COLLEGIATE PACIFIC INC, POS AM, 2000-06-22

COLLEGIATE PACIFIC INC
POS AM, 2000-06-22
CATALOG & MAIL-ORDER HOUSES

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<PAGE> 1

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 22, 2000.
REGISTRATION NO. 333-34294
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------------------

COLLEGIATE PACIFIC INC.
(Name of small business issuer in its charter)

DELAWARE 5091 22-2795073
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)

13950 SENLAC, SUITE 200 MICHAEL J. BLUMENFELD
FARMERS BRANCH, TEXAS 75234 CHIEF EXECUTIVE OFFICER
(972) 243-8100 13950 SENLAC, SUITE 200
FARMERS BRANCH, TEXAS 75234
(972) 243-8100
(Address and telephone number of principal (Name, address and telephone number of agent for
executive offices and principal place of service)
business)
</TABLE>

COPIES TO:
Alan J. Bogdanow
Hughes & Luce, L.L.P.
1717 Main Street, Suite 2800
Dallas, Texas 75201
(214) 939-5500

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT
TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX AND LIST
THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]

IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ]

IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [ ]

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1993, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.

================================================================================

<PAGE> 2

Pursuant to Rule 429, this is a combined registration statement that relates to
the securities previously registered by Form SB-2 Registration Statement, No.
333-64471, effective as of October 26, 1998, and the securities being registered
by this registration statement.

COLLEGIATE PACIFIC INC.
CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
FORM SB-2 ITEM NO. AND CAPTION PROSPECTUS CAPTION

<S> <C> <C>
Item 1. Front of Registration Statement and Outside Front Cover of Prospectus Outside Front Cover

Item 2. Inside Front Cover and Outside Back Cover Pages of Prospectus Inside Front and Outside Back Cover Pages

Item 3. Summary Information and Risk Factors Summary, Risk Factors

Item 4. Use of Proceeds Summary -- Use of Proceeds

Item 5. Determination of Offering Price Not Applicable

Item 6. Dilution Not Applicable

Item 7. Selling Security Holders Summary -- Selling Shareholders

Item 8. Plan of Distribution Summary -- Plan of Distribution

Item 9. Legal Proceedings The Company -- Legal Proceedings

Item 10. Directors, Executive Officers, Promoters and Control Persons Management -- Executive Officers and
Directors

Item 11. Security Ownership of Certain Beneficial Owners and Management Management -- Security Ownership of
Certain Beneficial Owners and Management

Item 12. Description of Securities Description of Securities

Item 13. Interest of Named Experts and Counsel Not Applicable

Item 14. Disclosure of Commission Position on Indemnification For Securities Act Indemnification
Liabilities

Item 15. Organization Within Last Five Years Not Applicable

Item 16. Description of Business The Company -- Business

Item 17. Management's Discussion and Analysis or Plan of Operation Management's Discussion and Analysis of
Financial Condition and Results of
Operations

Item 18. Description of Property The Company -- Property

Item 19. Certain Relationship and Related Transactions Management -- Certain Relationships and
Related Transactions

Item 20. Market For Common Equity and Related Stockholder Matters Market For Common Equity and Related
Stockholder Matters

Item 21. Executive Compensation Management -- Executive Compensation

Item 22. Financial Statements Index To Consolidated Financial Statements

Item 23. Changes in and Disagreements With Accountants on Accounting and Not Applicable
Financial Disclosure
</TABLE>

<PAGE> 3

COLLEGIATE PACIFIC INC.

4,237,748 COMMON STOCK PURCHASE WARRANTS
5,462,515 SHARES OF COMMON STOCK

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

This Prospectus relates to the issuance and resale of up to:

o 4,237,748 Common Stock Purchase Warrants issued as a special
dividend to each record holder of Common Stock as of May 26,
2000.

o 4,277,748 shares of Common Stock consisting of:

o 4,237,748 shares of Common Stock issuable upon
exercise of the Company's Common Stock Purchase
Warrants.

o 40,000 shares of Common Stock issuable upon exercise
of the Company's Common Stock Purchase Warrants
issued to Mike Farkus and Christopher Haupt.

