31
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average common shares(3):
Basic................................................... 4,423 11,238 12,519 11,873 17,662
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Diluted................................................. 4,423 11,238 12,519 11,873 18,340
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

AT DECEMBER 31, AT MARCH 31,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 243 $ 855 $ 1,956 $ 760 $ 602
Working capital........................................... 575 1,475 6,915 1,558 12,299
Total assets.............................................. 658 2,559 17,360 3,116 25,793
Total debt (including current maturities)................. -- 230 -- 479 1,135
Stockholders' equity...................................... 615 1,978 8,325 2,024 14,667
</TABLE>

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

(1) This table excludes financial information for the fiscal years ended
December 31, 1993 and 1994 because operations in those years were not
comparable in size or scope to current operations.

(2) Consists primarily of a stock award to the Company's founder, Chief
Executive Officer and President. See "Certain Transactions" and Note 9 of
Notes to Consolidated Financial Statements.

(3) See Note 1 of Notes to Consolidated Financial Statements for information
concerning the calculation of income (loss) per common share and weighted
average common shares outstanding.

16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management's discussion and analysis of financial condition
and results of operations addresses the performance of the Company for the three
months ended March 31, 1997 and 1998, and the years ended December 31, 1995,
1996 and 1997, and should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.

OVERVIEW

Adams designs, manufactures and markets premium quality, technologically
innovative golf clubs. Founded in 1987, the Company operated initially as a
components supplier and contract manufacturer. Thereafter, the Company
established its custom fitting operation which currently services a network of
over 100 certified custom fitting accounts. In the fall of 1995, the Company
introduced the original Tight Lies fairway wood and, in December 1996, the
Company extended the Tight Lies line to include the Tight Lies Strong 3, Strong
5 and Strong 7, with the Tight Lies Strong 9 being introduced in January 1998.
Sales of the Tight Lies line of products increased significantly subsequent to
the second quarter of 1997 when the Company launched an infomercial relating to
the original Tight Lies fairway wood.

The Company's net sales are primarily derived from sales to on- and
off-course golf shops and selected sporting goods retailers and, to a much
lesser extent, direct sales to consumers, international distributors and the
Company's custom fitting accounts. The Company defines net sales as gross sales
less returns. The Company recognizes sales and an allowance for returns is
estimated at the time products are shipped. The Company's net sales increased to
$36.7 million for 1997 from $1.1 million for 1995 and to $24.5 million for the
three months ended March 31, 1998 from $1.5 million for the three months ended
March 31, 1997. The Company's net sales are based on orders for immediate
delivery and backlog is not, therefore, necessarily indicative of future net
sales.

The Company does not currently manufacture the components required to
assemble its golf clubs, relying instead on component suppliers. Costs of the
Company's Tight Lies fairway woods consist primarily of component parts,
including the head, shaft and grip. To a lesser extent, the Company's cost of
goods sold includes labor and occupancy costs in connection with the inspection,
testing and assembly of component parts at its facility in Plano, Texas.

Operating expenses are composed primarily of selling and royalty expenses,
general and administrative expenses, and to a lesser extent, research and
development expenses. Selling and royalty expenses include advertising and
marketing expenses, salaries and commissions, royalties related to the Company's
infomercial and independent consulting fees. During the year ended December 31,
1997 and the first three months of 1998, royalties were approximately 6% of net
sales of the Company's original Tight Lies fairway wood, excluding international
and custom fitting sales. The Company expects royalties to increase as a
percentage of net sales as a result of the agreement reached with Nick Faldo.
The Company's royalty expenses were $0 and $944,451 for 1996 and 1997,
respectively. Beginning May 1, 1998, Mr. Faldo is entitled to receive a royalty
equal to 5% of the Company's net sales of golf clubs (other than certain
specialty items for which the royalty is 10%) sold outside the U.S. Although,
there is no minimum royalty for 1998, Mr. Faldo will be entitled to a minimum
royalty in subsequent years. See "Certain Transactions." General and
administrative expense includes salaries and benefits for corporate management,
accounting, administrative support staff, bad debts, independent consulting and
professional services, and office rent and utilities. Expenses associated with
research and development efforts include salaries and independent consulting
fees.

The Company was incorporated in Texas in 1987 and reincorporated in Delaware
in 1990. The Company completed an internal reorganization in 1997 and now
conducts its operations through several direct and indirect wholly-owned
subsidiaries, including (i) Adams Golf Holding Corp., a Delaware corporation,
which holds limited partnership interests of certain indirect subsidiaries of
the Company; (ii) Adams Golf GP Corp., a Delaware corporation, which holds
capital stock or limited partnership

17
<PAGE>
interests, as applicable, of certain indirect subsidiaries of the Company; (iii)
Adams Golf Direct Response, Ltd., a Texas limited partnership, which operates
the call-center and advertising activities; (iv) Adams Golf, Ltd., a Texas
limited partnership, which operates the golf club design, assembly and sales
business; (v) Adams Golf IP, L.P., a Delaware limited partnership, which holds
the intellectual property rights of the Company; and (vi) Adams Golf Management
Corp., a Delaware corporation, which provides management and consulting services
to certain of the Company's indirect subsidiaries.

RESULTS OF OPERATIONS

The following table sets forth operating results expressed as a percentage
of net sales for the periods indicated. Results for any one or more periods are
not necessarily indicative of annual results or continuing trends. See
"--Quarterly Results and Seasonality," below.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------- --------------------
CONSOLIDATED STATEMENTS OF OPERATIONS DATA 1995 1996 1997 1997 1998
- ----------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales.................................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold......................................... 67.2 45.1 27.2 39.8 23.9
--------- --------- --------- --------- ---------
Gross profit............................................. 32.8 54.9 72.8 60.2 76.1
Operating expenses......................................... 54.5 54.6 83.6 55.8 39.9
--------- --------- --------- --------- ---------
Operating income (loss).................................. (21.7) 0.3 (10.8) 4.4 36.2
Interest expense........................................... -- -- 0.2 0.9 --
Other income (expense)..................................... 0.1 0.1 (0.1) 0.6 (0.4)
--------- --------- --------- --------- ---------
Income (loss) before income taxes........................ (21.6) 0.4 (11.1) 4.1 35.8
--------- --------- --------- --------- ---------
Income tax expense......................................... -- -- 1.6 1.1 12.8
Net income (loss).......................................... (21.6)% 0.4% (12.7)% 3.0% 23.0%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

Net sales increased to $24.5 million for the three months ended March 31,
1998 from $1.5 million for the comparable period of 1997, primarily due to the
continued market acceptance of the Company's Tight Lies line of fairway woods,
and, to a lesser extent, a price increase effective January 1, 1998. Net sales
of the Tight Lies line of fairway woods increased to $23.8 million from $1.1
million for the comparable period of 1997, and increased as a percentage of net
sales to 97.3% from 75.8%, respectively. Sales of the Tight Lies fairway woods
increased subsequent to the Company's introduction of an infomercial marketing
its original Tight Lies fairway wood in the second quarter of 1997. Net sales of
other product lines for the three months ended March 31, 1998 increased to $0.7
million from $0.4 million for the comparable period of 1997, but decreased as a
percentage of net sales to 2.7% from 24.2%, respectively. Net sales of the
Company's products outside the U.S. increased to $1.4 million for the three
months ended March 31, 1998 from $0.2 million for the three months ended March
31, 1997, but decreased as a percentage of net sales to 5.7% from 11.0%,
respectively. The increase in international sales in absolute dollars was due to
increased market acceptance of the Tight Lies fairway woods and expanded
international marketing efforts in the last half of 1997.

Gross profit increased to $18.6 million for the three months ended March 31,
1998 from $0.9 million for the comparable period of 1997, and increased as a
percentage of net sales to 76.1% from 60.2%, respectively. Gross profit for the
three months ended March 31, 1998 was favorably affected by an increased
percentage of sales attributable to the higher margin Tight Lies fairway woods
and the inherent cost savings associated with buying components in large volumes
and assembling them on a substantially increased scale.

18
<PAGE>
Operating income increased to $8.9 million for the three months ended March
31, 1998 from $65,000 for the comparable period of 1997 due to increased sales.
Total operating expenses increased to $9.8 million for the three months ended
March 31, 1998 from $0.8 million for the comparable period of 1997, principally
as a result of increased selling and advertising costs related to the promotion
of the Tight Lies fairway woods and increased administrative costs resulting
primarily from the hiring of additional employees and slightly higher occupancy
costs. As a percentage of net sales, operating expenses decreased for the three
months ended March 31, 1998 to 39.9% from 55.8% for the comparable period of
1997.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Net sales increased to $36.7 million for 1997 from $3.5 million for 1996,
primarily due to increased market acceptance of the Company's Tight Lies fairway
woods. Net sales of the Tight Lies fairway woods increased to $34.6 million for
1997, from $1.7 million for 1996, and increased as a percentage of net sales to
94.3% from 47.2%, respectively. Net sales of other product lines increased to
$2.1 million for 1997 compared to $1.8 million for 1996, but decreased as a
percentage of net sales to 5.7% for 1997 from 52.8% for 1996.

Gross profit increased to $26.7 million for 1997 from $1.9 million for 1996,
and increased as a percentage of net sales to 72.8% from 54.9%, respectively.
Gross profit for 1997 was favorably affected by an increased percentage of sales
attributable to the higher margin Tight Lies fairway woods and the inherent cost
savings associated with buying components in large volumes and assembling them
on a substantially increased scale.

The Company experienced operating loss of $4.0 million for 1997 as compared
to operating income of $9,000 for 1996. Total operating expenses increased to
$30.7 million for 1997 from $1.9 million for 1996. Of the $30.7 million of
operating expenses for 1997, $14.8 million, or 48.4%, of expenses related to
stock compensation and bonus awards to the Company's founder, Chief Executive
Officer and President. See "Certain Transactions" and Note 9 of Notes to
Consolidated Financial Statements. The expense recognized in 1996 in conjunction
with these awards was $0.2 million, or 11.1% of operating expenses. In 1997, the
Company also incurred higher expenses for selling and royalties and provision
for bad debts, in each case due principally to increased sales of the Tight Lies
fairway woods. General and administrative expenses also increased in 1997 due to
the hiring of additional employees, and research and development expenses.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1996

Net sales increased to $3.5 million for 1996 from $1.1 million for 1995,
primarily due to the introduction of the original Tight Lies fairway wood in the
fall of 1995. Net sales of the original Tight Lies fairway wood increased to
$1.7 million for 1996 from $0.1 million for 1995, and increased as a percentage
of net sales to 47.2% from 9.6%, respectively. Net sales of other products
increased to $1.8 million for 1996 from $1.0 million for 1995, but decreased as
a percentage of net sales to 52.8% from 90.4%, respectively. The increase in
sales of other products in absolute dollars was due to increased sales of custom
fitted golf clubs resulting from an increased number of teaching professionals
who became certified Adams Golf club fitters during 1996.

Gross profit increased to $1.9 million for 1996 from $0.4 million for 1995,
and increased as a percentage of net sales to 54.9% from 32.8%, respectively.
The increase in gross profit was due to higher sales of the Company's products
in 1996, specifically the higher margin original Tight Lies fairway wood.

Operating income was $9,000 for 1996 compared to an operating loss of $0.2
million for 1995. Total operating expenses increased to $1.9 million for 1996
from $0.6 million for 1995 and remained relatively flat as a percentage of net
sales. Of the $1.9 million of operating expenses in 1996, $0.2 million, or
11.1%, of expenses were related to a bonus award to the Company's founder, Chief
Executive Officer and President. The Company also incurred additional selling
and general and administrative expenses in 1996 as a result of increased sales
and hiring additional employees.

19
<PAGE>
QUARTERLY RESULTS AND SEASONALITY

The following table sets forth certain unaudited quarterly financial
operational data for the five most recent quarters. A review in accordance with
Statement on Auditing Standards No. 71 has not been performed by the Company's
independent certified public accountants on the unaudited information in the
table below.

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------
SEPT. 30, DEC. 31,
MARCH 31, 1997 JUNE 30, 1997 1997 1997 MARCH 31, 1998
--------------- ------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Net sales........................... $ 1,475 $ 3,974 $ 14,236 $ 17,005 $ 24,511
Gross profit........................ 888 2,418 10,633 12,759 18,649
Operating income (loss)............. 65 4 4,212 (8,250) 8,872
Net income (loss)................... 45 (4) 3,144 (7,839) 5,642
</TABLE>

Golf generally is regarded as a warm weather sport and sales of golf
equipment historically have been strongest during the second and third quarters,
with the weakest sales occurring during the fourth quarter. Although the
Company's rapid growth has offset this trend in recent periods, no assurances
can be given that the Company's growth will continue to offset the impact of
seasonality, and therefore results for any one or more quarters are not
necessarily indicative of annual results or continuing trends. In addition,
sales of golf clubs are dependent on discretionary consumer spending, which may
be affected by general economic conditions. A decrease in consumer spending
generally could result in decreased spending on golf equipment, which could have
a material adverse effect on the Company's business, operating results and
financial condition. In addition, the Company's future results of operations
could be affected by a number of other factors, such as unseasonal weather
patterns; demand for and market acceptance of the Company's existing and future
products; new product introductions by the Company's competitors; competitive
pressures resulting in lower than expected average selling prices; and the
volume of orders that are received and that can be fulfilled in a quarter. Any
one or more of these factors could result in the Company failing to achieve its
expectations as to future sales or net income.

STOCK-BASED COMPENSATION

In December 1997, the Board of Directors of the Company approved a stock
compensation award of 2,000,000 shares of Common Stock to the Company's founder,
Chief Executive Officer and President. The Company agreed to pay all income
taxes due by the officer relating to such stock award and related tax bonus. As
a result, compensation expense of approximately $12.5 million was charged to
operations in 1997. In addition, this officer notified the Company of his intent
to exercise stock options and an additional compensation expense of
approximately $2.3 million was recorded in 1997. With respect to certain stock
options granted to employees, the Company recorded deferred compensation of
$981,000 and $788,000, respectively, in the first and second quarters of 1998.
The Company will begin amortizing deferred compensation in the second quarter of
1998 over the vesting period, generally four years. In addition, in connection
with its stock grant to Nick Faldo, the Company recorded deferred compensation
of $10.1 million in the second quarter of 1998. This amount will be amortized to
expense ratably over 10 years

20
<PAGE>
beginning in the second quarter of 1998. See "Certain Transactions" and Note 9
of Notes to Consolidated Financial Statements.

YEAR 2000 COMPLIANCE

Many existing computer systems and applications and other control devices
use only two digits to identify a year in the date field, without considering
the impact of the upcoming change in the century. As a result, as year 2000
approaches, computer systems and applications used by many companies may need to
be upgraded to comply with "Year 2000" requirements. The Company relies on its
systems in operating and monitoring many significant aspects of its business,
including financial systems (such as general ledger, accounts payable, accounts
receivable, inventory and order management), customer services, infrastructure
and network and telecommunications equipment. The Company also relies directly
and indirectly on the systems of external business enterprises such as
customers, suppliers, creditors, financial organizations and domestic and
international governments. The Company currently estimates that its costs
associated with Year 2000 compliance, including any costs associated with the
consequences of incomplete or untimely resolution of Year 2000 compliance
issues, will not have a material adverse effect on the Company's business,
financial condition or results of operations. However, the Company has not
exhaustively investigated and does not believe it has fully identified the
impact of Year 2000 compliance and has not concluded that it can resolve any
issues that may arise in complying with Year 2000 without disruption of its
business or without incurring significant expense. In addition, even if the
Company's internal systems are not materially affected by Year 2000 compliance
issues, the Company could be affected through disruption in the operation of the
enterprises with which the Company interacts.

LIQUIDITY AND CAPITAL RESOURCES

The Company historically has financed its operations principally through
internally generated funds and funds from the private placement of equity
securities. Such funds have been supplemented from time to time with short-term
borrowings under the Company borrowing facilities. Primarily as a result of tax
payments made by the Company in the first quarter of 1998, for the three months
ended March 31, 1998 net cash used in operating activities was $1.5 million. Net
cash provided by operating activities was $1.1 million for the year ended
December 31, 1997.

Working capital totaled $12.3 million at March 31, 1998 compared to $6.9
million at December 31, 1997. Net trade accounts receivable amounted to $14.7
million at March 31, 1998 compared to $7.7 million at December 31, 1997. The
increase was primarily due to increased net sales in the first three months of
1998. Inventory totaled $5.6 million at March 31, 1998 and $4.5 million at
December 31, 1997.

The Company has a $10.0 million revolving credit facility, which expires on
December 31, 1998. At May 31, 1998, the Company had no outstanding borrowings
under this facility. Borrowings under the Company's revolving credit facility
agreement are at interest rates based on the lending bank's general refinance
rate of interest or certain LIBOR rates of interest. Obligations under the
revolving credit facility loan agreement are collateralized by substantially all
of the accounts receivable, inventory and equipment of the Company. See Note 7
of Notes to Consolidated Financial Statements. During the first quarter of 1998,
the Company borrowed approximately $1.1 million in the form of a note payable to
the Company's founder, Chief Executive Officer and President to be used for
working capital purposes. The remaining principal amount of the note ($534,899
at April 30, 1998) is payable in two installments on December 15, 1998 and April
14, 1999 at an interest rate of 5.39%.

The Company's capital expenditures amounted to $1.7 million, $0.8 million
and $0.1 million for the three months ended March 31, 1998 and the years ended
December 31, 1997 and 1996, respectively. The Company anticipates making capital
expenditures in the ordinary course of business of approximately $6.0 million in
the balance of 1998, which includes implementing a customer management
information system at an estimated cost of $1.9 million.

The Company believes that the cash flow from operations, the net proceeds of
the Offering and the Company's $10.0 million credit facility will be sufficient
to meet operating needs and capital expenditures for at least the next 12
months.

21
<PAGE>
BUSINESS

GENERAL

Adams designs, manufactures and markets premium quality, technologically
innovative golf clubs. The Company's design objective is to produce golf clubs
that deliver meaningful performance benefits and inspire player confidence. The
Company believes that its most successful product line to date, the Tight Lies
fairway woods, meets this objective by providing golfers with the ability to hit
the ball from virtually any lie while maximizing distance. The patented Tight
Lies fairway woods feature an upright trapezoidal head, a shallow face and a
lower center of gravity as compared to conventional fairway woods. Adams has
developed a marketing model that integrates direct response and traditional
image-based advertising to generate brand awareness and drive retail sales. The
complete Tight Lies line of products includes the original, Strong 3, Strong 5,
Strong 7 and Strong 9 fairway woods. According to the Golf Market Research
Institute, the Tight Lies fairway woods were the top-selling single fairway
woods in the U.S. on a unit volume basis during the three months ended March 31,
1998. During this period, the Company achieved a 27% market share of the single
fairway woods category.