Each record holder of Common Stock as of May 26, 2000 received a
special dividend from the Company of one Warrant for each share of Common Stock
owned by the record holder. Each Warrant entitles the holder to purchase one
share of Common Stock at an initial exercise price of $10.00 per share, subject
to adjustment, at any time prior to May 26, 2005.

The Company issued a total of 40,000 Common Stock Purchase Warrants to
Mike Farkus and Christopher Haupt in connection with a License Agreement with
On-Line Sports, Inc. Each Warrant entitles the holder to purchase one share of
Common Stock at an initial exercise price of $12.50 per share.

This Prospectus also relates to an offering of up to 677,267 shares of
Common Stock by certain stockholders who previously held Notes of the Company.
The Company privately sold Notes in the principal amount of $2,235,000 to
certain officers and directors of the Company and certain third parties. The
Note Holders converted the Notes into 677,267 shares of Common Stock, based
upon a conversion price of $3.30 per share, on April 19, 2000.

In addition, this Prospectus relates to an offering of up to 507,500
shares of Common Stock by certain stockholders of Collegiate Pacific Inc. The
stockholders acquired these shares in the following transactions:

o Michael J. Blumenfeld acquired 400,000 shares through a Stock
Purchase Agreement dated as of August 18, 1997 by and between
Mr. Blumenfeld, Adam Blumenfeld and the Company.

o Richard Hershorin and Patti Hershorin acquired 27,500 shares
pursuant to an Agreement for Purchase and Sale of Stock dated
as of April 14, 1998 by and between the Hershorins and the
Company.

o Cary W. Bawcum, Stanley Graber, Frank A. Jones, and Joel W.
Brown each acquired 20,000 shares pursuant to a Plan and
Agreement of Merger dated as of May 31, 1998 by and among
Vantage Products International, Inc., Messrs. Bawcum, Graber,
Jones and Brown, and the Company.

These 507,500 shares are offered for the account of the Selling
Shareholders. Collegiate Pacific Inc. will not receive any proceeds from the
sale of these shares.

The Common Stock is quoted on the American Stock Exchange under the
symbol "BOO." The Warrants are quoted on the American Stock Exchange under the
symbol "BOO/WS." On June 21, 2000, the high and low price of the Common Stock
was $10.94 per share, and on June 16, 2000, the high and low price of the
Warrants was $2.75 and $2.63 per Warrant.

CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 8 IN THIS PROSPECTUS.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is June 22, 2000.

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<PAGE> 4

No dealer, salesperson or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus in connection with the offering made hereby and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, any of the securities offered hereby to
anyone in any jurisdiction to whom it is unlawful to make such offer or
solicitation in such jurisdiction. 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 the dates as of which such information is furnished.

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TABLE OF CONTENTS

<TABLE>
<S> <C>
Available Information.................................................. 3
Summary................................................................ 4
Risk Factors........................................................... 8
The Company............................................................ 14
Management............................................................. 17
Market for Common Stock and Related Stockholder Matters................ 21
Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 22
Description of Securities.............................................. 26
Legal Matters.......................................................... 33
Experts................................................................ 33
Indemnification........................................................ 33
Index To Consolidated Financial Statements............................. 34
</TABLE>

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Collegiate Pacific Inc. is a Delaware corporation. Our executive offices are
located at 13950 Senlac, Suite 200, Farmers Branch, Texas 75234, and our
telephone number is (972) 243-8100. In this Prospectus, the "Company,"
"Collegiate Pacific," "we," "us," and "our" refer to Collegiate Pacific Inc. and
its subsidiaries. The term "Warrants" refers to the Company's common stock
purchase warrants. The term "Notes" refers to the Company's Subordinated
Convertible Promissory Notes. In addition, "Common Stock" refers to our common
stock, $.01 par value per share. The term "Selling Shareholders" refers to Mr.
Blumenfeld, the Hershorins, and Messrs. Bawcum, Graber, Jones and Brown. In
addition, "Common Stock" refers to our common stock, $.01 par value per share.