The Company's growth strategy is to continue to increase its share of the
fairway woods market, leverage consumer acceptance of the Tight Lies brand,
expand international sales and develop new technologies and product designs.

GOLF INDUSTRY OVERVIEW

According to the National Golf Foundation ("NGF"), there are approximately
49 million golfers worldwide, including approximately 25 million in the U.S. In
1997, golfers in the U.S. played an estimated 547 million rounds of golf and,
according to the National Sporting Goods Association, are estimated to have
spent $5.8 billion on golf equipment, apparel and accessories. Of the 25 million
U.S. golfers, about 5.2 million, characterized by the NGF as "avid golfers,"
play over 25 rounds of golf per year. The Company believes that avid golfers are
the first to seek out performance-oriented golf equipment and generally drive
golf club product trends.

In 1997, wholesale sales of golf equipment in the U.S. reached an estimated
$2.4 billion. Wholesale sales of golf clubs increased at a compound annual
growth rate of approximately 13% over the 5-year period from 1992 to 1997. The
Company believes that sales of golf clubs will continue to grow in the future
due to a number of factors including:

INCREASING AVAILABILITY OF GOLF FACILITIES. According to the NGF,
approximately 900 new golf courses, the vast majority of which will be available
to the public, are expected to open in the U.S. by the year 2000. The Company
believes that these additional facilities will make golf more accessible and
convenient, leading to a further increase in golf participation rates.

INCREASING INTEREST FROM NON-TRADITIONAL GOLFERS. The game of golf has
become increasingly attractive to segments of the population that have not
historically been well-represented among golfers. Most notably, Tiger Woods has
made golf more appealing to junior and minority golfers. According to the NGF,
the total number of beginning and junior golfers increased by over 40% in 1997
compared to the previous year. In addition, the success of the Ladies
Professional Golf Association (the "LPGA") Tour and such female golfers as
Annika Sorenstam of Sweden have increased the appeal of the sport to women.

FAVORABLE POPULATION TRENDS. The Company believes that two population
trends are likely to benefit the golf industry over the next several years: (i)
the aging of Baby Boomers (those born between 1946 and 1964) and (ii) the
emergence of the Echo Boom generation (those born between 1977 and 1995). As
golfers age, they tend to play golf more often and spend more money on the
sport, particularly in the over-50 age group. Accordingly, because a majority of
Baby Boomers are entering their 40s and 50s, the Company expects interest in and
spending on golf to increase. Further, because Echo Boomers are

22
<PAGE>
beginning to enter their 20s, the age most golfers begin to play the sport, the
Company believes they will further increase their participation in and spending
on golf.

NEW PRODUCT INNOVATIONS. In recent years, the golf equipment industry has
made significant advances in product designs and technologies to enhance
golfers' performance and overall enjoyment of the game. The Company believes
that this rapid evolution of golf clubs accelerates the rate at which golfers
purchase new or additional clubs.

GROWTH IN FAIRWAY WOODS. The Company believes that sales of fairway woods
are growing for a number of reasons. Fairway woods have proven to be more
versatile and dependable than long irons (specifically, the 1-4 irons), which
many golfers find inherently difficult to hit. In addition, an increasing number
of professional golfers on each of the Professional Golf Association ("PGA"),
LPGA, Senior PGA and Nike Tours are carrying multiple fairway woods in
competition, thereby validating the use of fairway woods as an accepted
substitute for long irons. Finally, changes in course architectures and turf
maintenance techniques are placing a premium on shots that fly higher and land
softer (I.E., the types of shots typically produced by fairway woods).

COMPANY HISTORY

Barney Adams founded the Company in 1987. After an initial period of
supplying components and performing contract manufacturing, the Company
established a custom fitting operation at the Hank Haney Golf Ranch in McKinney,
Texas, a well-known teaching and practice facility. As a result of the knowledge
and experience gained through custom fitting, Mr. Adams concluded that the
greatest difference in skill between a professional golfer and an amateur golfer
is the ability to successfully hit the long second shot to the green. Similarly,
Alastair Cochran and John Stobbs previously concluded in their book "THE SEARCH
FOR THE PERFECT SWING" that the long approach shot affects a player's score more
than any other. After a period of further research, development and testing, the
Company introduced a patented club head design to assist golfers with this shot.
The resulting product, the original Tight Lies fairway wood, incorporates an
upright trapezoidal head, a shallow face, a low center of gravity and 16 DEG. of
loft to assist the golfer in getting the ball airborne quickly and efficiently
from a variety of lies while maximizing distance. In late 1996, Adams extended
the Tight Lies line of fairway woods to include the Strong 3, Strong 5 and
Strong 7 and, one year later, the Strong 9.

In an effort to generate maximum exposure and retail sell-through of the
original Tight Lies fairway wood, the Company debuted its professionally
produced infomercial in April 1997. This 30-minute informational commercial is
hosted by veteran golf announcer Jack Whitaker and features former PGA Teacher
of the Year Hank Haney, former British Open Champion Bill Rogers and LPGA Hall
of Famer Carol Mann. Demand for the Tight Lies fairway woods increased
significantly after the introduction of the infomercial. To meet this demand,
the Company increased its distribution capacity by expanding its network of on-
and off-course golf shops and selected sporting goods retailers.

The International Network of Golf, an 800-member organization of leading
media and golf industry executives, named the original Tight Lies fairway wood
the "Breakthrough Product of the Year" in 1996. In addition, the Tight Lies
fairway wood received the 1997/98 Certificate of Excellence from the Golf
Industry Association. Since the introduction of the original Tight Lies fairway
wood in late 1995, more than 50 professionals on the PGA, LPGA and Senior PGA
Tours have carried one or more Tight Lies fairway woods in competition, none of
whom were then under contract with or paid by the Company.

23
<PAGE>
BUSINESS STRENGTHS

The Company has developed the following business strengths that it believes
provide it with a competitive advantage over many other golf club manufacturers:

STRENGTH OF THE TIGHT LIES BRAND. The Company believes that it has
established a significant presence in the fairway woods market category.
According to the Golf Market Research Institute, the Tight Lies fairway woods
were the top selling single fairway woods in the U.S. on a unit volume basis
during the three months ended March 31, 1998. During this period, the Company
achieved a 27% market share of the single fairway woods category. The Company
believes that the strength of its brand is further demonstrated by the rapid
acceptance of the expanded line of Tight Lies fairway woods. Although at the
time the Company only advertised the original Tight Lies fairway wood, sales of
the expanded line represented 48.8% of net sales for the three months ended
March 31, 1998.

INNOVATIVE MARKETING MODEL AND STRONG RETAIL DISTRIBUTION. Adams has
developed a marketing model that integrates direct response and traditional
image-based advertising to generate brand awareness and drive retail sales. For
the three months ended March 31, 1998, approximately 79% of the Company's sales
occurred at the retail level. To preserve the integrity of its image and
reputation, the Company currently limits its distribution to retailers that
market premium quality golf equipment and provide a high level of customer
service and technical expertise. The Company currently sells its products to on-
and off-course golf shops and selected sporting goods retailers. The Company
does not sell its products through price sensitive general discount warehouses,
department stores or membership clubs. The Company believes its selective retail
distribution helps its retailers to maintain profitable margins and maximize
sales of Adams products. The Company further believes it is well-positioned to
utilize its marketing model and retail distribution for future products.

RELATIONSHIP WITH NICK FALDO. The Company has recently entered into a
relationship with Nick Faldo. Mr. Faldo was inducted into the World Golf Hall of
Fame in May 1998 and has won more major championships in the 1990s than any
other golfer. In addition to numerous other domestic and international
championships, Mr. Faldo has won the Masters three times (1989, 1990 and 1996)
and the British Open three times (1987, 1990 and 1992). Mr. Faldo uses the Tight
Lies fairway woods in competition and has agreed to work closely with the
Company to assist in the design and testing of future golf clubs and other
equipment. The Company believes that Mr. Faldo's comprehensive knowledge of the
game of golf and reputation for technical excellence complements the Company's
capabilities and strong brand identity.

SALES AND CUSTOMER SERVICE INFRASTRUCTURE. Adams has committed significant
resources to developing its sales and customer service infrastructure. Rather
than relying on independent sales representatives, as do many other golf
equipment companies, Adams maintains an inside sales department that currently
consists of 25 employees who are in regular telephone contact with the Company's
over 7,000 retailers. These sales representatives are supported by 13
field-based Regional Account Coordinators who maintain personal contact with the
Company's retailers nationwide. The Company believes that using and carefully
managing its own sales force enables it to significantly reduce selling
expenses. Adams also has a separate 30-seat customer call center that provides
customer service to retailers and consumers. The majority of the Company's sales
and customer service personnel are experienced golfers. The Company believes
interaction with its knowledgeable representatives promotes customer
satisfaction and helps to strengthen the Adams brand.

EMPHASIS ON QUALITY. Due in large part to its heritage in custom club
fitting, Adams emphasizes quality control and precise adherence to design
specifications. The Company has redundant sources of supply for each of the
component parts used in the manufacture of its golf clubs and has established a
quality assurance program at those manufacturing facilities located in Taiwan
and China that are collectively responsible for producing substantially all of
the Company's performance club heads. Upon arrival at the Company's
manufacturing facilities in Plano, Texas, each component used in the Company's
clubs is

24
<PAGE>
again checked to ensure consistency with strict design specifications.
Components are then sorted to identify variations in characteristics, such as
head weight and shaft flexibility, that, although within the specified
manufacturing tolerances, may affect club performance. The Company uses its
patented variable moment of inertia ("VMI") formula to combine compatible
components to produce a consistent swing feel across an entire set of clubs.

GROWTH STRATEGY

The Company's goal is to establish itself as a leading developer of
technologically innovative, performance-oriented golf clubs. The Company's
strategy to achieve this goal includes the following elements:

BUILDING MARKET SHARE IN FAIRWAY WOODS. The Company's first priority is to
build its share of the premium fairway woods market. The Company believes it can
increase its market share by (i) continuing to build demand using the Company's
marketing model; (ii) assisting existing retailers to increase their sales of
the Tight Lies fairway woods by maintaining the relatively high margins
currently enjoyed by such retailers; and (iii) increasing the number of on- and
off-course golf shops and selected sporting goods retailers that distribute the
Tight Lies fairway woods.

LEVERAGING CONSUMER ACCEPTANCE OF TIGHT LIES BRAND. The Company intends to
leverage acceptance of the Tight Lies brand to develop and sell additional
products, a strategy that has proven effective in marketing the Company's
expanded line of Tight Lies fairway woods. For the three months ended March 31,
1998, sales of the expanded line of Tight Lies fairway woods exceeded sales of
the original club. The Company believes that the success and performance of its
Tight Lies fairway woods have earned Adams a reputation as a manufacturer of
technologically innovative, performance-oriented golf clubs among its customers
and avid golfers. The Company further believes that it will be able to
efficiently introduce new products to this customer base through its recent
investments in infrastructure, thereby generating sales and receiving valuable
product feedback.

EXPANDING INTERNATIONAL SALES. Until recently, the Company has focused on
developing sales domestically. For the year ended December 31, 1997 and the
three months ended March 31, 1998, approximately 2% and 6%, respectively, of the
Company's net sales were derived from international sales. Accordingly, the
Company's sales to date have been achieved without significant contribution from
international markets. Beginning in late 1997, the Company began leveraging its
domestic strength to attract qualified international distributors. The Company
currently has a network of 33 distributors located in 39 countries including
Canada, Japan and the United Kingdom and expects to continue to build its
international distribution. Toward this end, the Company has recently hired a
Director of International Sales who has significant international golf equipment
sales experience. Additionally, the Company believes that Nick Faldo's worldwide
reputation will help drive international demand for the Company's products.

DEVELOPING NEW TECHNOLOGIES AND PRODUCT DESIGNS. The Company engages
continuously in the process of developing new technologies and product designs
that, when incorporated into golf clubs, are expected to provide golfers with
meaningful performance benefits. Capitalizing on the technical knowledge and
expertise gained through the Tight Lies fairway woods, the Company is currently
testing prototypes of a potential new driver. This new product is expected to
combine the distance of a driver with the playability of a fairway wood. The
Company currently expects the new driver to be introduced after the end of
fiscal year 1998. The Company is working with Mr. Faldo to design and test this
new driver as well as other potential new products. To the extent that any new
technology or product design can be developed to the point of commercial
viability, the Company intends to introduce such technology or design into a
single product and, if the product is well received by consumers, develop a
broader product line around the core club category. The Company believes that
the affiliation, endorsement and support of Nick Faldo will provide important
credibility in the development and marketing of new technologies and product
designs.

25
<PAGE>
The Company's continued growth and success depend, in large part, on its
ability to successfully develop and introduce new products that achieve
widespread market acceptance. Failure by the Company to identify and develop
innovative new technologies and product designs could adversely affect the
Company's future growth and profitability. See "Risk Factors--Dependence on New
Product Introductions; Uncertain Consumer Acceptance."

PRODUCTS

The Company currently offers the following products:

ORIGINAL TIGHT LIES FAIRWAY WOOD. The original Tight Lies fairway wood has
an innovative upright trapezoidal or "upside down" head shape that incorporates
a distinctive shallow face, a low center of gravity and 16 DEG. of loft. The
Company believes that this club is ideal for getting the ball airborne quickly
and efficiently with optimum spin to maximize distance from the critical scoring
area of 185 to 225 yards from the green. The Company further believes that the
Tight Lies fairway woods are particularly effective from virtually any lie on
the course including the rough, hard pan, fairway bunkers and divots.

EXPANDED LINE OF TIGHT LIES FAIRWAY WOODS. In late 1996, based on initial
consumer acceptance of the original Tight Lies fairway wood, the Company
expanded its line to include the Tight Lies Strong 3 (13 DEG. loft), the Tight
Lies Strong 5 (19 DEG. loft) and the Tight Lies Strong 7 (24 DEG. loft). In
January 1998, the Company expanded the line again to include the Tight Lies
Strong 9 (28 DEG. loft). The expanded line of Tight Lies fairway woods
incorporates the same design innovations as the original club while providing
golfers with increased flexibility to play these clubs from different distances
on the course. For the three months ended March 31, 1998, sales of the expanded
line of Tight Lies fairway woods exceeded sales of the original club.

OTHER CLUB LINES. The Company's other clubs include the Air Assault Driver
and the Assault-VMI irons. The Air Assault Driver was the Company's first
product to incorporate the patented upright trapezoidal head. The Company's
Assault-VMI irons are perimeter-weighted, cavity-backed, slightly offset irons
which incorporate the Company's patented VMI design formula producing consistent
swing feel across an entire set of clubs. The Company markets the Assault-VMI
irons to professional and avid golfers exclusively through its network of over
100 certified custom fitting accounts. The Company believes that its custom
fitting activities provide Adams with an in-depth understanding of golf club
design and credibility in the golf industry.

Each golf club manufactured by the Company is available in a variety of
shaft lengths and flexes to accommodate both men and women golfers of all ages
and ability levels. In addition, once a club has received a certain degree of
market acceptance, the Company has historically introduced a left-handed model.
Currently, the Company offers each of its golf clubs in a left-handed model,
with the exception of the recently introduced Tight Lies Strong 9.

26
<PAGE>
The following table indicates the percentage of net sales in each major
product group for the years ended December 31, 1996 and 1997 and the three
months ended March 31, 1998. Historical percentages may not be indicative of the
Company's future product mix.

PERCENTAGE OF NET SALES BY PRODUCT GROUP

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS
------------------------------------ ENDED MARCH 31,
PRODUCT GROUP 1996 1997 1998
- ------------------------------------------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C>
Original Tight Lies................................... 45.6% 55.9% 48.5%
3, 5, 7 and 9 Tight Lies.............................. 1.6 38.4 48.8
Other Club Lines...................................... 52.8 5.7 2.7
----- ----- -----
Total............................................... 100.0% 100.0% 100.0%
----- ----- -----
----- ----- -----
</TABLE>

The Company supports each of its products with a two-year warranty. The
warranty provides for repair or replacement of the golf club, except in the case
of abuse. The Company has not experienced material amounts of breakage with
respect to its golf clubs.

DESIGN AND DEVELOPMENT

The Company's design and development team is responsible for developing,
testing and introducing new technologies and product designs. This team is
currently spearheaded by Barney Adams, the founder of the Company and inventor
of the Tight Lies fairway wood; Richard H. Murtland, Vice President-- Research
and Development; Mr. Nick Faldo and, independent consultants, Robert R. Bush and
Dr. Michael M. Carroll. Mr. Bush has over 30 years of experience in golf club
development, most notably, as Director of Technical Services for True Temper
Sports, a leading shaft manufacturer, where from 1966 to 1993, he was
responsible for testing all golf club shafts. Mr. Bush was instrumental in the
development of "Iron Byron," the industry standard for the mechanical testing of
golf clubs and balls. Mr. Bush is currently a member of the Technical Advisory
Panel for GOLF DIGEST. Dr. Michael M. Carroll is Dean of the George R. Brown
School of Engineering at Rice University in Houston, Texas. Dr. Carroll holds
doctorate degrees in both physics and mathematics and is an avid golfer. Dr.
Carroll has worked with the Adams design and development team since April 1,
1998 and is responsible for the scientific analysis of each new product under
development by the Company.

The design and development team engages in a five-step process to create new
products.

CONCEPT DEVELOPMENT. During concept development, Adams' design and
development team identifies specific desirable ball flight objectives. In
addition, the Company considers new ideas from professional golfers, inventors,
distributors and others. The Company expects that Nick Faldo will play a
significant role in future concept development.

DESIGN SPECIFICATIONS. The Company's product design and development team
determines design specifications for the club, including shaft length, flex and
weight, head design, loft and overall club weight. Throughout the design
specifications process, the Company refers to and incorporates the golf
equipment standards developed by the USGA. Although the standards set by the
USGA only apply to competitive events sanctioned by that organization, the
Company believes it is critical for new clubs to comply with these standards. At
this time, the product design and development team also determines the optimal
materials to use in the club. The Company will not use higher cost materials,
such as titanium or other alloys, unless such expensive materials provide
meaningful performance benefits. This stage of product development typically
takes 6 to 8 weeks after a concept has been clearly identified.

PATENT REVIEW. The Company considers patent protection for its technologies
and product designs to be an important part of its development strategy. The
Company and its patent attorneys conduct a search

27
<PAGE>
of prior art and existing products to determine whether a new product idea may
be covered by an existing patent. Patent review, depending upon the complexity
and novelty of the design involved, generally requires between 3 to 18 months to
complete, however, this stage of product development typically occurs in
conjunction with one or more of the other steps.

PRODUCT DESIGN AND ENGINEERING REVIEW. If a product concept continues past
the patent review stage, the Company translates design parameters into working
designs. When appropriate, these designs are modeled and developed using
computer aided design technologies and subjected to rigorous engineering review
to validate the effectiveness of the technology or design. Dr. Carroll is
expected to play a key role in this stage of product development. The Company
estimates that it will take between 4 to 6 months to successfully complete
product design and engineering review.

TESTING. Once a specific design has been decided upon, the Company creates
and tests one or more prototypes. The Company has a testing facility at the Hank
Haney Golf Ranch in McKinney, Texas. As part of the testing process, the Company
records, analyzes and interprets data associated with each prototype including
ball flight, distance, spin and accuracy. Using feedback from these tests, the
Company modifies its designs to achieve its performance objective. Additionally,
the Company applies for official USGA approval of the resulting club at this
time. Upon approval of a new product from the USGA, it becomes considered for
commercial release. The Company believes that in order to properly field test a
new product, it must expect between 4 to 6 months of additional development
time.

The Company's research and development expenses were $18,516, $51,101 and
$557,513 during 1995, 1996 and 1997, respectively.

MARKETING

The goals of the Company's marketing efforts are to build its brand identity
and drive sales through its retail distribution channel. To accomplish these
goals, Adams utilizes direct response and traditional image-based advertising,
engages in promotional activities and capitalizes on its relationship with Nick
Faldo and other well known golf figures.

ADVERTISING. The Company uses a combination of direct response and
traditional image-based advertising.

- DIRECT RESPONSE ADVERTISING. The Company intends to continue to build
brand awareness and stimulate product demand through its direct response
advertising, which includes a variety of mediums including television,
radio, print and direct mail. Direct response advertising, in which
consumers may order products directly from the Company by calling a
toll-free telephone number, provides a cost-effective vehicle enabling
Adams to communicate a compelling product story and build brand
recognition. The Company's direct response advertising serves to introduce
the Company's products to consumers, many of whom will subsequently
purchase Adams clubs directly from the Company's retailers. In April 1997,
Adams debuted a 30-minute Tight Lies infomercial, which has contributed
significantly to the Company's recent growth. This infomercial received
the award for "Best Infomercial Demonstration Show" from the National
Infomercial Marketing Association in September 1997. The Tight Lies
infomercial routinely runs on The Golf Channel, regional sports stations,
national networks and local, market-specific broadcast stations. In
addition, the Company utilizes 30- and 60-second direct response
television commercials as well as radio advertising. The Company
advertises regularly in major golf and industry publications, general
consumer magazines and local newspapers nationwide. These include GOLF
DIGEST, GOLF MAGAZINE, SPORTS ILLUSTRATED, THE WALL STREET JOURNAL and USA
TODAY. Finally, the Company engages in regularly scheduled direct mail
advertising campaigns.

- TRADITIONAL IMAGE-BASED ADVERTISING. The Company's direct response sales
revenue has enabled Adams to broaden its advertising efforts to include
traditional image-based advertising. This

28
<PAGE>
advertising includes a series of 30-second commercials which run during
major golf tournaments and golf related programs; newspaper, magazine and
radio ad campaigns; sponsorship of selected golf tournaments; exclusive
sponsorship of The Golf Channel's weekly instructional program, "LIVING
ROOM LESSONS" and a recently updated and professionally redesigned web
site located at www.adamsgolf.com.

The Company has received extensive editorial coverage in golf, consumer and
trade publications as well as general consumer magazines and newspapers
worldwide.

PROMOTIONAL ACTIVITIES. The Company engages in a variety of promotional
activities to sell and market its products. Such activities include (i) consumer
sweepstakes like the Company's "Ramble in the Bramble," where the winner will
receive an all expense paid, luxury tour for two of Scotland's most legendary
golf courses; (ii) promotional giveaways with certain purchases, including items
such as instructional videos and audio tapes; and (iii) promotional campaigns
like the "90-Day Challenge," in which the Company advertises its 90-day return
policy.

RELATIONSHIP WITH NICK FALDO AND OTHERS. The Company has recently formed a
lifetime relationship with Nick Faldo, an internationally recognized
professional golfer and winner of numerous U.S. and international championships,
including three Masters (1989, 1990 and 1996) and three British Opens (1987,
1990 and 1992). Mr. Faldo led the Official World Golf Ranking for 81 weeks
during 1993 and 1994. Mr. Faldo also has made the most Ryder Cup appearances in
the history of golf. Adams expects Nick Faldo to be actively and directly
involved in the design, testing and development of new technologies and
products. Mr. Faldo is noted for his precise play as a golfer and his reputation
as a perfectionist. The Company believes that by aligning itself with Mr. Faldo,
it can further promote the Adams brand, while at the same time demonstrating the
Company's ability to deliver golf clubs that satisfy the specific and demanding
requirements of tour professionals.

The Company has also obtained endorsements from Hank Haney, Bill Rogers and
Carol Mann. Mr. Haney was named the 1993 PGA Teacher of the Year and is a
five-time recipient of the Northern Texas Section PGA Teacher of the Year Award.
Mr. Haney has instructed over 100 touring professionals from the PGA, LPGA,
European, Japanese and Asian Tours along with several top rated junior golfers.
Mr. Haney is a member of the advisory staff for GOLF DIGEST. Mr. Rogers won the
British Open championship in 1981 and was the 1981 PGA Player of the Year. Ms.
Mann is a member of the LPGA Hall of Fame.

SALES AND CUSTOMER SUPPORT

The Company sells its products through on- and off-course golf shops and
selected sporting goods retailers, direct sales to consumers, international
distributors and the Company's custom fitting accounts.

SALES TO RETAILERS. The Company sells a significant majority of its
products to selected retailers. To maintain its high quality reputation and
generate retailer loyalty, the Company does not sell its products through price
sensitive general discount warehouses, department stores or membership clubs.
The Company believes its selective retail distribution strategy helps its
retailers to maintain profitable margins and maximize sales of Adams products.
In the three months ended March 31, 1998, sales to retailers accounted for
approximately 79% of the Company's total sales.

Adams maintains an inside sales department that currently consists of 25
employees who are in regular contact with the Company's over 7,000 retailers.
These sales representatives are supported by 13 field-based Regional Account
Coordinators who maintain personal contact with the Company's retailers
nationwide. The Company generally has been successful in delivering product to
its retailers within one week of a placed order. The Company believes its prompt
delivery of products enables its retail accounts to maintain smaller quantities
of inventory than may be required with other golf equipment manufacturers.

29
<PAGE>
CUSTOMER SUPPORT AND DIRECT SALES. Adams believes that superior customer
service can significantly enhance its marketing efforts. Accordingly, the
Company maintains an in-house customer call center whose representatives provide
technical assistance to Adams' customers and field calls resulting from the
Company's direct response advertising. The Company also outsources a portion of
its call center activities. The Company provides its staff with computerized
access to its retailer database enabling call center representatives to guide
consumers to their nearest Adams retailer.

INTERNATIONAL SALES. International sales are made in 39 countries
(including Japan, Canada and the United Kingdom) through approximately 33
independent distributors. The international distributors sell to retailers for
end sale to the consumer. International sales have increased from $0.6 million
for 1996 to $0.9 million for 1997 and $0.2 million for the first three months of
1997 to $1.4 million for the first three months of 1998. The Company recently
expanded its international sales staff to include a Director of International
Sales to identify, develop, engage and support the Company's worldwide
distributor base.

CUSTOM FITTING SALES. The Company employs six sales representatives who
manage the Company's custom fitting sales and support division and administer
Adams' custom fitting training program for golf professionals. Adams' custom
fitting training program has received PGA certification and provides continuing
education credits for PGA Member Professionals. Since 1992, the Company has
certified in excess of 300 golf professionals to custom fit its Assault-VMI
irons, which are sold exclusively through its over 100 custom fitting accounts.
Custom fitters measure data relating to swing and ball flight characteristics.
Based on the interpretation of the data, a set of clubs is manufactured that is
specifically tailored to that golfer.

The majority of the Company's sales and customer service personnel are
experienced golfers, including a number of former collegiate and professional
golfers. Further, each of the Company's new employees attends an 8-hour,
in-house seminar which provides training on club specifications, performance,
design and manufacturing. Adams believes interaction with its knowledgeable
representatives promotes customer satisfaction and helps to strengthen the Adams
brand image.

MANUFACTURING AND ASSEMBLY

The Company manages all stages of manufacturing, from sourcing to assembly,
in order to maintain a high level of product quality and consistency. The
Company establishes product specifications, selects the materials used to
produce the components and tests the specifications of all components received
by the Company. In addition, the Company has redundant sources of supply for
each of the component parts used in the manufacture of its golf clubs and has
established a quality assurance program at those manufacturing facilities
located in Taiwan and China that are collectively responsible for producing
substantially all of the Company's performance club heads. Upon arrival at the
Company's manufacturing facilities in Plano, Texas, each component used in the
Company's clubs is again checked to ensure consistency with strict design
specifications. Components are then sorted to identify variations in
characteristics, such as head weight and shaft flexibility, that, although
within the specified range, may affect club performance. Golf clubs are then
built by the Company's manufacturing personnel using the appropriate component
parts and the Company's patented VMI technology. See "Risk Factors--Sources of
Supply."

PATENTS

The Company's ability to compete effectively in the golf club market will
depend, in large part, on the ability of the Company to maintain the proprietary
nature of its technologies and products. The Company currently holds six U.S.
patents relating to certain of its products and proprietary technologies and has
two patent applications pending. Assuming timely payment of maintenance fees, if
any, the Company expects that the six currently issued patents will expire on
various dates between 2009 and 2013. The Company has been awarded patents with
respect to the design of the Tight Lies fairway wood and the VMI design formula.
There can be no assurance, however, as to the degree of protection afforded by
these or any other

30
<PAGE>
patents held by the Company or as to the likelihood that patents will be issued
from the pending patent applications. Moreover, these patents may have limited
commercial value or may lack sufficient breadth to adequately protect the
aspects of the Company's products to which the patents relate. The Company does
not hold any foreign patents and no foreign patent applications are pending. The
U.S. patents held by the Company do not preclude competitors from developing or
marketing products similar to the Company's products in international markets.

There can be no assurance that competitors, many of which have substantially
greater resources than the Company and have made substantial investments in
competing products, will not apply for and obtain patents that will prevent,
limit or interfere with the Company's ability to make and sell its products. The
Company is aware of numerous patents held by third parties that relate to
products competitive to the Company's, including products competitive with the
Tight Lies fairway woods. There is no assurance that these patents would not be
used as a basis to challenge the validity of the Company's patent rights, to
limit the scope of the Company's patent rights or to limit the Company's ability
to obtain additional or broader patent rights. A successful challenge to the
validity of the Company's patents may adversely affect the Company's competitive
position. Moreover, there can be no assurance that such patent holders or other
third parties will not claim infringement by the Company with respect to current
and future products. Because U.S. patent applications are held and examined in
secrecy, it is also possible that presently pending U.S. applications will
eventually issue with claims that will be infringed by the Company's products or
technologies. The defense and prosecution of patent suits is costly and
time-consuming, even if the outcome is favorable. This is particularly true in
foreign countries where the expenses associated with such proceedings can be
prohibitive. An adverse outcome in the defense of a patent suit could subject
the Company to significant liabilities to third parties, require the Company and
others to cease selling products or require disputed rights to be licensed from
third parties. Such licenses may not be available on satisfactory terms, or at
all.

INFORMATION SYSTEMS

The Company believes that a comprehensive and integrated infrastructure of
information technology, systems and services is a significant factor in
maintaining and improving its competitive position. Systems in place, including
order fulfillment and distribution, financial and decision support and
operational planning, have supported the growth of the Company to date. The
Company is aggressively enhancing its current capabilities to meet the demands
of the Company's growth. Special emphasis is being placed on systems for
customer management, supply chain management and business analysis and planning.
The Company believes that its current and enhanced computer systems, along with
normal upgrades and extensions, will be sufficient to accommodate the Company's
anticipated growth of sales and planned expansion for the foreseeable future.
There can be no assurance that any upgrades of its information systems will be
completed in a timely manner, that any such upgrades will be adequate to meet
the needs of the Company or that these upgrades will not strain the Company's
financial resources.

COMPETITION

The Company competes with a number of established golf club manufacturers,
many of which have greater financial and other resources than the Company.
Adams' competitors include Callaway Golf Company, adidas-Salomon AG (Taylor
Made) and Fortune Brands, Inc. (Titleist and Cobra). The

31
<PAGE>
Company competes primarily on the basis of performance, brand name recognition,
quality and price. The Company believes that its ability to market its products
through multiple distribution channels, including on- and off-course golf shops,
selected sporting goods retailers and through direct response advertising, is
important to its ability to compete.

The golf club industry is generally characterized by rapid and widespread
imitation of popular technologies, designs and product concepts. Due to the
success of the Tight Lies fairway woods, the Company expects that one or more
competitors may introduce products similar to the Tight Lies fairway woods. The
buying decisions of many purchasers of golf clubs are often the result of highly
subjective preferences which can be influenced by many factors, including, among
others, advertising media, promotions and product endorsements. The Company may
face competition from manufacturers introducing other new or innovative products
or successfully promoting golf clubs that achieve market acceptance. The failure
to compete successfully in the future could result in a material deterioration
of customer loyalty and the Company's image and could have a material adverse
effect on the Company's business, operating results or financial condition. See
"Risk Factors--Dependence on New Product Introductions; Uncertain Consumer
Acceptance" "--Highly Competitive Industry" and "--Historical Dependence on
Television Advertising."

EMPLOYEES

At May 31, 1998, the Company had 264 full-time employees, including 113
engaged in manufacturing and assembly, 26 in research and development and
quality control, 86 in sales support and 39 in management and administration.
Adams' employees are not unionized. Management believes its relations with its
employees are good.

PROPERTIES

The Company's administrative offices and manufacturing facilities currently
occupy approximately 65,000 square feet of space in Plano, Texas. This facility
is leased by the Company pursuant to a lease agreement expiring in 2004 and may
be extended for an additional five years. The Company maintains the right to
terminate the lease if it moves to a larger facility owned by the current
lessor. The Company has also leased an additional 33,000 square feet of space
and expects to take possession of the additional space before July 31, 1998
pursuant to the terms of a lease also expiring in 2004. The Company believes
that these facilities will be sufficient through at least the end of 1999.

LEGAL PROCEEDINGS

The Company is not involved in any material legal proceedings.

32
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
directors and executive officers of the Company, as of May 31, 1998:

<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
- ----------------------------- --- ----------------------------------------------------------------
<S> <C> <C>

B. H. (Barney) Adams......... 59 Chairman of the Board, Chief Executive Officer and President

Darl P. Hatfield............. 51 Senior Vice President--Finance and Administration and Chief
Financial Officer

Richard H. Murtland.......... 57 Vice President--Research and Development, Secretary, Treasurer
and Director

James E. Farrell............. 39 Vice President--Finance

Mark D. Gonsalves............ 38 Vice President--Sales and Marketing, Retail

Steven P. Sanazaro........... 50 Vice President--Information Technology

Paul F. Brown, Jr............ 51 Director

Roland E. Casati............. 67 Director

Finis F. Conner.............. 54 Director

Mark R. Mulvoy............... 56 Director

Stephen R. Patchin........... 39 Director
</TABLE>

The Company's Certificate of Incorporation was amended and restated
effective May 1, 1998 to provide, among other things, that the Board of
Directors be divided into three classes, each of whose members serve for
staggered three-year terms. Commencing with the 1999 Annual Meeting of
Stockholders, one class of directors will be elected each year for a three-year
term. Messrs. Conner and Patchin are members of Class I, the term of which
expires at the 1999 Annual Meeting of Stockholders, Messrs. Murtland and Casati
are members of Class II, the term of which expires at the 2000 Annual Meeting of
Stockholders and Messrs. Adams, Brown and Mulvoy are members of Class III, the
term of which expires at the 2001 Annual Meeting of Stockholders. See
"Description of Capital Stock--Delaware Law and Certain Charter and Bylaw
Provisions."

The number of members of the Board of Directors of the Company is currently
fixed at nine and, as a result, the Board presently has two vacancies. The
Company intends to fill these vacancies as soon as practicable after the
completion of the Offering. Under the terms of the agreement between the Company
and Nick Faldo, the Company has agreed that, for so long as royalties remain
payable to Mr. Faldo, it will use commercially reasonable efforts to cause a
designee of Mr. Faldo to be nominated for, and elected to, the Board. As of the
date of this Prospectus, Mr. Faldo has not notified the Company of his designee
to the Board.

Certain additional information concerning the directors and executive
officers is set forth below.

B. H. (BARNEY) ADAMS. Mr. Adams founded the Company in 1987 and has served
as Chairman of the Board, Chief Executive Officer and President since that time.
Mr. Adams is the inventor of the Tight Lies fairway wood. Prior to founding the
Company, Mr. Adams served as President of Intertest, Inc. (a manufacturer of
semiconductor testing equipment), Senior Vice President of Margaux Controls,
Inc. (a manufacturer of energy control systems) and Executive Vice President of
Maytex Manufacturing Co., Inc. (a manufacturer of store fixtures). Mr. Adams has
authored several magazine articles concerning the technical aspects of golf
equipment and is a frequent PGA section speaker.

DARL P. HATFIELD. Mr. Hatfield joined the Company as Senior Vice
President--Finance and Administration and Chief Financial Officer in May 1998.
Prior to joining the Company, Mr. Hatfield was a partner

33
<PAGE>
with KPMG Peat Marwick LLP ("KPMG") from July 1977 to April 1998. Mr. Hatfield
has 30 years of experience in accounting and auditing and is a Certified Public
Accountant.