You should rely only on the information contained in this Prospectus.
We have not authorized anyone to provide you with information different from
that contained in this Prospectus. The information contained in this Prospectus
is accurate only as of the date of this Prospectus, regardless of the time of
delivery of this Prospectus or of any sale of the Common Stock.

UNLESS OTHERWISE PROVIDED IN THIS PROSPECTUS, ALL REFERENCES TO SHARES
OF COMMON STOCK TAKE INTO ACCOUNT THE ONE-FOR-FIVE REVERSE STOCK SPLIT THAT
BECAME EFFECTIVE JANUARY 19, 2000.

2
<PAGE> 5

AVAILABLE INFORMATION

The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and we
file annual, quarterly and other reports and other information with the
Securities and Exchange Commission (the "Commission"). These materials may be
inspected and copied at the public reference facilities of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549-1004,
at its Northeast Regional Office located at 7 World Trade Center, Suite 1300,
New York, New York 10048 and at its West Regional Office located at 5670
Wilshire Boulevard, Los Angeles, California 90036. You can obtain copies of
these materials at prescribed rates from the Public Reference Section of the
Commission located at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a Web site that contains reports, proxy statements,
information statements and other information regarding the Company. The
Commission's Web site address is http://www.sec.gov.

The Company is a publicly held corporation and its Common Stock is
traded on the America Stock Exchange under the symbol "BOO." The Warrants are
traded on the American Stock Exchange under the symbol "BOO/WS."

The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other periodic reports as it
may determine to furnish or as may be required by law.

We have filed Registration Statements on Form SB-2 (the "Registration
Statements") under the Securities Act of 1933 (the "Securities Act") with the
Commission, with respect to the Common Stock offered in this Prospectus. This
Prospectus does not contain all information set forth in the Registration
Statements. We omitted certain parts of the Registration Statements in
accordance with the rules and regulations of the Commission. For further
information about us and the Common Stock being offered in this Prospectus, you
should read the Registration Statements and their exhibits and schedules, which
you may read without charge at the public reference rooms at the offices of the
Commission.

3
<PAGE> 6

SUMMARY

CERTAIN INFORMATION IN THIS PROSPECTUS CONTAINS "FORWARD-LOOKING
STATEMENTS." ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACT, ARE
"FORWARD-LOOKING STATEMENTS" FOR PURPOSES OF THESE PROVISIONS.

THESE STATEMENTS INCLUDE:

o ANY PROJECTIONS OF EARNINGS, REVENUES OR OTHER FINANCIAL
ITEMS;

o ANY STATEMENTS OF THE PLANS AND OBJECTIVES OF MANAGEMENT FOR
FUTURE OPERATIONS;

o ANY STATEMENTS CONCERNING PROPOSED NEW PRODUCTS OR SERVICES;

o ANY STATEMENTS REGARDING FUTURE ECONOMIC CONDITIONS OR
PERFORMANCE; AND

o ANY STATEMENT OF ASSUMPTIONS UNDERLYING ANY OF THE FOREGOING.

IN SOME CASES, FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE
OF TERMINOLOGY SUCH AS "MAY," "WILL," "EXPECTS," "BELIEVES", "PLANS,"
"ANTICIPATES," "ESTIMATES," "POTENTIAL," OR "CONTINUE," AND VARIATIONS ON SUCH
WORDS AND SIMILAR EXPRESSIONS.

ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN ITS
FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CAN GIVE NO ASSURANCE THAT THESE
EXPECTATIONS OR ANY FORWARD-LOOKING STATEMENTS WILL PROVE TO BE CORRECT. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS WE PROJECTED OR ASSUMED IN OUR
FORWARD-LOOKING STATEMENTS. THE COMPANY'S FUTURE FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, AS WELL AS ANY FORWARD-LOOKING STATEMENTS, ARE SUBJECT TO
INHERENT RISKS AND UNCERTAINTIES, SOME OF WHICH ARE SUMMARIZED IN THE SECTION
TITLED "RISK FACTORS" BEGINNING ON PAGE 8.