RICHARD H. MURTLAND. Mr. Murtland joined the Company in 1994 as Vice
President--Operations and has been a director of the Company since August 1995.
He became Vice President--Research and Development in April 1998. Mr. Murtland
has approximately 30 years of experience in operations and engineering, most
recently serving as Project Manager with ARCO International Oil and Gas Company
(an international oil exploration and production company) from June 1976 to
March 1994.

JAMES E. FARRELL. Mr. Farrell joined the Company as Vice President--Finance
in September 1997. From June 1995 to September 1997, Mr. Farrell served as a
Manager for The Pittson Company (a diversified holding company), where he was
responsible for financial review and re-engineering in the security services and
air freight divisions. From May 1994 to June 1995, Mr. Farrell was employed by
ADT Security Systems, Inc. as a Manager of Planning and Marketing. Prior
thereto, he served as Director of Accounting for Brinks Home Security, Inc. from
September 1986 to December 1993. Mr. Farrell has over 15 years of business
experience and is a Certified Public Accountant.

MARK D. GONSALVES. Mr. Gonsalves joined the Company in July 1995 as Vice
President--Sales and Marketing and now serves as Vice President--Sales and
Marketing, Retail. Prior to joining the Company, Mr. Gonsalves was President and
Chief Executive Officer of In-Sync Sport International, Inc. (a sports
psychology company founded by Mr. Gonsalves) from January 1992 to July 1995. He
was a professional golfer from 1990 to 1992. Mr. Gonsalves has 16 years of sales
and marketing experience.

STEVEN P. SANAZARO. Mr. Sanazaro joined the Company as Vice
President--Information Technology in January 1998. Prior to joining Adams, Mr.
Sanazaro served as Director, Information Technology for Sprint Corporation from
June 1987 to November 1992, as Vice President, Information Technology for
Pepsico, Inc. from May 1996 to January 1998 and as Vice President, Research and
Development and Chief Technology Officer for Harbinger Corporation (a supplier
of electronic commerce software and network services) from August 1993 to May
1996. Mr. Sanazaro has approximately 30 years of business technology experience.

PAUL F. BROWN, JR. Mr. Brown became a director of the Company in August
1995. Mr. Brown has been Vice President--Finance and Chief Financial Officer of
Royal (a holding company with diversified interests) since 1990. Mr. Brown has
29 years of experience in accounting, auditing, and finance and is a Certified
Public Accountant.

ROLAND E. CASATI. Mr. Casati became a director of the Company in November
1995. Mr. Casati has been Chairman of the Board of Continental Offices, Ltd. for
over five years. Continental Offices, Ltd. is engaged in the development of
residential and commercial real estate and diversified personal investments. Mr.
Casati is a director of Zeigler Coal Holding Co. (one of the largest coal
producers in the U.S.) and Virtual Visits, Inc. (a company engaged in the design
of Internet web sites for the promotion of golf products).

FINIS F. CONNER. Mr. Conner became a director of the Company in October
1996. From 1985 to February 1996, Mr. Conner was Chairman of the Board and Chief
Executive Officer of Conner Peripherals, Inc. (a manufacturer of disk drives for
personal computers founded by Mr. Conner in 1986) which, in February 1996,
merged with Seagate Technology, Inc. ("Seagate") (a publicly traded manufacturer
of computer components co-founded by Mr. Conner in 1979). Mr. Conner served as
Vice-Chairman of Seagate from 1979 to 1985. Since February 1996, Mr. Conner has
been a principal of the Conner Group, an independent consulting organization,
and Chairman of the Board of Virtual Visits, Inc. Mr. Conner is also a director
of Box Hill Systems Corp., a manufacturer of high performance data storage
systems.

MARK R. MULVOY. Mr. Mulvoy became a director of the Company in April 1998.
Mr. Mulvoy is a retired executive of Sports Illustrated magazine, where he was
employed from 1965 to 1998. Mr. Mulvoy was Managing Editor of Sports Illustrated
from 1984 through 1996 and Publisher from 1990 to 1992.

34
<PAGE>
Mr. Mulvoy has written 12 books including "GOLF - THE PASSION AND THE
CHALLENGE." He is also a director of Tosco Corporation (the largest independent
refiner and marketer of petroleum products in the U.S.).

STEPHEN R. PATCHIN. Mr. Patchin became a director in October 1993. He has
been President and Chief Executive Officer of Royal Oil and Gas Corp., an oil
and gas exploration and production company and wholly owned subsidiary of Royal,
since June 1985 and President and Chief Executive Officer of Royal since
February 1990.

Executive officers of the Company are elected by and serve at the discretion
of the Board of Directors.

KEY MANAGEMENT EMPLOYEES

The following table sets forth certain information with respect to certain
additional key management employees of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
- ------------------------------- --- --------------------------------------------------------------
<S> <C> <C>

Walter G. DeVault.............. 47 Director of Customer Service and Consumer Sales

Cindy A. Herington............. 36 Director of Advertising and Direct Response Marketing

Christopher K. Beebe IV........ 41 Director of International Sales
</TABLE>

Certain additional information concerning these individuals is set forth
below.

WALTER G. DEVAULT. Mr. DeVault joined the Company as Director of Customer
Service and Consumer Sales in February 1998. He has worked in the home security
industry for the last eight years. Mr. DeVault served as Director of Sales for
X-Truder, Inc. (a home security company) from February 1992 to July 1994 and as
National Sales Director for Brink's Home Security, Inc. from August 1994 to
February 1998. Mr. DeVault has over 25 years of sales and sales management
experience.

CINDY A. HERINGTON. Ms. Herington joined the Company as Director of Special
Projects in May 1997. Ms. Herington became Director of Advertising and Direct
Response Marketing in April 1998. Prior to joining the Company, Ms. Herington
had been employed from August 1987 to May 1997 by The Neiman Marcus Group, Inc.
in a variety of sales management positions. Ms. Herington is the daughter of Mr.
Adams, the Company's Chairman of the Board, Chief Executive Officer and
President.

CHRISTOPHER K. BEEBE IV. Mr. Beebe joined the Company as Director of
International Sales in March 1998. He has been involved with international sales
for the past 10 years. From June 1989 through July 1994, Mr. Beebe held various
international sales positions with Ram Golf Corporation (a golf equipment
manufacturer), and from August 1994 through April 1997 he was Vice
President--Asia/Pacific with Lynx Golf, Inc. (a golf equipment manufacturer).

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors currently has two standing committees: the
Compensation/Plan Committee and the Audit Committee. The Compensation/Plan
Committee is responsible for the recommendation to the Board of Directors of
annual salaries for senior management as well as the administration and grant of
awards under the Company's Incentive Plan and the Company's Bonus Plan (the
"Bonus Plan"). The Compensation/Plan Committee is comprised of Messrs. Casati,
Mulvoy and Patchin.

The Audit Committee is responsible for meeting periodically with
representatives of the Company's independent public accountants to review the
general scope of audit coverage, including consideration of the Company's
accounting practices and procedures and system of internal accounting controls,
and to report to the Board of Directors with respect thereto. The Audit
Committee also makes recommendations to the Board of Directors with respect to
appointment of the Committee's independent auditors. The Audit Committee is
comprised of Messrs. Brown and Conner.

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<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth all compensation received by the Company's
Chief Executive Officer and the executive officers whose total annual salary and
bonus exceeded $100,000 during the fiscal year ended December 31, 1997
(collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
- ------------------------------------------------ --------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
B. H. Adams
Chairman of the Board, Chief Executive Officer
and President................................. 1997 $ 162,940 $ 10,015,000(1) $ 2,541,688(2) $ 4,185(3)
Richard H. Murtland
Vice President-Research and Development,
Secretary and Treasurer....................... 1997 72,548 40,000 -- --
Mark D. Gonsalves
Vice President--Sales and Marketing, Retail... 1997 62,400 352,144(4) -- --
</TABLE>

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

(1) Represents (a) $15,000 cash bonus and (b) value of 2,000,000 shares of
Common Stock granted on December 31, 1997 having a fair market value, as
determined by the Board of Directors, of $5.00 per share on the date of
grant. See "Certain Transactions."

(2) Represents reimbursement of federal income taxes and Medicare tax liability
associated with the grant of certain restricted shares of Common Stock. See
"Certain Transactions."

(3) Comprised of premiums for a life insurance policy for which members of Mr.
Adams' family are the beneficiaries.

(4) Represents bonus earned in 1997 pursuant to the terms of a sales commission
agreement which expired by its terms on December 31, 1997.

FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS MONEY OPTIONS AT
AT FISCAL YEAR-END(#) FISCAL YEAR END($)(1)
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------ ------------- ------------- ------------- -------------
B. H. Adams........................................... 1,520,766 0 $ 7,033,552 --
Richard H. Murtland................................... 222,214 0 1,027,739 --
Mark D. Gonsalves..................................... 333,320 0 1,541,605 --
</TABLE>

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

(1) Calculated by determining the difference between the fair market value of
the Common Stock underlying the options at December 31, 1997 ($5.00 per
share), as determined by the Board of Directors, and the exercise price of
such options. See "Certain Transactions." Each of the options referred to
herein was exercised by the respective option holder during January 1998.

BENEFIT PLANS

1998 STOCK INCENTIVE PLAN. In February 1998, the Company adopted the 1998
Stock Incentive Plan. The purpose of the Incentive Plan is to provide incentives
and rewards for participating employees and consultants of the Company (i) to
support the execution of the Company's business strategies and the achievement
of its goals and (ii) to associate the interests of such persons with those of
the Company's stockholders. In furtherance of this purpose, the Incentive Plan
authorizes the granting of stock options, including incentive stock options
(within the meaning of Section 422 of the Internal Revenue Code of

36
<PAGE>
1986, as amended) (the "Code"), stock appreciation rights, restricted and
performance shares, restricted and performance share units, performance stock
awards, dividend or equivalent rights, or other awards that are valued in whole
or in part by reference to, or otherwise based on, the Common Stock of the
Company (each, an "Award"). A total of 1,800,000 shares of Common Stock have
been reserved for issuance upon the exercise of Awards granted under the
Incentive Plan, subject to adjustment in accordance with the terms of the
Incentive Plan.

Upon consummation of the Offering, the Incentive Plan will be administered
by the Compensation/ Plan Committee comprised of Messrs. Casati, Mulvoy and
Patchin. The Compensation/Plan Committee has discretion to select the persons to
whom Awards will be granted (each, a "Participant"), to determine the type, size
and terms and conditions applicable to each Award and the authority to
interpret, construe and implement the provisions of the Incentive Plan. Each
Award under the Incentive Plan shall be evidenced by an Award Agreement.

Under the Incentive Plan, the Company may grant, in addition to other
Awards, incentive or nonqualified stock options. The exercise price of any
option granted under the Incentive Plan must be at least equal to the fair
market value of the Common Stock on the date of the grant, and in the case of a
grant of an incentive stock option to any Participant who owns stock
representing more than 10% of the Common Stock, the exercise price shall at
least equal 110% of the fair market value of the shares at the time the
incentive stock option is granted. In addition, no incentive stock option is
exercisable more than 10 years from the date of grant (5 years if such option is
granted to a Participant who owns in excess of 10% of the Common Stock) and the
aggregate fair market value, determined on the date of grant, of the Common
Stock as to which such incentive stock options are exercisable for the first
time by any Participant in the Incentive Plan shall be limited to $100,000 per
calendar year. The Incentive Plan also permits the grant of stock appreciation
rights (rights to receive the excess of the fair market value of a share of
Common Stock on the date the Award is exercised over the fair market value of a
share of Common Stock on the date of grant for such period as the
Compensation/Plan Committee may determine); restricted and performance shares (a
transfer of shares of Common Stock to a Participant, subject to such
restrictions on transfer or other incidents of ownership, or subject to
specified performance standards as the Compensation/Plan Committee may
determine); restricted or performance share units (fixed or variable share or
dollar-denominated units subject to conditions of vesting, performance and time
of payment as the Compensation/Plan Committee may determine, which may be paid
in shares of Common Stock, cash or a combination of both); dividend or
equivalent rights (rights to receive dividends or their equivalent in value in
shares of Common Stock, cash or in a combination of both with respect to any new
or previously existing Award); performance stock awards (rights to receive
restricted shares that will not be issued until after the end of the applicable
performance period, subject to the satisfaction of specified performance goals);
and other Common Stock-based Awards, in each case, as set forth in the Incentive
Plan.

At May 31, 1998, the Company had granted Awards under the Incentive Plan
consisting of (i) options to purchase an aggregate of 382,000 shares of Common
Stock, none of which were exercisable at such date and (ii) 900,000 shares of
restricted Common Stock. It is anticipated that all of the Company's employees
will be considered for participation in the Incentive Plan.

If a Participant terminates his or her service for reasons other than
retirement, permanent and total disability or death, the Participant may
exercise, no later than the date of termination, only those stock options vested
as of the date of termination. Upon retirement, a Participant's options
immediately vest and such Participant may exercise nonqualified stock options
within one year of retirement and incentive stock options within three months of
such retirement. In order to retire under the Incentive Plan, a Participant must
have attained the age of 62 and have had 10 years of continuous employment with
the Company. In the case of termination as a result of permanent and total
disability, a Participant's options will immediately vest and such Participant
will have one year from termination to exercise any outstanding options. If a
Participant who was granted stock options dies while employed by the Company, or
during the period which options may be exercised following termination of
employment due to retirement or permanent and

37
<PAGE>
total disability, all stock options granted under the Incentive Plan immediately
vest and must be exercised by the Participant's estate no later than the
termination date of such option. Except to the extent permitted by the Code and
the rules and regulations promulgated under Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (i) no Award under the
Incentive Plan is assignable or transferable except by will, by the laws of
descent and distribution or pursuant to a qualified domestic relations order and
(ii) during the lifetime of a Participant, the Award will be exercisable only by
such Participant or such Participant's guardian, legal representative or
assignee pursuant to a qualified domestic relations order.

The Incentive Plan provides that, in the event of a "change of control" (as
defined below), the following may, in the sole discretion of the
Compensation/Plan Committee, occur with respect to any and all Awards
outstanding as of such change of control:

(i) automatic maximization of performance standards, lapse of all
restrictions and acceleration of any time periods relating to the exercise,
realization or vesting of such Awards so that such Awards may be immediately
exercised, realized or vested in full on or before the relevant date fixed
in the applicable Award Agreement;

(ii) performance shares or performance units shall be paid entirely in
cash;

(iii) upon the exercise of a stock option during the 60-day period from
and after the date of the change of control, the Participant exercising the
option may in lieu of the receipt of Common Stock upon exercise, elect by
written notice to the Company to receive an amount in cash equal to the
excess of the aggregate Value (as hereinafter defined) of the shares of
Common Stock covered by the option or portion thereof surrendered,
determined on the date the option is exercised, over the aggregate exercise
price of the option (the "Aggregate Spread"). However, if the end of such 60
day period is within six months of the date of grant of the option held by a
Participant subject to the reporting requirements of Section 16 of the
Exchange Act, such option shall be canceled in exchange for a cash payment
to the participant equal to the Aggregate Spread on the day which is six
months and one day after the date of grant of such option. "Value," as more
fully defined in the Incentive Plan, means the higher of (i) the highest
fair market value during the 60-day period after the date of a change of
control and (ii) if the change of control is the result of a transaction
described in paragraphs (i) or (iii) under the definition of a change of
control, the highest price per share of the Common Stock paid in such
transaction.

(iv) if a Participant's employment or engagement terminates for any
reason other than retirement or death following a change of control, any
options held by such Participant may be exercised by such Participant until
the earlier of three months after the termination of employment or
engagement or the expiration date of such options; and

(v) all Awards become non-cancellable.

For purposes of the Incentive Plan, "change of control" is defined, in
general, to mean the occurrence of any of the following events: (i) the
acquisition, other than from the Company, by an individual, entity or group
(other than Royal or B. H. Adams) of beneficial ownership of thirty percent
(30%) or more of either the then outstanding shares of Common Stock or the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in election of directors, (ii) the ceasing, for any
reason, of individuals who, as of January 1, 1998, constitute the Board of
Directors to constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to such date whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the incumbent Board shall
be considered as though such individual were a member of the incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company; (iii) approval by the
stockholders of the Company of a

38
<PAGE>
reorganization, merger or consolidation of the Company, in each case, whereby
the individuals who were the respective beneficial owners of the Common Stock
and voting securities of the Company immediately prior to such reorganization,
merger or consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than sixty percent
(60%) of the then outstanding shares of Common Stock and the combined voting
power of the then outstanding voting securities entitled to vote generally in
election of directors, as the case may be, of the corporation resulting from
such reorganization, merger or consolidation, or complete liquidation or
dissolution of the Company or the sale or other disposition of all or
substantially all of the assets of the Company. The Incentive Plan terminates on
February 25, 2008.

1996 STOCK OPTION PLAN. In April 1996, the Company adopted a stock option
plan (the "1996 Plan") providing for the issuance to certain officers,
directors, employees and advisors of the Company of incentive stock options
within the meaning of Section 422 of the Code and stock options that are
nonqualified for federal income tax purposes. A total of 800,000 shares of
Common Stock have been reserved for issuance upon the exercise of options
granted under the 1996 Plan, subject to adjustment in accordance with such plan.
At May 31, 1998, options to purchase an aggregate of 659,694 shares of Common
Stock had been granted under the 1996 Plan, of which 618,030 had been exercised.
All such stock options were granted at an exercise price that was, at the time
of grant, equal to the fair market value of a share of Common Stock, as
determined by the Board of Directors. The Company currently does not anticipate
making additional grants under the 1996 Plan.

401(K) PLAN. In February 1998, the Company adopted its 401(k) Retirement
Plan (the "Retirement Plan"). Generally, all employees who are 18 years of age
and who have completed a three-month consecutive period of service are eligible
for participation in the Retirement Plan.

The Retirement Plan is a defined contribution plan intended to qualify under
Section 401 of the Code, such that participants generally may elect to
contribute to the Retirement Plan, on a pretax basis, up to 15% of their
compensation per pay period in the form of voluntary payroll deductions (for
which the statutorily prescribed annual limit in 1998 is $10,000 per
participant) ("Voluntary Contributions"). The Company makes matching
contributions equal to 50% of the first 6% of a participant's compensation
contributed to the Retirement Plan during such pay period ("Mandatory Matching
Contributions"). From time to time, the Company may make additional
discretionary contributions to the Retirement Plan ("Discretionary
Contributions," and together with Mandatory Matching Contributions, "Company
Contributions").