THE COMPANY

We are in the business of the mail order marketing of sports equipment.
We sell our products primarily to institutional customers located throughout the
United States. Our principal customers include country clubs, schools, YMCAs,
YWCAs and similar recreational organizations, municipal recreation departments,
and other governmental agencies. We offer a broad line of sporting equipment,
including inflatable balls, nets for various sports, standards and goals for
sports, weight lifting equipment, and other recreational products, and we also
provide after-sale customer service through toll-free numbers.

We believe that prompt delivery of a broad range of products at
competitive prices, coupled with prompt, accessible customer service,
distinguishes Collegiate Pacific from its competitors. We currently market about
2,500 sports and recreational related equipment and products to over 200,000
potential institutional, retail, mass merchant, and team dealer customers. Since
commencing operations, we have sold products to approximately 20,000 customers.

Our master mailing list currently includes over 200,000 potential
customers, and we intend to distribute approximately 700,000 catalogs and fliers
to this audience during Fiscal Year 2000. Michael Blumenfeld, the Chief
Executive Officer of the Company with 25 years of experience in the industry,
supervised the development of this mailing list, and it is carefully maintained,
screened, and cross-checked. We subdivided this mailing list into various
combinations designed to place catalogs in the hands of the individuals making
the purchase decisions. The master mailing list is also subdivided by relevant
product types, seasons, and customer profiles. We also use other forms of
solicitations such as trade shows, telemarketing, broadcast fax programs, and
the Internet.

Collegiate Pacific Inc. was incorporated in Pennsylvania in 1987, and
reincorporated in Delaware in 1999. The Company's executive offices are located
at 13950 Senlac, Suite 200, Farmers Branch, Texas 75234, and its telephone
number at that location is (972) 243-8100.

RECENT DEVELOPMENTS

On October 25, 1999, we acquired certain assets of Mark One Inc., a
distributor of camping and sporting good related equipment for the recreation,
military, and municipal markets.

4
<PAGE> 7

On January 14, 2000, our shareholders approved an amendment to the
Company's Articles of Incorporation authorizing a one-for-five reverse stock
split, which became effective on January 19, 2000.

On February 7, 2000, we entered into licensing and distribution
agreements with the Edwards Sports Company, a manufacturer of tennis nets and
tennis court equipment.

On February 29, 2000, we issued $2,235,000 of Subordinated Convertible
Promissory Notes to certain officers and directors of the Company and certain
third parties. Approximately $995,000 of such Notes were issued in exchange for
an equal amount of subordinated notes held by Michael J. Blumenfeld. The
remaining Notes were sold for approximately $1.4 million in cash. We are using
the cash proceeds to repay our outstanding commercial bank debt, to expand
working capital, and to finance stock repurchases. On April 19, 2000, the Note
holders converted the Notes into 677,267 shares of Common Stock, based on a
conversion price of $3.30 per share.

On June 8, 2000, the General Services Administration awarded a
long-term contract to us for the supply of sports and recreational products to
federal and military locations throughout the world.

SELLING SHAREHOLDERS

The following table sets froth the names of each of the Selling
Shareholders, the number of shares of Common Stock beneficially owned by each
Selling Shareholder as of April 19, 2000, the number of shares that each may
offer, and the number of shares of Common Stock beneficially owned by each
Selling Shareholder upon completion of the offering, assuming all of the shares
offered are sold. The number of shares sold by each Selling Shareholder may
depend upon a number of factors, including, among other things, the market price
of the Common Stock.

<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering(1) After Offering
------------------------------------------ --------------------------
Number of Percent of Shares to be Number of Percent of
Name of Beneficial Owner Shares(2) Class(3) Sold Shares(2) Class
------------------------ --------- --------- ---- --------- -----

<S> <C> <C> <C> <C> <C>
Michael J. Blumenfeld, 4,416,134(4) 67.3% 3,057,612(5) 4,416,134 67.3%
Chief Executive Officer
of the Company

Richard M. Hershorin TTEE 55,000(6) 1.3% 27,500 27,500 0.6%
FBO R. Hershorin Rev. Trust
U/A/D 04/21/89

Cary W. Bawcum 40,000(7) 0.9% 20,000 20,000 0.5%

Stanley Graber (8) 40,000(9) 0.9% 20,000 20,000 0.5%

Frank A. Jones 40,000(10) 0.9% 20,000 20,000 0.5%

Joel W. Brown 40,000(11) 0.9% 20,000 20,000 0.5%
</TABLE>

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

(1) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated.

(2) As required by SEC regulations, the number of shares shown as
beneficially owned includes shares that could be purchased within 60
days after the date of this Prospectus. The table shows the estimated
total of the shares that would be issued on the exercise of all
Warrants to acquire shares of Common Stock described in this
Prospectus. The actual number of shares of Common Stock issuable upon
the exercise of the Warrants is subject to adjustment and could be
materially less than the number estimated in this table. This variation
is due to factors that cannot be predicted by us at this time. The most
significant of these factors is the future market price of our Common
Stock.

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<PAGE> 8

(3) The percentage of each Selling Shareholder is based on the beneficial
ownership of that Selling Shareholder divided by the sum of the current
outstanding shares of Common Stock plus the additional shares, if any,
that would be issued to that Selling Shareholder (but not any other
shareholder) when exercising any Warrant or other right in the future.

(4) Consists of 1,748,522 shares of Common Stock, 454,545 shares issued
upon conversion of a Note on April 19, 2000, 10,000 shares issuable
upon exercise of an option expiring February 24, 2009, 1,748,522 shares
issuable upon exercise of a Warrant expiring May 26, 2005, and 454,545
shares issuable upon exercise of a Warrant expiring May 26, 2005 issued
as a special dividend of warrants on shares of Common Stock issued upon
conversion of a Note on April 19, 2000.

(5) Consists of 400,000 shares being registered by Mr. Blumenfeld with the
intention that the sale or placement of these shares will be for the
benefit of the Company. The shares and/or the majority of net proceeds
of a sale could be used in acquisitions, debt repayments, working
capital advances or other such circumstances that may accrue to the
benefit of the Company. shares of Common Stock. Also includes 454,545
shares issued upon conversion of a Note on April 19, 2000, 1,748,522
shares issuable upon exercise of a Warrant expiring May 26, 2005, and
454,545 shares issuable upon exercise of a Warrant expiring May 26,
2005 issued as a special dividend of warrants on shares of Common Stock
issued upon conversion of a Note on April 19, 2000.

(6) Consists of 27,500 shares of Common Stock, and 27,500 shares issuable
upon exercise of a Warrant expiring May 26, 2005.

(7) Consists of 20,000 shares of Common Stock, and 20,000 shares issuable
upon exercise of a Warrant expiring May 26, 2005.

(8) Mr. Graber is the brother-in-law of Michael J. Blumenfeld.

(9) Consists of 20,000 shares of Common Stock, and 20,000 shares issuable
upon exercise of a Warrant expiring May 26, 2005.

(10) Consists of 20,000 shares of Common Stock, and 20,000 shares issuable
upon exercise of a Warrant expiring May 26, 2005.

(11) Consists of 20,000 shares of Common Stock, and 20,000 shares issuable
upon exercise of a Warrant expiring May 26, 2005.

PLAN OF DISTRIBUTION

The Warrants offered in this Prospectus will be issued to each of the
Company's stockholder's on a pro rata basis as a special dividend.

The sale of the Shares offered in this Prospectus may be made from time
to time directly by the Selling Shareholders, by the Note holders who converted
their Notes into shares of Common Stock, by the stockholders who exercised their
Warrants, or by one or more broker-dealers or agents.