Participants who were employed by the Company at May 1, 1998 are immediately
vested in all Company Contributions. Participants who were not employed by the
Company on May 1, 1998 are gradually vested in all Company Contributions over a
period of three years of credited service, vesting 33 1/3% a year for each full
year of service beginning with the participant's first anniversary, and becoming
fully vested after three years of service or upon death, total and permanent
disability, retirement under the Retirement Plan or Retirement Plan termination.
Participants are always fully vested in their Voluntary Contributions.

COMPANY BONUS PLAN. In February 1998, the Company adopted the Bonus Plan to
become effective for the fiscal quarter commencing January 1, 1998. The Bonus
Plan is administered by the Compensation/ Plan Committee. Participation is based
upon individual selection by the Compensation/Plan Committee from among key
employees who, in the judgment of the Compensation/Plan Committee, make
significant contributions to the performance of the Company and whose decisions
and actions most significantly affect the growth, profitability and efficient
operations of the Company. It is anticipated that approximately 22 individuals
will initially participate in the Bonus Plan. The aggregate amount of any awards
paid with respect to calendar year 1998 to any participant under the Bonus Plan
shall not exceed 8% of the Company's net pre-tax operating profits.

39
<PAGE>
Awards are based upon the extent to which the Company's financial
performance (measured in terms of financial goals or objectives as may be
determined by the Compensation/Plan Committee) during the appropriate
measurement period for each award (e.g., the calendar year, calendar quarter,
etc.) has met or exceeded certain performance goals specified by the
Compensation/Plan Committee. Some performance goals applicable to participants
in the Bonus Plan may include elements which specify individual achievement
objectives directly related to such individual's area of responsibility. The
Compensation/Plan Committee may, in its discretion, decrease, but not increase,
the amount of any award granted under the Bonus Plan. Additionally, the
Compensation/Plan Committee may alternatively grant discretionary bonuses.

Because the performance goals under the Bonus Plan are determined by the
Compensation/Plan Committee in its discretion, it is not possible to determine
the benefits and amounts that will be received by any individual participant or
group of participants in the future. The Board of Directors may terminate,
modify or suspend the Bonus Plan, in whole or in part, at any time; provided
that no such termination or modification may impair any rights which may have
accrued under such Bonus Plan.

COMPENSATION OF DIRECTORS

Prior to the Offering, directors did not receive compensation to serve as
directors of the Company but did receive reimbursement for expenses traveling to
and from meetings of the Board of Directors. The Company intends to continue to
reimburse directors for their reasonable expenses associated with attending
meetings. The Company is also considering the adoption of a Director Plan to
further incentivize the directors and align their interests with those of the
stockholders.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company's Certificate of Incorporation limits the liability of directors
to the maximum extent permitted by Delaware law. Delaware provides that a
corporation's certificate of incorporation may contain a provision eliminating
or limiting the personal liability of directors for monetary damages for breach
of their fiduciary duties as directors, except for liability (i) for any breach
of their duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the DGCL or (iv)
for any transaction from which a director derives an improper personal benefit.

The Company's Certificate of Incorporation and Bylaws provide that the
Company will indemnify, to the fullest extent permitted by applicable law as
from time to time may be in effect, any person against all liability and expense
(including attorneys' fees and settlement costs) incurred by reason of the fact
that he is or was a director or officer of the Company. Expenses (including
reasonable attorneys' fees) incurred in defending any proceeding or prosecution
will be paid by the Company in advance of the final disposition of such
proceeding or suit upon receipt of a written affirmation by the director or
officer of his or her good faith belief that he or she has met the standard of
conduct necessary for indemnification and a written undertaking by such person
to repay such amount if it is ultimately determined that he or she is not
entitled to indemnification. The Company may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee, or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against and incurred
by such person in any such capacity or arising out of such person's position,
whether or not the Company would have the power to indemnify against such
liability under the provisions of the Certificate of Incorporation or Bylaws of
the Company.

40
<PAGE>
The indemnification provided by the Certificate of Incorporation is not
deemed to be exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement or vote of stockholders or disinterested
directors, or otherwise, and inures to the benefit of their heirs, executors and
administrators. Further, such indemnification shall continue as to a person who
has ceased to be a director or officer. The provisions of the Bylaws
specifically permit the Company to indemnify other persons from similar or other
expenses and liabilities as the Board of Directors may determine. Insofar as
indemnification for liabilities 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
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.

The Company is not aware of any pending litigation or proceeding involving
any director, officer, employee or agent of the Company where indemnification
will be required or permitted, nor any threatened litigation or proceeding that
might result in a claim for such indemnification.

The foregoing description of certain provisions of the Company's Certificate
of Incorporation and Bylaws is qualified in its entirety by the actual
Certificate of Incorporation and Bylaws filed as exhibits to the Registration
Statement of which this Prospectus is a part.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to April 29, 1998, the Company did not have a Compensation Committee
or other committee of the Board of Directors performing similar functions.
Decisions concerning compensation of executive officers have generally been made
by Mr. Adams in consultation with the other members of the Board of Directors.
None of the executive officers of the Company currently serves on the
Compensation Committee of another entity or on any other committee of the Board
of Directors of another entity performing similar functions.

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<PAGE>
CERTAIN TRANSACTIONS

In September 1995, the Company effected a reorganization (the
"Reorganization") pursuant to which it (i) distributed to its stockholders the
shares of common stock of Supershafts, Inc., a Texas corporation
("Supershafts"), held by the Company and constituting a minority interest in
Supershafts, (ii) issued four shares of Common Stock in exchange for each share
of Supershafts common stock then outstanding and (iii) reclassified, on a 1 for
1 basis, all of the outstanding Series A Preferred Stock and Series B Preferred
Stock of the Company as Common Stock. As a result of the Reorganization, the
Company issued an aggregate of 5,827,406 shares of Common Stock, Supershafts
became a wholly-owned subsidiary of the Company and the Common Stock became the
only class of capital stock of the Company outstanding. Mr. Adams and Royal
Holding Company, Inc. received 820,000 and 3,706,382 shares of Common Stock,
respectively, in the Reorganization.

In 1996 and 1997, the Company borrowed an aggregate of $450,000 from Royal
of which $250,000 was advanced in 1997, to finance the production of the
Company's infomercial. Such advances bore interest at the prime rate. In
September 1997, the Company paid accrued interest of $29,233 on this debt and
issued 900,000 shares of Common Stock (at a rate of $.50 of principal
indebtedness per share) to Royal in cancellation of the principal amount.

In December 1997, the Board of Directors of the Company granted to Mr.
Adams, the Company's Chairman of the Board, Chief Executive Officer and
President, 2,000,000 shares of Common Stock. The Board of Directors also
provided Mr. Adams with a cash payment of $2,541,688, an amount equal to the
federal income tax and Medicare tax liability associated with such grant and
bonus. In the first quarter of 1998, Mr. Adams loaned $1.1 million of such funds
back to the Company pursuant to an unsecured promissory note at an interest rate
of 5.39% per annum. The Company repaid $600,142 of the note on April 14, 1998
and the remaining principal amount of the note ($534,899) is payable in
installments of $312,500 and $222,399 on December 15, 1998 and April 14, 1999,
respectively. In determining that the stock grant and bonus to Mr. Adams were
appropriate and in the best interests of the Company and its stockholders, the
Board of Directors considered, among other factors, the Company's revenue and
operating income growth and improved competitive position under Mr. Adams'
leadership, Mr. Adams' historical cash compensation and the Board of Directors'
desire to increase Mr. Adams' equity interest in the Company to a level
commensurate with his contributions to and role with the Company. The Board of
Directors determined that the value of Mr. Adams' services to the Company
exceeded the fair market value of the stock ($10,000,000) and bonus. The Company
does not consider these payments to be indicative of future levels of
compensation to Mr. Adams or other executives of the Company.

The agreement between the Company and Nick Faldo (the "Faldo Agreement")
became effective May 1, 1998 and provides that Mr. Faldo will exclusively
endorse the Company's clubs and undertake certain other promotional activities
on behalf of the Company. Pursuant to the Faldo Agreement, the Company and Mr.
Faldo will design a line of clubs to be used by Mr. Faldo in tournaments and
other events, provided such clubs are suitable for Mr. Faldo's use. Under the
Faldo Agreement, the Company has licensed the worldwide rights to the Nick Faldo
trademark for use in connection with the distribution of its golf clubs, head
covers, golf bags, travel covers, golf towels and umbrellas which it designs or
manufactures.

As compensation for the licensing and endorsement arrangement set forth in
the Faldo Agreement, the Company has granted 900,000 shares of Common Stock to
Mr. Faldo. Subject to certain exceptions including transfers to Mr. Faldo's
agent, Mr. Faldo may not transfer, dispose of or otherwise assign any rights in
more than 100,000 shares of Common Stock in any calendar year prior to 2002. In
addition, Mr. Faldo is entitled to receive a royalty of 5% of the net sales
price of all Adams golf clubs (other than certain specialty items for which the
royalty equals 10% of the net sales price) sold outside the U.S. throughout the
term of the Faldo Agreement. The Faldo Agreement provides for a minimum royalty
of $1.5 million in 1999 escalating to $4.0 million for years 2004 through 2008.
From 2009 through 2014, the minimum royalty is $1.5 million, as adjusted for
changes in the consumer price index. After 2014, the Faldo

42
<PAGE>
Agreement does not provide for a minimum royalty. Commencing with 2009, however,
the Faldo Agreement provides for a maximum royalty of $4.0 million, as adjusted
for changes in the consumer price index. In the event Mr. Faldo does not compete
in a minimum number of worldwide golf events each year, such royalty payments
shall be reduced on a pro-rata basis, unless such events are missed as a result
of illness or injury. The Company has also agreed that through the year 2008, it
will support the "Faldo Junior Series" in the United Kingdom by making an annual
contribution to the sponsoring organization of not less than $45,000 for each
year the tournament is played under that name. The Faldo Agreement further
provides that, so long as royalties remain payable thereunder, the Company will
use commercially reasonable efforts to cause a designee of Mr. Faldo to be
nominated for, and elected to, the Board of Directors of the Company. As of the
date of this Prospectus, Mr. Faldo has not notified the Company of his
designation to the Board.

The Faldo Agreement extends through Mr. Faldo's lifetime; however, the
Company has the right to terminate the Faldo Agreement earlier if Mr. Faldo (a)
is unable to perform the duties required by the Faldo Agreement for a period of
12 consecutive months, (b) retires or becomes officially ineligible to compete
on the PGA and/or Senior PGA tour, or (c) has engaged in illegal or immoral
conduct resulting in a felony conviction, or has otherwise conducted himself in
a manner not in keeping with the standards of professional conduct set forth in
the Faldo Agreement. In the event of the death of Mr. Faldo prior to May 1,
2030, the Company may, at its option, continue the terms of the Faldo Agreement
until May 1, 2030, in which case, Mr. Faldo's heirs or estate shall be entitled
to any royalties due.

KPMG, a public accounting firm in which Mr. Hatfield was a partner until
April 30, 1998, has provided accounting and auditing services to the Company
during 1997 and 1998. The amounts paid to KPMG for services rendered during 1997
and 1998 were $112,887 and $403,520, respectively. Mr. Hatfield is currently
Senior Vice President--Finance and Administration and Chief Financial Officer of
the Company. The Company has an agreement with Mr. Hatfield providing that, upon
Mr. Hatfield's termination without cause following certain change of control
events, Mr. Hatfield's stock options will become fully vested and Mr. Hatfield
will be paid an amount equal to one year of his base salary.

From January 1, 1998 through May 31, 1998, the Company paid Virtual Visits,
Inc. ("Virtual Visits"), a company engaged in the design of Internet Web sites
for the promotion of golf products, approximately $60,000. The Company expects
to pay at least an additional $10,000 to Virtual Visits during 1998. Mr. Conner
and Mr. Casati, directors of the Company, are also directors and significant
stockholders of Virtual Visits.

In January 1998, the Company made loans of $83,330 and $125,000 to Mr.
Murtland and Mr. Gonsalves, respectively, to finance the aggregate exercise
price of stock options then exercised by such individuals. The loans bore
interest at the rate of 5% per annum and were due January 14, 2001. The loan to
Mr. Murtland was repaid in April 1998. Messrs. Murtland and Gonsalves are each
executive officers of the Company.

The Company has granted options to purchase the Company's Common Stock to
certain of its officers and directors. See "Management--Benefit Plans" and
"Principal and Selling Stockholders."

The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions between the Company and its
officers, directors, principal stockholders and their affiliates will be
approved by a majority of the Board of Directors, including a majority of the
independent and disinterested outside directors.

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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table and the notes thereto set forth certain information
regarding the beneficial ownership of the Common Stock as of May 31, 1998, by
(i) each person known by the Company to own beneficially more than 5% of the
outstanding shares of the Common Stock, (ii) each director of the Company, (iii)
each Named Executive Officer, (iv) all directors and executive officers of the
Company as a group, and (v) each Selling Stockholder. Unless otherwise noted in
the notes to the table, the Company believes the executive officers and
directors can be contacted at the principal offices of the Company.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF COMMON STOCK NUMBER OF SHARES OF COMMON STOCK
PRIOR TO THE OF COMMON STOCK AFTER THE
OFFERING(1) TO BE SOLD(2) OFFERING(1)(2)
------------------------ ----------------- ------------------------
NAME OF BENEFICIAL OWNERS NUMBER PERCENT NUMBER NUMBER PERCENT
- -------------------------------------------------- ----------- ----------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
DIRECTORS AND NAMED EXECUTIVE OFFICERS
B. H. Adams..................................... 4,482,321 23.5% 928,000 3,554,321 15.4%
Richard H. Murtland............................. 333,952 1.7 66,750 267,202 1.2
Mark D. Gonsalves............................... 333,320 1.7 0 333,320 1.4
Paul F. Brown, Jr.(3)(4)........................ 7,405,438 38.8 454,745(5) 6,950,693 30.1
Roland E. Casati................................ 1,838,600 9.6 0 1,838,600 8.0
Finis F. Conner................................. 1,942,776 10.2 388,555 1,554,221 6.7
Mark R. Mulvoy.................................. 0 0.0 0 0 0.0
Stephen R. Patchin(3)(4)........................ 7,405,438 38.8 454,745(5) 6,950,963 30.1
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP
(11 PERSONS)(4)(6).............................. 16,381,407 85.6 1,838,050 14,543,537 62.8
BENEFICIAL OWNERS OF 5% OR MORE OF THE COMPANY'S
COMMON STOCK
Royal Holding Company, Inc.(3)(4)............... 7,405,438 38.8 454,745 6,950,693 30.1
OTHER SELLING STOCKHOLDERS
Lincoln Trust Company
Custodian f/b/o Richard Urdahl................ 116,592 * 77,000 39,592 *
Richard Urdahl(7)............................... 119,392 * 79,800(8) 39,592 *
Faris McMullin.................................. 111,738 * 73,750 37,988 *
Peter Cassady................................... 8,400 * 8,400 0 0.0
</TABLE>

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

* Less than one percent.

(1) Applicable percentage of ownership is based on 19,099,282 shares of Common
Stock outstanding on May 31, 1998, and 23,099,282 shares of Common Stock to
be outstanding upon completion of the Offering. Common Stock is the only
class of equity securities outstanding. Beneficial ownership is determined
in accordance with the rules of the Commission and generally includes voting
or investment power with respect to securities. Shares of Common Stock
subject to options that are presently exercisable or exercisable within 60
days of May 31, 1998 are deemed to be beneficially owned by the person
holding such options for the purpose of computing the beneficial ownership
of such person, but are not treated as outstanding for the purpose of
computing the beneficial ownership of any other person.

(2) Does not give effect to the exercise of the Underwriters' over-allotment
option or to purchases in the Offering, if any. If the Underwriters
over-allotment option is exercised in full, Messrs. Adams, Murtland,
Gonsalves, Conner, Urdahl, McMullin and Cassady would beneficially own
3,362,321 (14.6%), 250,464 (1.1%), 303,320 (1.3%), 1,554,221 (6.7%), 30,000
(less than 1%) (representing 30,000 shares held of record by Lincoln Trust
Company as custodian for Mr. Urdahl), -0- and -0- shares of Common Stock,
respectively, and Royal Holding Company, Inc. and Lincoln Trust Company
would own 6,374,511 (27.6%) and 30,000 (less than 1%) shares, respectively,
after the Offering. See "Underwriting."

(3) The address for Messrs. Patchin and Brown and for Royal is c/o Royal Holding
Company, Inc., 300 Delaware Avenue, Suite 306, Wilmington, Delaware 19801.

(4) Includes 7,405,438 shares of Common Stock owned directly by Royal. Messrs.
Patchin and Brown, directors of the Company, are the (i) Chief Executive
Officer and President and (ii) Chief Financial Officer and Vice President--
Finance, respectively, of Royal and, by virtue of their positions with
Royal, may be deemed to share the power to vote or direct the vote of, and
to share the power to dispose or direct the disposition of, these shares of
Common Stock. Each of Messrs. Patchin and Brown disclaim beneficial
ownership of the shares of Common Stock held by Royal.

(5) Represents shares sold for the account of Royal Holding Company, Inc.

(6) Includes 45,000 shares of Common Stock subject to options exercisable by
Darl P. Hatfield, an executive officer of the Company, within 60 days of May
31, 1998.

(7) Includes 116,592 shares of Common Stock held of record by Lincoln Trust
Company as custodian for Mr. Urdahl and 2,800 shares of Common Stock held of
record by Mr. Urdahl.

(8) Represents 77,000 shares sold for the account of Lincoln Trust Company as
custodian for Mr. Urdahl and 2,800 shares sold for the account of Mr.
Urdahl.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, $.001 par value per share, and 5,000,000 shares of Preferred
Stock, $.01 par value per share (the "Preferred Stock"). The following
description of certain characteristics of the capital stock of the Company does
not purport to be complete and is subject to, and qualified in its entirety by,
the provisions of the Certificate of Incorporation, Bylaws and the Registration
Rights Agreement, as defined below, each of which is included as an exhibit to
the Registration Statement of which this Prospectus is a part, and by the
provisions of applicable law.