Shareholders selling their Shares or Warrants will act independently of
the Company in making decisions with respect to the timing, manner and size of
each sale. The Shares and the Warrants may be sold in one or more transactions
on the Bulletin Board, in negotiated transactions, or through a combination of
such methods of distribution, at prices related to prevailing market prices or
at negotiated prices.

In the event one or more broker-dealers or agents agree to sell the
Shares or the Warrants, they may do so by purchasing the Shares or Warrants as
principals or by selling the Shares or the Warrants as agent for the
shareholders selling their shares. These broker-dealers may be compensated in
the form of discounts, concessions, or commissions from these shareholders or
the purchasers of the Shares or the Warrants. A particular broker-dealer's
compensation may be in excess of customary compensation.

Under applicable Exchange Act rules and regulations, any person engaged
in a distribution of the Shares or the Warrants may not simultaneously engage in
market-making activities with respect to the Company's Common Stock or Warrants
for the applicable period under Regulation M of the Exchange Act prior to the
commencement of such distribution. In addition, shareholders selling their
shares are subject to applicable provisions, rules and regulations of the
Exchange Act, including Regulation M, which may limit the timing of purchases
and sales of the Shares and the Warrants by these shareholders. All of the
foregoing may affect the marketability of the Shares and the Warrants.

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<PAGE> 9

To comply with applicable states' securities laws, the Shares and the
Warrants will be sold in such jurisdictions only through registered or licensed
brokers or dealers. Additionally, the Shares and the Warrants may not be sold in
certain states unless the Shares and the Warrants has been registered or
qualified for sale in these states, or an exemption from registration or
qualification is available and is complied with.

The 400,000 shares being registered by Mr. Blumenfeld are being done so
with the intention that the sale or placement of these shares may be for the
benefit of the Company. The shares and/or the majority of net proceeds of a sale
could be used in acquisitions, debt repayment, working capital advances or other
such circumstances that may accrue to the benefit of the Company.

USE OF PROCEEDS

The Company will not receive any consideration for the issuance of the
Warrant, or any proceeds from the sale of Warrants by the Warrant holders.

The Company will receive proceeds only if the Warrants are duly
exercised and paid by the Warrant holders. There can be no assurance that the
Warrant holders will exercise all or any portion of the Warrants. If all the
Warrants are exercised, the Company will receive $42,877,480. The Company
currently plans to use any proceeds received upon exercise of the Warrants as
working capital for general corporate purposes. These general corporate purposes
may include working capital, acquisitions, and debt repayment.

The Company did not receive any proceeds from the conversion of the
Notes into shares of Common Stock. However, the conversion of the Notes
constituted a reduction of the Company's outstanding debt by $2,235,000. The
Note holders converted the Notes into shares of Common Stock at a conversion
price equal to $3.30 per share.

The 400,000 shares that have been registered by Mr. Blumenfeld are
being done so with the intention that the sale or placement of these shares may
be for the benefit of the Company. The shares and/or the majority of net
proceeds of a sale could be used in working capital, acquisitions, debt
repayment, or other circumstances that may accrue to the benefit of the Company.

The Company will not receive any of the proceeds from the sale of the
shares of Common Stock by the Selling Stockholders.

DESCRIPTION OF DIVIDEND WARRANTS

The Company issued the Warrants pursuant to a Warrant Agreement between
the Company and Continental Stock Transfer and Trust Company, Inc. (the "Warrant
Agent"). Each record holder of Common Stock as of May 26, 2000 received a
special dividend from the Company of one Warrant for each share of Common Stock
owned by the record holder.

Each Warrant entitles the registered holder to purchase from the
Company, for cash, one share of Common Stock at $10.00 per share. The number of
shares purchasable upon exercise of each Warrant and price per share may be
adjusted under certain conditions.

Holders may exercise the Warrants at any time on or before May 26,
2005, unless extended by the Company. The Warrants are callable and cancelable
at a cancellation price of $.10 per share of Common Stock purchasable upon
exercise of the Warrants (the "Cancellation Price"). If the Company calls the
Warrants for cancellation, holders may exercise the Warrants at any time prior
to the close of business on the business day preceding the date fixed for
cancellation.

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<PAGE> 10
DESCRIPTION OF ON-LINE SPORTS WARRANTS

The Company issued a total of 40,000 Common Stock Purchase Warrants to
Mike Farkus and Christopher Haupt in connection with a License Agreement by and
between the Company and On-Line Sports, Inc., dated April 24, 1999.

The Warrants entitled Messrs. Farkus and Haupt to purchase from the
Company, for cash, one share of Common Stock at $12.50 per share. The exercise
price and number of shares purchasable upon exercise of each Warrant and price
per share may be adjusted under certain circumstances.

Messrs. Farkus and Haupt may exercise the Warrants at any time on or
before April 24, 2004. The Company does not have the right to call the Warrants
for cancellation.

DESCRIPTION OF NOTES

The Notes were sold to certain officers and directors of the Company
and certain other third parties not affiliated with the Company (the "Note
Holders") pursuant to a Purchase Agreement between the Company and the Note
Holders (the "Purchase Agreement"), dated as of February 29, 2000. The Company
and the Note Holders also executed a Subordination Agreement with Chase Bank of
Texas, National Association (the "Subordination Agreement"), subordinating the
indebtedness represented by the Notes to the prior payment in full of all Senior
Indebtedness.

The Notes were general obligations of ours limited to $2,235,000 in
aggregate principal amount, and bore an interest rate equal to the Prime Rate
plus 2 1/2 percentage points. The Notes were convertible at $3.30 per share.

RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND CAUTIONARY
WARNINGS BEFORE INVESTING IN THE COMMON STOCK OFFERED IN THIS PROSPECTUS. THE
FOLLOWING RISKS AND UNCERTAINTIES ARE NOT THE ONLY ONES FACING THE COMPANY.
THERE ARE ADDITIONAL RISKS AND UNCERTAINTIES THAT WE ARE EITHER UNAWARE OF OR
THAT WE CURRENTLY THINK ARE IMMATERIAL; HOWEVER, THESE RISKS AND UNCERTAINTIES
MAY ALSO IMPAIR THE COMPANY'S BUSINESS OPERATIONS.

IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL
CONDITION, OR RESULTS OF OPERATIONS COULD BE MATERIALLY AND ADVERSELY AFFECTED.
IN SUCH CASE, THE TRADING PRICE OF THE COMMON STOCK COULD DECLINE, AND INVESTORS
COULD LOSE ALL OR PART OF ANY INVESTMENT IN THE COMMON STOCK.

YOU SHOULD ALSO REFER TO THE OTHER INFORMATION SET FORTH IN THIS
PROSPECTUS, INCLUDING THE COMPANY'S FINANCIAL STATEMENTS AND THE RELATED NOTES.

LIMITED OPERATING HISTORY:

We have a limited operating history upon which to base an evaluation of
the Company and its prospects.

8
<PAGE> 11

Collegiate Pacific only recently entered into the catalog and
mail-order distribution of sporting goods, and it incurred losses of
approximately $31,000 and $680,000 for the years ended June 30, 1999 and 1998,
respectively, which includes operating losses, the merger, and developmental
expenses, and losses of approximately $423,000 and $212,000 for the six months
ended December 31, 1999 and 1998 respectively.

Our prospects must be considered in light of the risks, expenses, and
difficulties frequently encountered by start-up companies in the marketing
industry. To address these risks, we must, among other things:

o Effectively develop new relationships and maintain existing
relationships with our suppliers, advertisers and customers;

o Provide products at competitive prices; o Respond to
competitive developments; and

o Attract, retain, and motivate qualified personnel.

We cannot assure you that we will succeed in addressing such risks. Our
failure to do so could have a material adverse effect on the Company's business,
financial condition, or results of operations.

In addition, our limited operating history makes it difficult or
impossible to predict future operating results. We cannot give you any assurance
that our revenues will increase or even continue at their current level, or that
we will attain profitability or generate cash from operations in the future.