COMMON STOCK

As of May 31, 1998, there were 19,099,282 shares of Common Stock outstanding
held of record by 101 stockholders. The holders of Common Stock are entitled to
share pro rata in dividends and distributions, if any, with respect to the
Common Stock when, as and if declared by the Board of Directors, from funds
legally available therefor. See "Dividend Policy". Holders of Common Stock are
entitled to one vote per share, are not entitled to cumulative voting in the
election of directors and have no preemptive, subscription, redemption or
conversion rights. Upon the liquidation, dissolution or winding up of the
Company, the assets of the Company remaining after payment of or provision for
liabilities and payment to the holders of Preferred Stock of such preferential
amounts that they are entitled to receive will be distributed pro rata on a
share-for-share basis among the holders of Common Stock. All outstanding shares
of Common Stock are, and the shares to be issued and sold in the Offering will
be, duly authorized, validly issued, fully paid and non-assessable. The rights,
preferences and privileges of holders of Common Stock are subject to any series
of Preferred Stock that the Company may issue in the future.

The Company effected a two-for-one stock split on May 1, 1998 in
contemplation of this Offering. The Company had 9,549,641 shares of Common Stock
issued and outstanding immediately prior to the stock split.

PREFERRED STOCK

The Company's Board of Directors is authorized, without further action by
the stockholders, to divide the Preferred Stock into series and, with respect to
each series, to determine the preferences and rights, and the qualifications,
limitations or restrictions thereof, including the dividend rights, conversion
rights, voting rights, redemption rights and terms, liquidation preferences,
sinking fund provisions, the number of shares constituting the series and the
designation of such series. The Board of Directors could, without stockholder
approval, issue Preferred Stock with voting and other rights that could
adversely affect the voting power of the holders of Common Stock and could have
certain anti-takeover effects. The Company has no present plans to issue any
shares of Preferred Stock.

The authority possessed by the Board of Directors to issue Preferred Stock
could potentially be used to discourage attempts by others to obtain control of
the Company through merger, tender offer, proxy contest or otherwise by making
such attempts more costly or difficult to achieve.

REGISTRATION RIGHTS

Pursuant to the terms of that Registration Rights Agreement dated April 30,
1998 (the "Registration Rights Agreement") by and among the Company and certain
stockholders of the Company holding an aggregate of 17,797,087 shares of Common
Stock as of May 31, 1998, the Company has granted certain registration rights to
such stockholders. Specifically, under the terms of the Registration Rights
Agreement, the stockholders holding in excess of 40% of the Common Stock covered
by such agreement have a right commencing at any time not earlier than the
latter of (i) the expiration of any of the "lock-up" period prescribed by the
Lock-up Agreement and (ii) the date on which the Company shall become eligible
to use the Form S-3 Registration Statement (or any successor to such form) for
the purpose of registering outstanding securities for the account of any person
other than the Company, to demand that the shares of the Common Stock held by
them be registered under the Securities Act. However, if the Board of Directors
determines, in its good faith, that such registration would be detrimental to
the Company and, as a result, that it is necessary to defer the filing of such
registration statement at such time, the Company may defer such registration for
a period not to exceed 180 days. The Company has agreed to pay all costs and
expenses necessary to effect the registration of the shares of Common Stock to
be sold by the stockholders in this first registration statement (other than
underwriting and brokerage commissions, if

45
<PAGE>
any, and legal fees incurred by the selling holders). If, after the Company has
effected the first such registration statement, it shall receive a request for
registration from the stockholders holding a majority of the shares of Common
Stock subject to the Registration Rights Agreement not previously registered,
the Company shall file a second or third registration statement for the purpose
of registering such shares under the Securities Act; however, the Company and
such stockholders have agreed to defer the filing of such registration
statements in the same manner and on the same basis as the first registration.
The stockholders having shares registered in such subsequent registration
statements have agreed to pay all costs and expenses related thereto including
the Company's fees and expenses relating to counsel, accountants and filing
under the Securities Act.

The Registration Rights Agreement also grants certain piggy-back
registration rights to the stockholders. Accordingly, whenever the Company
proposes to register any shares of Common Stock under the Securities Act (other
than registrations on Form S-4 or S-8), certain of the stockholders have the
right to include the shares of Common Stock held by them in any such
registration. However, if the managing underwriter of such registration advises
the Company in writing that, in its opinion, the total number or dollar amounts
of securities requested to be included in such registration exceeds the number
or dollar amount of shares of Common Stock that can be sold in such offering,
the Company may exclude certain shares from the offering. In such a case, the
order of priority in which shares are to be included in the proposed offering
will be as follows: first, all shares of Common Stock that the Company proposes
to sell; and second, up to the full number or dollar amount of shares of Common
Stock requested by the stockholders to be included in such registration in
excess of the number or dollar amount of shares of the Common Stock the Company
proposes to sell which, in the opinion of such underwriter, can be sold,
allocated pro rata among the participating stockholders on the basis of the
number of shares of Common Stock requested to be included therein by each. The
Company generally is obligated to bear the expenses, other than underwriting
discounts and sales commissions, of the registration of such shares. Any
exercise by the holders of such incidental registration rights may hinder
efforts by the Company to arrange future financings and may have an adverse
impact on the market price of the Common Stock.

DELAWARE LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS

Following the consummation of the Offering, the Company will be subject to
Section 203 of the DGCL, the "business combinations" statute. In general, such
statute prohibits a publicly held Delaware corporation from engaging in various
"business combinations" with any "interested stockholder" for a period of three
years after the time that such stockholder became an "interested stockholder,"
unless (i) the business combination or the transaction by which such stockholder
became an "interested stockholder" was approved by the Board of Directors prior
to such time, (ii) upon consummation of the transaction which resulted in the
stockholder becoming an "interested stockholder," the "interested stockholder"
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (excluding for purposes of determining the number
of shares outstanding those shares owned by (a) persons who are directors and
also officers and (b) certain employee stock ownership plans) or (iii) on or
subsequent to such time the "business combination" is approved by the Board of
Directors and authorized at an annual or special meeting of stockholders by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the "interested stockholder." A "business combination" includes
mergers, asset sales and other transactions resulting in financial benefit to a
stockholder. In general, an "interested stockholder" is a person who, together
with affiliates and associates, owns (or within three years, did own) 15% or
more of a corporation's outstanding voting stock. The statute could prohibit or
delay mergers or other takeover or change in control attempts with respect to
the Company and, accordingly, may discourage attempts to acquire the Company.

In addition, certain provisions of the Company's Certificate of
Incorporation and Bylaws summarized in the following paragraphs may be deemed to
have an anti-takeover effect and may delay, defer or prevent an attempt to
obtain control of the Company by means of a proxy contest, tender offer, merger
or other transaction that a stockholder might consider in its best interest,
including those attempts that might result in a premium over the market price
for the shares held by stockholders.

CLASSIFIED BOARD OF DIRECTORS. The Company's Certificate of Incorporation
provides for the Board of Directors to be divided into three classes of
directors serving staggered three-year terms. As a result, approximately
one-third of the Board of Directors will be elected each year. Moreover, under
the DGCL, in the case of a corporation having a classified board, stockholders
may remove a director only for cause.

46
<PAGE>
This provision, when coupled with the provision of the Bylaws authorizing the
Board of Directors to fill vacant directorships, may preclude a stockholder from
removing incumbent directors without cause and simultaneously gaining control of
the Board of Directors by filling the vacancies created by such removal with its
own nominees.

SPECIAL MEETING OF STOCKHOLDERS. The Company's Bylaws provide that special
meetings of stockholders of the Company may be called only by the Board of
Directors, or the Executive Committee of the Board of Directors, if any, or the
President. This provision will make it more difficult for stockholders to take
actions opposed by the Board of Directors.

STOCKHOLDER ACTION BY WRITTEN CONSENT. The Company's Certificate of
Incorporation provides that no action required or permitted to be taken at any
annual or special meeting of the stockholders of the Company may be taken
without a meeting, and the power of stockholders of the Company's to consent in
writing, without a meeting, for the taking of any action is specifically denied.

ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. The Bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual or special meeting of stockholders, must provide
timely notice thereof in writing. In order to be timely, a stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Company no later than 90 days prior to the meeting; provided, however,
that in the event that less than 100 days notice or prior public disclosure of
the date of the meeting is given and made to stockholders, notice by the
stockholder must be received no later than the close of business on the tenth
day following the earlier of the day on which such notice of the date of the
meeting was mailed or such public disclosure was made in order to be timely. The
Bylaws specify certain requirements for a stockholder's notice to be in proper
form. These provisions may preclude some stockholders from bringing matters
before the stockholders at an annual or special meeting or from making
nominations for directors at an annual or special meeting.

The Company believes the foregoing provisions are necessary to attract and
retain qualified persons as directors and officers.

MARKET INFORMATION

Prior to the Offering, there has been no established public trading market
for the Common Stock. The Common Stock has been approved for listing on the
Nasdaq National Market under the symbol "ADGO."

TRANSFER AGENT AND REGISTRAR

The Company has appointed The Bank of New York as the transfer agent and
registrar for the Common Stock.

47
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of the Offering, the Company will have 23,099,282 shares of
Common Stock outstanding. Of these shares, the 4,000,000 shares sold by the
Company and the 2,000,000 shares sold by the Selling Stockholders in the
Offering will be freely tradeable without restriction or further registration
under the Securities Act unless held by an "affiliate" of the Company (as that
term is defined below). Any such affiliate will be subject to the resale
limitations of Rule 144 adopted under the Securities Act. The remaining
17,099,282 shares of Common Stock currently outstanding are "restricted
securities" for purposes of Rule 144 ("Restricted Shares"). Restricted Shares
may be sold in the public market only if registered or if they qualify for an
exemption from registration under Rule 144 or Rule 701 promulgated under the
Securities Act. As a result of contractual restrictions and the provisions of
Rule 144 and Rule 701, additional shares will be available for sale in the
public market as follows: (i) no Restricted Shares will be eligible for
immediate sale on the date of this Prospectus; (ii) no additional Restricted
Shares will be eligible for sale 90 days after the date of this Prospectus; and
(iii) an additional 16,184,282 Restricted Shares will be eligible for sale upon
expiration of the Lock-up Agreements, 180 days after the date of this
Prospectus.

After the expiration of the Lock-up Agreements, the Company may file a
Registration Statement on Form S-8 under the Securities Act to register the
shares of Common Stock reserved for issuance to its employees, officers,
directors and consultants under its employee benefit plans. Upon the effective
date of such Registration Statement, shares of Common Stock issued upon exercise
of options granted under the plans generally will be available for sale in the
open market. As of the date of this Prospectus, the Company has granted
outstanding options to purchase up to 423,666 shares of Common Stock to certain
employees, officers, directors and consultants under the 1996 Plan and the
Incentive Plan, none of which were then exercisable. In addition, Mr. Faldo has
been granted 900,000 shares of Common Stock pursuant to the terms of the
Incentive Plan, however, subject to certain exceptions including transfers to
Mr. Faldo's agent, he may not transfer, dispose of or otherwise assign any
rights in any more than 100,000 shares of Common Stock in any calendar year
prior to 2002.

In general under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated), including a person who may be deemed to be an
"affiliate" of the Company as that term is defined under the Securities Act, is
entitled to sell within any three-month period a number of shares beneficially
owned for at least one year that does not exceed the greater of (i) 1% of the
then outstanding shares of Common Stock (approximately 230,993 shares
immediately after the Offering) or (ii) the average weekly trading volume of the
outstanding shares of Common Stock during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to certain requirements as to the
manner of sale, notice and the availability of current public information about
the Company. A person (or persons whose shares are aggregated) who is not an
"affiliate" of the Company during the 90 days immediately preceding a proposed
sale by such person and who has beneficially owned "restricted securities" for
at least two years is entitled to sell such shares under Rule 144(k) without
regard to the volume, manner of sale, public information or notice requirements.
As defined in Rule 144, an "affiliate" of an issuer is a person that directly or
indirectly controls, or is controlled by, or is under common control with such
issuer. In general, under Rule 701 under the Securities Act as currently in
effect, any employee, consultant or advisor of the Company who purchases shares
from the Company in connection with a compensatory stock or option plan or other
written agreement related to compensation is eligible to resell such shares 90
days after the effective date of the offering in reliance on Rule 144, but
without compliance with certain restrictions contained in Rule 144.

Prior to this Offering, there has been no public market for the Common Stock
of the Company and no predictions can be made of the effect, if any, that future
sales of shares of Common Stock, and options to acquire shares of Common Stock,
or the availability of shares for future sale, will have on the market price
prevailing from time to time. Sales of substantial amounts of Common Stock in
the public market, or the perception that such sales could occur, could
adversely affect prevailing market prices of the Common Stock.

48
<PAGE>
UNDERWRITING

Subject to certain terms and conditions contained in the Underwriting
Agreement, Lehman Brothers Inc., NationsBanc Montgomery Securities LLC and
Ferris, Baker Watts, Incorporated (the "Underwriters") have severally agreed to
purchase from the Company and the Selling Stockholders, and the Company and the
Selling Stockholders have agreed to sell to each of the Underwriters, the number
of shares of Common Stock set forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- -------------------------------------------------------------------------------- ------------
<S> <C>
Lehman Brothers Inc. ........................................................... 1,602,000
NationsBanc Montgomery Securities LLC........................................... 1,601,000
Ferris, Baker Watts, Incorporated............................................... 1,601,000
CIBC Oppenheimer Corp. ......................................................... 104,000
Donaldson, Lufkin & Jenrette Securities Corporation............................. 104,000
A.G. Edwards & Sons, Inc. ...................................................... 104,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............................. 104,000
Morgan Stanley & Co. Incorporated............................................... 104,000
PaineWebber Incorporated........................................................ 104,000
Prudential Securities Incorporated.............................................. 104,000
Wheat First Securities, Inc. ................................................... 104,000
First Southwest Company......................................................... 52,000
Hoak Breedlove Wesneski & Co. .................................................. 52,000
Janney Montgomery Scott Inc. ................................................... 52,000
Ragen MacKenzie Incorporated.................................................... 52,000
Raymond James & Associates, Inc. ............................................... 52,000
Sands Brothers & Co., Ltd. ..................................................... 52,000
J.E. Sheehan & Co., Inc. ....................................................... 52,000
------------
Total....................................................................... 6,000,000
------------
------------
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
thereunder are subject to various conditions. The nature of the Underwriters'
obligations are such that they are committed to take and pay for all of the
shares offered hereby if any are purchased.

The Company and the Selling Stockholders have been advised by the
Underwriters that they propose to offer the shares of Common Stock to the public
at the public offering price set forth on the cover page hereof and to certain
selected dealers (who may include the Underwriters) at such price less a
concession not in excess of $.65 per share. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $.10 per share to certain
other dealers. After the initial offering, the public offering price, the
concession to selected dealers and the reallowance to other dealers may be
changed by the Underwriters.

The Company and certain of the Selling Stockholders have granted to the
Underwriters an option to purchase up to an additional 900,000 shares of Common
Stock, at the public offering price less the underwriting discounts and
commissions shown on the cover page of this Prospectus, solely to cover over-
allotments, if any. Such option may be exercised at any time up to 30 days after
the date of this Prospectus. To the extent that the Underwriters exercise such
option, each of the Underwriters will be committed, subject to certain
conditions, to purchase a number of additional shares that is proportional to
such Underwriter's initial commitment.

The Company's directors, officers and certain stockholders of the Company
including the Selling Stockholders have agreed that they will not, without the
prior written consent of Lehman Brothers Inc., during the 180 days following the
date of this Prospectus, directly or indirectly, (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Stock (including, without
limitation, in the case of Selling Stockholders, shares of Common Stock that may

49
<PAGE>
be deemed to be beneficially owned in accordance with the rules and regulations
of the Securities and Exchange Commission and shares of Common Stock that may be
issued upon exercise of any option or warrant) or securities convertible into or
exchangeable for Common Stock (other than the shares of Common Stock to be sold
in the Offering), or (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise (other than, in the case of the
Company, the grant of options pursuant to option plans existing on the date
hereof).

Until the distribution of the shares of Common Stock is completed, rules of
the Commission may limit the ability of the Underwriters and certain selling
group members to bid for and purchase shares of Common Stock. As an exception to
these rules, the Underwriters are permitted to engage in certain transactions
that stabilize the price of the Common Stock. Such transactions may consist of
bids or purchases for the purpose of pegging, fixing or maintaining the price of
the Common Stock.

In addition, if the Underwriters over-allot (I.E., if they sell more shares
of Common Stock than are set forth on the cover page of this Prospectus), and
thereby create a short position in the Common Stock in connection with the
Offering, the Underwriters may reduce that short position by purchasing Common
Stock in the open market. The Underwriters also may elect to reduce any short
position by exercising all or part of the over-allotment option described
herein.

The Underwriters also may impose a penalty bid on certain dealers and
certain selling group members. This means that if the Underwriters purchase
shares of Common Stock in the open market to reduce the Underwriter short
position to stabilize the price of the Common Stock, they may reclaim the amount
of selling concession from such dealers and the selling group who sold shares as
part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security, to
the extent that it were to discourage resales of the security by purchasers in
the Offering.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

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

Prior to the sale of shares in the Offering, there has been no active public
market for the Common Stock of the Company. The initial public offering price of
the shares of Common Stock will be determined by negotiation among the Company,
the Selling Stockholders and the Underwriters. Among the factors that will be
considered in determining the initial public offering price will be the
prospects of the Company and its industry in general, the Company's past and
present operations, the Company's position in the industry, an assessment of the
Company's management, the general condition of securities markets at the time of
the Offering and the demand for similar securities.

At the request of the Company, the Underwriters have reserved up to 575,000
shares of Common Stock offered hereby for sale to certain officers, directors,
employees, business associates and related parties of the Company at the initial
public offering price set forth on the cover page of this Prospectus. Such
persons must commit to purchase no later than the close of business on the day
following the date hereof. The number of shares available for sale to the
general public will be reduced to the extent such persons purchase such reserved
shares.

50
<PAGE>
LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Arter & Hadden LLP, Dallas, Texas. Certain legal matters
in connection with the Offering will be passed upon for the Underwriters by
Cooley Godward LLP, San Francisco, California.

EXPERTS

The consolidated financial statements and financial statement schedule of
the Company as of December 31, 1996 and 1997, and for each of the years in the
three-year period ended December 31, 1997, have been included herein and
elsewhere in the Registration Statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, appearing elsewhere
herein and in the Registration Statement, and upon the authority of such firm as
experts in accounting and auditing.

The statements in this Prospectus set forth under "Risk Factors--Patents and
Protection of Proprietary Technology," "Business--Design and Development--Patent
Review" and "Business--Patents," together with the last paragraph of the inside
front cover of this Prospectus, have been reviewed and approved by Aquilino &
Welsh, Arlington, Virginia, as experts in patent and trademark law, and are
included herein in reliance upon that review and approval. A partner in Aquilino
& Welsh owns 59,106 shares of Common Stock of the Company. Purchasers of the
securities offered hereby should not rely on Aquilino & Welsh with respect to
any matters other than as set forth above.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus constitutes a part of the Registration Statement and does not
contain all of the information set forth therein and in the 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 Common Stock offered hereby, reference is hereby made to such
Registration Statement and exhibits. Statements contained in this Prospectus as
to the contents of any document are not necessarily complete and in each
instance are qualified in their entirety by reference to the copy of the
appropriate document filed with the Commission. The Registration Statement,
including the exhibits thereto, may be examined without charge at the
Commission's public reference facility at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: 7 World Trade Center, New York, NY 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, IL 60601. Copies of
such material may be obtained from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the fees prescribed by the Commission. Copies of such
material are also available through the Commission's website located at http://
www.sec.gov.

51
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Independent Auditors' Report......................................................... F-2

Consolidated Balance Sheets as of December 31, 1996 and 1997 and March 31, 1998
(unaudited)........................................................................ F-3

Consolidated Statements of Operations for the years ended December 31, 1995, 1996 and
1997 and the three months ended March 31, 1997 and 1998 (unaudited)................ F-4

Consolidated Statements of Stockholders' Equity for the years ended December 31,
1995, 1996 and 1997 and the three months ended March 31, 1998 (unaudited).......... F-5

Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1996 and
1997 and the three months ended March 31, 1997 and 1998 (unaudited)................ F-6

Notes to Consolidated Financial Statements........................................... F-7

Financial Statement Schedule:
II--Valuation and Qualifying Accounts for the years ended December 31, 1995, 1996
and 1997 and the three months ended March 31, 1998 (unaudited)................... F-16
</TABLE>

All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the consolidated financial
statements and notes thereto.

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Adams Golf, Inc. and subsidiaries:

We have audited the consolidated financial statements of Adams Golf, Inc.
and subsidiaries as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we have also audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule 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 Adams Golf,
Inc. and subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

KPMG PEAT MARWICK LLP

Dallas, Texas
April 29, 1998

F-2
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- MARCH 31,
1996 1997 1998
------------- ------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
Current assets:
Cash and cash equivalents......................................... $ 854,543 $ 1,955,563 $ 602,290
Trade receivables net of allowance for doubtful accounts of
$26,199, $698,341 and $1,126,831 (unaudited) in 1996, 1997 and
1998, respectively (note 7)..................................... 497,787 7,670,960 14,708,636
State income taxes refundable..................................... -- 221,637 221,637
Inventories (notes 2 and 7)....................................... 674,737 4,486,563 5,559,699
Prepaid expenses.................................................. 28,007 509,350 1,106,635
Deferred income tax assets (note 8)............................... -- 390,164 650,626
Other current assets.............................................. -- 715,670 352,795
------------- ------------- -------------
Total current assets............................................ 2,055,074 15,949,907 23,202,318
Property and equipment, net (note 3)................................ 123,950 603,823 2,094,794
Deferred income tax assets (note 8)................................. -- 182,621 209,942
Other assets, net (note 4).......................................... 379,697 623,728 285,705
------------- ------------- -------------
Total assets.................................................... $ 2,558,721 $ 17,360,079 $ 25,792,759
------------- ------------- -------------
------------- ------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable..................................................... $ 230,406 $ -- $ --
Note payable to shareholder (note 7).............................. -- -- 912,642
Accounts payable.................................................. 17,526 377,622 2,732,215
Federal income taxes payable...................................... -- 1,020,980 2,940,390
Accrued expenses (note 5)......................................... 332,423 7,636,157 4,317,926
------------- ------------- -------------
Total current liabilities....................................... 580,355 9,034,759 10,903,173
------------- ------------- -------------
Notes payable to shareholder, less current portion (note 7)......... -- -- 222,399
------------- ------------- -------------
Total liabilities............................................... 580,355 9,034,759 11,125,572
------------- ------------- -------------
Stockholders' equity (note 9):
Common stock, $.001 par value. Authorized 50,000,000 shares;
11,873,234, 15,719,338 and 18,199,282 (unaudited) shares issued
and outstanding at December 31, 1996 and 1997 and March 31,
1998, respectively.............................................. 11,873 15,719 18,199
Additional paid-in capital........................................ 3,126,073 14,123,398 16,031,896
Common stock subscription......................................... -- -- (230,459)
Deferred compensation............................................. -- -- (981,000)
Accumulated deficit............................................... (1,159,580) (5,813,797) (171,449)
------------- ------------- -------------
Total stockholders' equity...................................... 1,978,366 8,325,320 14,667,187
Commitments (note 6)................................................
------------- ------------- -------------
$ 2,558,721 $ 17,360,079 $ 25,792,759
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
YEARS ENDED DECEMBER 31, 31,
-------------------------------------- -------------------------
1995 1996 1997 1997 1998
----------- ----------- ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales................................... $ 1,125,115 $ 3,521,788 $ 36,690,090 $ 1,474,940 $ 24,510,808
Cost of goods sold.......................... 756,400 1,589,696 9,991,132 586,538 5,862,255
----------- ----------- ------------ ----------- ------------
Gross profit.......................... 368,715 1,932,092 26,698,958 888,402 18,648,553
----------- ----------- ------------ ----------- ------------
Operating expenses:
Research and development expenses......... 18,516 51,101 557,513 -- 196,997
Selling and royalty expenses.............. 312,785 625,897 13,093,174 418,737 6,248,196
General and administrative expenses:
Stock compensation and bonus award (note
9).................................... -- 213,760 14,841,711 -- --
Provision for bad debts................. 12,791 51,306 738,805 75,768 466,213
Other................................... 268,518 981,219 1,436,995 328,727 2,865,198
----------- ----------- ------------ ----------- ------------
Total operating expenses.............. 612,610 1,923,283 30,668,198 823,232 9,776,604
----------- ----------- ------------ ----------- ------------
Operating income (loss)............... (243,895) 8,809 (3,969,240) 65,170 8,871,949
Other income (expense):
Interest income........................... 1,226 3,938 15,325 4,451 10,550
Interest expense.......................... -- -- (69,731) (13,090) (9,362)
Other..................................... -- -- (47,808) 4,350 (100,621)
----------- ----------- ------------ ----------- ------------
Income (loss) before income taxes..... (242,669) 12,747 (4,071,454) 60,881 8,772,516
Income tax expense (note 8)................. -- -- 582,763 15,586 3,130,168
----------- ----------- ------------ ----------- ------------
Net income (loss)..................... $ (242,669) $ 12,747 $ (4,654,217) $ 45,295 $ 5,642,348
----------- ----------- ------------ ----------- ------------
----------- ----------- ------------ ----------- ------------
Income (loss) per common share:
Basic..................................... $ (.05) $ .00 $ (.37) $ .00 $ .32
----------- ----------- ------------ ----------- ------------
----------- ----------- ------------ ----------- ------------
Diluted................................... $ (.05) $ .00 $ (.37) $ .00 $ .31
----------- ----------- ------------ ----------- ------------
----------- ----------- ------------ ----------- ------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE
THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES OF SHARES OF ADDITIONAL
PREFERRED PREFERRED COMMON COMMON PAID-IN COMMON STOCK DEFERRED
STOCK STOCK STOCK STOCK CAPITAL SUBSCRIPTION COMPENSATION
----------- ----------- ----------- ----------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994
(unaudited).............. 772,551 $ 773 1,066,514 $ 1,067 $ 1,327,799 $ -- $ --
Conversion of preferred
stock to
common stock (note 9).... (772,551) (773) 1,545,102 1,545 (772) -- --
Sale of stock.............. -- -- 4,168,988 4,169 453,507 -- --
Stock distribution (note
9)....................... -- -- 4,282,304 4,282 (4,282) -- --
Net loss................... -- -- -- -- -- -- --
----------- ----- ----------- ----------- ------------ ------------- --------------
Balance, December 31,
1995..................... -- $ -- 11,062,908 11,063 1,776,252 -- --
----------- -----
----------- -----
Sale of stock.............. 1,581,126 1,581 1,594,362 -- --
Common stock repurchased
and retired (note 9)..... (770,800) (771) (244,541) -- --
Net income................. -- -- -- -- --
----------- ----------- ------------ ------------- --------------
Balance, December 31,
1996..................... 11,873,234 11,873 3,126,073 -- --
Stock compensation award
(note 9)................. 2,000,000 2,000 9,998,000 -- --
Exercise of stock options.. 946,104 946 550,225 -- --
Exchange of debt for common
stock
(note 9)................. 900,000 900 449,100 -- --
Net loss................... -- -- -- -- --
----------- ----------- ------------ ------------- --------------
Balance, December 31,
1997..................... 15,719,338 15,719 14,123,398 -- --
Issuance of stock options.. -- -- 981,000 -- (981,000)
Exercise of stock options.. 2,479,944 2,480 927,498 (230,459) --
Net income................. -- -- -- -- --
----------- ----------- ------------ ------------- --------------
Balance, March 31, 1998
(unaudited).............. 18,199,282 $ 18,199 $ 16,031,896 $ (230,459) $ (981,000)
----------- ----------- ------------ ------------- --------------
----------- ----------- ------------ ------------- --------------

<CAPTION>
TOTAL
ACCUMULATED STOCKHOLDERS'
DEFICIT EQUITY
------------- --------------
<S> <C> <C>
Balance, December 31, 1994
(unaudited).............. $ (929,658) $ 399,981
Conversion of preferred
stock to
common stock (note 9).... -- --
Sale of stock.............. -- 457,676
Stock distribution (note
9)....................... -- --
Net loss................... (242,669) (242,669)
------------- --------------
Balance, December 31,
1995..................... (1,172,327) 614,988

Sale of stock.............. -- 1,595,943
Common stock repurchased
and retired (note 9)..... -- (245,312)
Net income................. 12,747 12,747
------------- --------------
Balance, December 31,
1996..................... (1,159,580) 1,978,366
Stock compensation award
(note 9)................. -- 10,000,000
Exercise of stock options.. -- 551,171
Exchange of debt for common
stock
(note 9)................. -- 450,000
Net loss................... (4,654,217) (4,654,217)
------------- --------------
Balance, December 31,
1997..................... (5,813,797) 8,325,320
Issuance of stock options.. -- --
Exercise of stock options.. -- 699,519
Net income................. 5,642,348 5,642,348
------------- --------------
Balance, March 31, 1998
(unaudited).............. $ (171,449) $ 14,667,187
------------- --------------
------------- --------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------- -----------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net income (loss)............................. $ (242,669) $ 12,747 $(4,654,217) $ 45,295 $ 5,642,348
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization............... 8,291 19,278 302,589 16,374 218,959
Loss on retirement of fixed assets.......... -- -- 134,009 -- 100,617
Stock compensation and bonus award.......... -- -- 10,000,000 -- --
Deferred income taxes....................... -- -- (572,785) -- (137,657)
Allowance for doubtful accounts............. -- 26,199 672,142 71,207 1,126,831
Changes in assets and liabilities:
Trade and other receivables............... (93,649) (374,228) (8,066,952) (399,963) (8,164,507)
Inventories............................... (81,470) (476,467) (3,811,826) (103,962) (1,073,136)
Prepaid assets............................ (27,589) (418) (481,343) 406 (597,285)
Other current assets...................... 2,860 -- (715,670) (257,186) 362,875
Other assets.............................. (4,873) (361,916) (390,442) 67,478 248,822
Accounts payable.......................... 40,252 (22,726) 360,096 60,688 991,832
Accrued expenses.......................... 2,728 329,302 7,303,734 187,607 (2,105,596)
Federal income taxes payable.............. -- -- 1,020,980 15,586 1,919,410
----------- ----------- ----------- ---------- -----------
Net cash provided by (used in) operating
activities............................ (396,119) (848,229) 1,100,315 (296,470) (1,466,487)
----------- ----------- ----------- ---------- -----------
Cash flow from investing activities--purchase of
equipment..................................... (9,287) (121,444) (770,060) (46,277) (1,721,347)
----------- ----------- ----------- ---------- -----------
Cash flows from financing activities:
Proceeds from notes payable and line of
credit...................................... -- 230,406 1,050,000 250,000 4,635,041
Repayment of line of credit borrowings........ -- -- (800,000) -- (3,500,000)
Repayment of notes payable.................... -- -- (30,406) (1,494) --
Issuance of common stock...................... 457,676 1,350,631 551,171 -- 699,520
----------- ----------- ----------- ---------- -----------
Net cash provided by financing
activities............................ 457,676 1,581,037 770,765 248,506 1,834,561
----------- ----------- ----------- ---------- -----------
Net increase (decrease) in cash and cash
equivalents................................... 52,270 611,364 1,101,020 (94,241) (1,353,273)
Cash and cash equivalents at beginning of
period........................................ 190,909 243,179 854,543 854,543 1,955,563
----------- ----------- ----------- ---------- -----------
Cash and cash equivalents at end of period...... $ 243,179 $ 854,543 $ 1,955,563 $ 760,302 $ 602,290
----------- ----------- ----------- ---------- -----------
----------- ----------- ----------- ---------- -----------
Supplemental disclosure of cash flow
information:
Interest paid................................. $ -- $ -- $ 69,731 $ 13,090 $ 9,362
----------- ----------- ----------- ---------- -----------
----------- ----------- ----------- ---------- -----------
Income taxes paid............................. $ -- $ -- $ 356,204 $ -- $ 1,293,820
----------- ----------- ----------- ---------- -----------
----------- ----------- ----------- ---------- -----------
Supplemental disclosure of financing activity--
exchange of debt for common stock............. $ -- $ -- $ 450,000 $ -- $ --
----------- ----------- ----------- ---------- -----------
----------- ----------- ----------- ---------- -----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) GENERAL

Adams Golf, Inc. (the "Company") was founded in 1987. The Company designs,
manufactures, markets and distributes golf clubs and provides custom golf club
fitting technology. The Company's primary products are fairway woods that are
marketed under the trademark "Tight Lies."

The Company has both domestic and international sales. International sales
were $647,325, $878,666, and $1,387,325 for the years ended December 31, 1996
and 1997 and the three months ended March 31, 1998, respectively. There were no
international sales in 1995.

The consolidated financial statements include the accounts of Adams Golf,
Inc. and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.

The consolidated financial statements of the Company as of March 31, 1998
and for the three months ended March 31, 1997 and 1998 are unaudited, but in the
opinion of management reflect all adjustments (consisting only of normal
recurring accruals) which are necessary for a fair statement of the results of
the interim periods presented. Results for interim periods are not necessarily
indicative of the results to be expected for a full year due in part to the
Company's growth.

(b) INVENTORIES

Inventories are valued at the lower of cost or market and primarily consists
of completed golf clubs and component parts. Cost is determined using the
first-in, first-out method.

Property and equipment are stated at cost. Depreciation is calculated using
the straight-line method over the estimated useful lives of the respective
assets, which range from three to seven years.

(d) REVENUE RECOGNITION

The Company records revenue as earned, which occurs when the product is
shipped.

(e) OTHER ASSETS AND RELATED AMORTIZATION EXPENSE

Other assets consist primarily of the cost of obtaining patents, development
costs of an infomercial and various deposits. Patent amortization is computed on
the straight-line method over the estimated useful lives of the assets, which
range from 5 to 15 years.

(f) RESEARCH AND DEVELOPMENT

Research and development costs consist of all costs incurred in planning,
designing and testing of golf equipment, including salary costs related to
research and development, and are expensed as incurred.

(g) ADVERTISING COSTS

Advertising media costs, other than infomercial costs, are expensed as
incurred. Production costs are charged to expense ratably in relation to sales
over the year in which incurred. Advertising costs other than infomercials were
$35,300, $33,503 and $8,651,420 for the years ended December 31, 1995, 1996 and
1997, respectively, and $59,049 (unaudited) and $2,333,406 (unaudited) for the
three months ended March 31, 1997 and 1998, respectively.

F-7
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Infomercial costs are amortized based on revenues generated compared to
total estimated revenues expected to result from the airing of such infomercial
generally over an 18 month period. Amortization expense for the years ended
December 31, 1995, 1996 and 1997 was $3,161, $3,738 and $146,411, respectively,
and $89,200 (unaudited) for the three months ended March 31, 1998.

(h) PRODUCT WARRANTY AND SALES RETURNS

The Company's golf equipment is sold under warranty against defects in
material and workmanship for a period of two years. In addition, the Company has
a 90 day "no questions asked" return policy. An allowance for estimated future
warranty and sales return costs is recorded in the period products are sold.
Such estimates have approximated actual costs incurred.

(i) INCOME TAXES

The Company accounts for income taxes using the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss carryforwards. Deferred tax assets and liabilities are
measured using enacted 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.

(j) INCOME (LOSS) PER SHARE

The weighted average common shares used for determining basic net income
(loss) per common share was 4,423,146, 11,237,794 and 12,519,392, for the years
ended December 31, 1995, 1996 and 1997, respectively, and 11,873,234 (unaudited)
and 17,662,189 (unaudited) for the three months ended March 31, 1997 and 1998,
respectively. The effect of dilutive stock options added 678,263 (unaudited)
shares for the three months ended March 31, 1998 for the computation of diluted
income (loss) per common share. Stock options outstanding for the years ended
December 31, 1995, 1996 and 1997 and the three months ended March 31, 1997 were
not considered in the computation of net income (loss) per common share since
their effect is immaterial or antidilutive.

(k) USE OF ESTIMATES

The preparation of consolidated 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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

(l) FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents, accounts receivable,
accounts payable, and accrued expenses and note payable to stockholder
approximates fair value due to the short maturity of these instruments.

F-8
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR LONG-LIVED ASSETS TO BE DISPOSED OF, on January 1, 1996. This Statement
requires that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used 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. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. Adoption of this Statement did not
impact the Company's financial position, results of operations, or liquidity.

(n) STATEMENTS OF CASH FLOWS

The Company considers all short-term highly liquid instruments, with an
original maturity of three months or less, to be cash equivalents.

(o) NEWLY ADOPTED ACCOUNTING PRONOUNCEMENTS

The Company adopted the reporting and disclosure requirements of SFAS No.
130, REPORTING COMPREHENSIVE INCOME, on January 1, 1998. This Statement requires
the display of comprehensive income and its components in a financial statement
that is displayed in equal prominence with other financial statements. As the
Company has not had any comprehensive income components, the reporting and
disclosure requirements of this statement have not altered the consolidated
financial statements presented herein.

Effective January 1, 1998, the Company adopted Statement of Position (SOP)
98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR
INTERNAL USE, which was issued in March 1998. The SOP requires that certain
costs related to the development or purchase of internal-use software be
capitalized and amortized over the estimated useful life of the software. The
SOP also requires that costs related to the preliminary project stage and the
post-implementation/operations stage of an internal-use computer software
development project be expensed as incurred.

(2) INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1996 1997
---------- ------------ MARCH 31,
1998
------------
(UNAUDITED)
<S> <C> <C> <C>
Finished goods.................................................. $ 41,323 $ 2,063,803 $ 2,526,767
Component parts................................................. 633,414 2,422,760 3,032,932
---------- ------------ ------------
$ 674,737 $ 4,486,563 $ 5,559,699
---------- ------------ ------------
---------- ------------ ------------
</TABLE>

F-9
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)

(3) PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1997
---------- ----------- MARCH 31,
1998
------------
(UNAUDITED)
<S> <C> <C> <C>
Manufacturing equipment.......................................... $ 70,728 $ 142,137 $ 151,979
Office and computer equipment.................................... 100,368 660,145 2,237,891
Accumulated depreciation......................................... (47,146) (198,459) (295,076)
---------- ----------- ------------
$ 123,950 $ 603,823 $ 2,094,794
---------- ----------- ------------
---------- ----------- ------------
</TABLE>

(4) OTHER ASSETS, NET

Other assets, net, consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
---------- ----------
<S> <C> <C>
Deposits, including amounts for fixed assets purchased.......................... $ 97,498 $ 380,836
Infomercial costs............................................................... 267,677 233,365
Patents......................................................................... 14,522 9,527
---------- ----------
$ 379,697 $ 623,728
---------- ----------
---------- ----------
</TABLE>

(5) ACCRUED EXPENSES

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
---------- ------------ MARCH 31,
1998
------------
(UNAUDITED)
<S> <C> <C> <C>
Payroll, bonuses and commissions (see note 9)................... $ 277,810 $ 5,576,134 $ 1,115,699
Sales, property and state income taxes.......................... 4,604 271,225 204,501
Royalties....................................................... -- 392,541 477,163
Advertising..................................................... -- 470,500 795,260
Product warranty and sales returns.............................. -- 449,200 732,100
Professional services........................................... 9,807 340,389 220,491
Other........................................................... 40,202 136,168 772,712
---------- ------------ ------------
$ 332,423 $ 7,636,157 $ 4,317,926
---------- ------------ ------------
---------- ------------ ------------
</TABLE>

F-10
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)

(6) COMMITMENTS

The Company is obligated under certain noncancelable leases for office
space. A summary of the minimum rental commitments under noncancellable leases
is as follows:

<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
- ------------------------------------------------------------------------
<S> <C>
1998.................................................................. $ 368,700
1999.................................................................. 456,000
2000.................................................................. 480,400
2001.................................................................. 488,500
2002.................................................................. 512,900
Thereafter............................................................ 651,400
</TABLE>

Rent expense was $32,540, $45,603, $104,480 $26,694 (unaudited) and $64,075
(unaudited) for the years ended December 31, 1995, 1996 and 1997, and the three
months ended March 31, 1997 and 1998, respectively.

The Company had outstanding commitments (denominated in U.S. dollars ) on
letters of credit of $459,167 at December 31, 1997, and $989,419 (unaudited) at
March 31, 1998 for the purchase of inventory from foreign vendors.

(7) DEBT

The Company entered into a $1,500,000 revolving line of credit agreement
with a bank on May 30, 1997. The line of credit is secured by trade receivables
and inventories, matures on May 15, 1998 and bears interest, payable quarterly,
at the bank's prime rate (8.5% at December 31, 1997). At December 31, 1997,
there was no balance outstanding on this line of credit. The Company pays an
annual commitment fee of 0.5% on the unused portion of the line of credit.

On February 27, 1998, the Company entered into a new $10,000,000 revolving
credit facility with a bank which replaced the existing $1,500,000 line of
credit. The facility is secured by eligible trade receivables, inventories and
equipment, matures on December 31, 1998 and bears interest, payable monthly, at
the bank's prime rate of interest minus 25 basis points (8.25% at March 31,
1998) or LIBOR rates plus 1.75% interest. At March 31, 1998, there was no
balance outstanding on this credit facility. The Company pays an annual
commitment fee of 0.25% on the unused portion of the credit facility.

During the first quarter of 1998, the Company borrowed $1,135,041 in the
form of an unsecured note payable to the Chief Executive Officer. The principal
balance is payable in three installments, matures on April 14, 1999, and bears
interest at 5.39%.

F-11
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)

(8) INCOME TAXES

Income tax expense (benefit) for the year ended December 31, 1997 consists
of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-------------------------------------
CURRENT DEFERRED TOTAL
------------ ----------- ----------
<S> <C> <C> <C>
Federal................................................ $ 1,020,980 $ (572,785) $ 448,195
State.................................................. 134,568 -- 134,568
------------ ----------- ----------
$ 1,155,548 $ (572,785) $ 582,763
------------ ----------- ----------
------------ ----------- ----------
</TABLE>

Actual income tax expense differs from the "expected" income tax expense
(benefit) (computed by applying the U.S. federal corporate tax rate of 34% to
income (loss) before income taxes) for the years ended December 31, 1995, 1996
and 1997 as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1996 1997
---------- --------- ---------------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)...................... $ (82,507) $ 4,334 $ (1,384,294)
State income taxes, net of federal tax benefit................. -- -- 88,815
Stock compensation and bonus award............................. -- -- 2,159,000
Change in valuation allowance for deferred tax assets.......... 81,352 (4,334) (337,558)
Other.......................................................... 1,155 -- 56,800
---------- --------- ---------------
$ -- $ -- $ 582,763
---------- --------- ---------------
---------- --------- ---------------
</TABLE>

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

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1997
----------- ---------- MARCH 31,
1998
-----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets:
Allowance for bad debts........................................ $ 8,908 $ 237,436 $ 394,391
Research and development costs................................. 7,563 974 --
Bonus compensation............................................. 72,678 -- --
Product warranty and sales returns............................. -- 152,728 256,235
Net operating tax loss carryforwards........................... 389,528 311,100 320,250
----------- ---------- -----------
Total gross deferred tax assets.............................. 478,677 702,238 970,876
Less valuation allowance....................................... (387,667) (50,109) (59,259)
----------- ---------- -----------
Net deferred tax assets...................................... 91,010 652,129 911,617
Deferred tax liabilities--infomercial costs...................... (91,010) (79,344) (51,049)
----------- ---------- -----------
Net.......................................................... $ -- $ 572,785 $ 860,568
----------- ---------- -----------
----------- ---------- -----------
</TABLE>

In assessing the realizability of deferred income tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred income tax assets will not be realized. The ultimate realization of
deferred income tax assets is dependent upon the generation of future taxable
income during

F-12
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)

(8) INCOME TAXES (CONTINUED)
the periods in which those temporary differences become deductible. Based upon
projections for future taxable income over the periods which the deferred tax
assets are deductible, management believes it is more likely than not that the
Company will realize the benefits of these deductible differences, net of the
existing valuation allowance at December 31, 1997.

The valuation allowance for deferred tax assets at December 31, 1996 and
1997 was $387,667 and $50,109, respectively. The net change in the total
valuation allowance for the years ended December 31, 1996 and 1997 were
decreases of $4,334 and $337,558, respectively.

At December 31, 1997, the Company has net operating tax loss carryforwards
for federal income tax purposes of approximately $915,000 which are available to
offset future federal taxable income through 2010. The availability of the net
operating loss carryforwards to reduce future taxable income is subject to
certain limitations. As a result of a change in ownership, the Company believes
utilization of its net operating tax loss carryforwards is limited to
approximately $62,000 per year for the remaining life of the net operating
losses.

(9) STOCKHOLDERS' EQUITY

(a) STOCK OPTION PLANS

In April 1996, the Company adopted the 1996 Stock Option Incentive Plan
("the Stock Option Plan"), pursuant to which stock options covering an aggregate
of 800,000 shares of the Company's common stock may be granted. Options awarded
under the Stock Option Plan (i) are generally granted at prices that equate to
or are above fair market value on the date of the grant; (ii) generally become
exercisable over a period of one to four years; and (iii) generally expire five
years subsequent to award.

At December 31, 1997 and March 31, 1998, there were 140,310 shares available
for grant under the Plan. The per share weighted-average fair value of stock
options granted during 1995 and 1996 was $0.25 and $0.06, respectively, on the
date of grant using the Black Scholes option-pricing model with the following
weighted-average assumptions: Risk-free interest rate, 6%; expected life,
two-five years and expected dividend yield, 0%.

In connection with an employment agreement entered into in September 1995
with the Company's chief executive officer and founder, the Company granted the
chief executive officer options to acquire 1,520,766 shares of common stock at
$.375 per share, the market price at date of grant. Vesting of the stock options
was conditioned upon meeting certain revenue and earnings requirements, which
were met during 1996 and 1997. Also, the agreement provided for a bonus to be
paid to the officer in an amount equal to the exercise price of the options plus
any related income tax due by the officer upon exercise of the options. The
officer notified the Company of his intent to exercise the options in December
1997 and the shares were issued in January 1998. Compensation expense of
$213,760 and $2,300,023 was charged to operations in 1996 and 1997,
respectively, to recognize the bonus due to the officer.

In conjunction with a 1996 stock purchase agreement, the Company granted
options to a shareholder to acquire an aggregate of 942,632 shares of common
stock at option exercise prices ranging from $0.375, the market price at date of
grant, to $0.625 per share. During 1997, the shareholder exercised the options
for an aggregate exercise price of $549,869.

F-13
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)

(9) STOCKHOLDERS' EQUITY (CONTINUED)
In February 1998, the Company adopted the 1998 Stock Incentive Plan ("the
1998 Stock Option Plan"), pursuant to which stock options covering an aggregate
of 1,800,000 shares of the Company's common stock may be granted. The Company
granted 218,000 options to employees on February 26, 1998 at $2.50 per share.
For financial statement reporting purposes, the grant was deemed to have a fair
market value of $7.00 per share at the date of grant. Accordingly, the Company
has recorded deferred compensation of $981,000 at March 31, 1998.

The Company applies Accounting Principles Board Opinion 25 in accounting for
its stock plans and, accordingly, no compensation cost has been recognized for
its stock options in the financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Company's net income (loss) would have been
adjusted to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------
1995 1996 1997
----------- ---------- -------------
<S> <C> <C> <C>
Net income (loss):
As reported................................................... $ (242,669) $ 12,747 $ (4,654,217)
Pro forma..................................................... (242,669) (13,361) (4,743,744)
Diluted income (loss) per common share:
As reported................................................... $ (0.05) $ 0.00 $ (0.37)
Pro forma..................................................... (0.05) (0.00) (0.38)
</TABLE>

Pro forma net loss reflects only options granted in 1995, 1996 and 1997.
Therefore, the full impact of calculating compensation cost for stock options
under SFAS No. 123 is not reflected in the pro forma net loss amounts presented
above because compensation cost is reflected over the respective options vesting
periods of up to four years.

A summary of stock option activity follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
SHARES PRICE
----------- -------------
<S> <C> <C>
Options outstanding at December 31, 1994......................... -- $ --
Options granted.................................................. 1,520,766 0.375
Options outstanding at December 31, 1995......................... 1,520,766 0.375
Options granted.................................................. 1,946,948 0.50
Options outstanding at December 31, 1996......................... 3,467,714 0.44
Options exercised................................................ (946,104) 0.583
Options outstanding at December 31, 1997......................... 2,521,610 0.375
Options granted.................................................. 272,000 2.50
Options exercised................................................ (2,479,944) 0.375
----------- ------
Options outstanding at March 31, 1998 (unaudited)................ 313,666 $ 2.22
----------- ------
----------- ------
</TABLE>

At December 31, 1997, the exercise price and weighted-average remaining
contractual life of outstanding options was $0.375 and 3.5 years, respectively.

At December 31, 1996 and 1997, the number of options exercisable was 467,970
and 2,114,492, respectively, and the weighted-average exercise price of those
options was $0.375.

F-14
<PAGE>
ADAMS GOLF, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)

(9) STOCKHOLDERS' EQUITY (CONTINUED)
(b) STOCK DISTRIBUTION

In connection with the acquisition of a related entity, the Company
distributed 4,282,304 shares of common stock to its shareholders during the year
ended December 31, 1995. As a result of the common control existing between the
Company and the related entity, the transaction was accounted for in a manner
similar to a pooling of interests. Accordingly, the transaction resulted in no
increase to stockholders' equity since the recorded net asset value of the
related entity was not material. The resulting subsidiary has been inactive
during the three years ended December 31, 1997 and has no assets or liabilities.

In December 1997, the Board of Directors of the Company approved a stock
compensation award of 2,000,000 shares of common stock to its chief executive
officer and founder of the Company. In addition, the Company agreed to pay all
income taxes payable by the officer relating to such stock award and related tax
bonus. Aggregate compensation of $12,541,688 (including $2,541,688 for estimated
taxes) was recorded by the Company during the year ended December 31, 1997 based
on the fair market value of the stock.

(d) NOTE WITH STOCKHOLDER CONVERTED TO STOCK

The Company borrowed $200,000 from a stockholder in October 1996 and an
additional $250,000 from the same stockholder in 1997. The aggregate notes
payable balance of $450,000 was converted into 900,000 shares of the Company's
stock in September 1997.

(e) STOCK CONVERSION

During 1995, the Company amended its Certificate of Incorporation to provide
the authority to issue up to 25,000,000 shares of $.001 per share par value
stock. All such shares were to be designated as common stock and, accordingly,
all stockholders of preferred stock surrendered such shares for an equivalent
number of shares of common stock.

(f) STOCK SPLIT AND AUTHORIZED CLASSES OF STOCK

Effective April 29, 1998, the stockholders of the Company authorized a
two-for-one stock split for holders of record on May 1, 1998. The stock split
has been reflected in the accompanying consolidated financial statements and,
accordingly, all applicable dollar, share and per share amounts have been
restated to reflect the stock split. In addition, the stockholders of the
Company also approved an increase in the number of authorized shares of Common
Stock to 50,000,000 and established a class of preferred stock with a par value
of $.01 per share and authorized shares of 5,000,000.

(10) SUBSEQUENT EVENTS (UNAUDITED)

Effective May 1, 1998, the Company entered into an agreement with Nicholas
A. Faldo, a professional golfer (the "Agreement"). The Agreement with Faldo,
provides the Company with Faldo's endorsement and use of Adams products, as well
as the design, development and testing of new technologies and products. As
consideration for such services, Faldo will receive 900,000 shares of the
Company's common stock which will be recorded and amortized over the estimated
period benefited. In addition, Mr. Faldo will receive royalty payments
representing 5% of net sales outside the U.S., with a minimum annual amount of
$1,500,000 beginning in 1999 and increasing ratably to $4,000,000 in 2004. Under
certain conditions, including the failure by the Company to effect an initial
public offering by December 31, 1998, Faldo has the right to require the Company
to repurchase the shares for $5,000,000 at which point the Company would have
the right to terminate the agreement.

F-15
<PAGE>
SCHEDULE II

ADAMS GOLF, INC. AND SUBSIDIARIES
YEARS ENDED DECEMBER 31, 1995, 1996
AND 1997 AND THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
ADDITIONS CHARGED TO:
BALANCE AT -------------------------- BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES OTHER DEDUCTIONS(1) PERIOD
- -------------------------------------------- ---------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1995.............. $ -- $ 12,791 $ -- $ 12,791 $ --
---------- ------------ ------------ ------------- ------------
---------- ------------ ------------ ------------- ------------
Year ended December 31, 1996.............. $ -- $ 51,306 $ -- $ 25,107 $ 26,199
---------- ------------ ------------ ------------- ------------
---------- ------------ ------------ ------------- ------------
Year ended December 31, 1997.............. $ 26,199 $ 738,805 $ -- $ 66,663 $ 698,341
---------- ------------ ------------ ------------- ------------
---------- ------------ ------------ ------------- ------------
Three months ended March 31, 1998
(unaudited)............................. $ 698,341 $ 466,213 $ -- $ 37,723 $ 1,126,831
---------- ------------ ------------ ------------- ------------
---------- ------------ ------------ ------------- ------------
Product Warranty and Sales Returns:
Year ended December 31, 1995.............. $ -- $ -- $ -- $ -- $ --
---------- ------------ ------------ ------------- ------------
---------- ------------ ------------ ------------- ------------
Year ended December 31, 1996.............. $ -- $ 1,733 $ -- $ 1,733 $ --
---------- ------------ ------------ ------------- ------------
---------- ------------ ------------ ------------- ------------
Year ended December 31, 1997.............. $ -- $ 1,808,154 $ -- $ 1,358,954 $ 449,200
---------- ------------ ------------ ------------- ------------
---------- ------------ ------------ ------------- ------------
Three months ended March 31, 1998
(unaudited)............................. $ 449,200 $ 1,078,407 $ -- $ 795,507 $ 732,100
---------- ------------ ------------ ------------- ------------
---------- ------------ ------------ ------------- ------------
</TABLE>

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

(1) Represents uncollectible accounts charged against the allowance for doubtful
accounts and actual costs incurred for warranty repairs and sales returns.

F-16
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES IN ANY STATE
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
STATE. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
-----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 6
Disclosure Regarding Forward-Looking
Statements................................... 12
Use of Proceeds................................ 13
Dividend Policy................................ 13
Dilution....................................... 14
Capitalization................................. 15
Selected Consolidated Financial Information.... 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 17
Business....................................... 22
Management..................................... 33
Certain Transactions........................... 42
Principal and Selling Stockholders............. 44
Description of Capital Stock................... 45
Shares Eligible for Future Sale................ 48
Underwriting................................... 49
Legal Matters.................................. 51
Experts........................................ 51
Additional Information......................... 51
Index to Financial Statements.................. F-1
</TABLE>

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

UNTIL AUGUST 4, 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

6,000,000 SHARES

[LOGO]

COMMON STOCK

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

PROSPECTUS

July 9, 1998

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

LEHMAN BROTHERS

NATIONSBANC MONTGOMERY SECURITIES LLC

FERRIS, BAKER WATTS

INCORPORATED

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