COMPETITION

The sports goods and related equipment market in which we participate
is highly competitive and it is without a significant barrier to entry.

We compete principally in the institutional market with local sporting
goods dealers and other direct mail companies. Collegiate Pacific is a recent
entrant in this market and we had sales of about $6.8 million for the year ended
June 30, 1999.

Most of our direct mail competitors have:

o Substantially greater financial resources;

o A larger customer base; and

o Greater name recognition within the industry.

In addition, our competitors may have larger technical, sales, and
marketing resources.

We compete on a number of factors, including price, relationships with
customers, name recognition, product availability, and quality of service. We
cannot give you any assurance that we will compete successfully against our
competitors in the future. If we fail to compete successfully, our business,
financial condition, and results of operations will be materially and adversely
affected.

RAW MATERIALS

The general economic conditions in the U.S. or international countries
with which we do business could affect pricing of raw materials such as metals
and other commodities used by suppliers of our finished goods. We cannot assure
you that any price increase incurred by the Company for its products can be
passed to its customers without adversely affecting the Company's operating
results.

ACCOUNTS RECEIVABLE

We monitor the credit worthiness of our customer base on an ongoing
basis, and we have not experienced an abnormal increase in losses in our
accounts receivable portfolio. We believe that allowances for losses

9
<PAGE> 12

adequately reflect the risk of loss. However, a change in the economic condition
or in the make-up of our customer base could have an adverse affect on losses
associated with the credit terms the we give to our customers.

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY

Our quarterly operating results may fluctuate significantly in the
future as a result of a variety of factors, many of which are outside of our
control.

We anticipate that our revenues will peak in the third and fourth
quarters of each fiscal year due primarily to the budgeting procedures of many
of our customers and the seasonal demand for the products. The first and second
quarters generally experience lower revenues and higher expenses as a percentage
of sales due to lessening customer demand because of decreased sports
activities, adverse weather conditions inhibiting customer demand, holiday
seasons, and school recesses. Therefore, we do not believe that
quarter-to-quarter comparisons of operating results for preceding quarters are
necessarily meaningful. You should not rely on the results of one quarter as an
indication of our future performance.

MANAGING POTENTIAL GROWTH

We experienced a period of significant growth, and our continued
expansion may significantly strain our management, financial, and other
resources. We believe that improvements in management and operational controls,
and operational, financial and management information systems could be needed to
manage future growth.

We cannot assure you that:

o These resources will be available or in a cost-effective form
to the Company which will allow it to sustain growth at the
same levels;

o Our current personnel, systems, procedures, and controls will
be adequate to support our future operations;

o We will identify, hire, train, motivate, or manage required
personnel; or

o That we will successfully identify and exploit existing and
potential market opportunities.

Our failure to have these resources in sufficient form or quantity
during a period of significant growth could have an adverse affect on our
operating results.

FUTURE CAPITAL REQUIREMENTS

Our cash flow from existing operations may not support an expansion of
operations or future acquisitions.

We incurred losses of approximately $31 thousand and $680 thousand for
the years ended June 30, 1999, and 1998, respectively. We funded our operations
primarily from the sale of stock to Michael Blumenfeld and others in February
and March of 1998 and with working capital loans from Mr. Blumenfeld. In
addition, on September 14, 1999 we obtained a $2 million revolving line of
credit from Chase Bank of Texas, N.A. Notes. On February 29, 2000 we received
approximately $1.4 million in cash from the sale of the Notes. We may need to
seek additional third-party financing to raise additional capital needed to
support any future growth.

We cannot give you any assurance that such additional funding will be
available on acceptable terms, if at all. If we cannot obtain adequate funds
from third parties we may have to forego strategic decisions or delay, scale
back, or eliminate certain aspects of our operations. This could have a material
adverse effect on our business, financial condition, and results of operations.

10
<PAGE> 13

DEPENDENCE ON KEY PERSONNEL

Our performance is substantially dependent on the skills, experience,
and performance of its Chief Executive Officer, Michael J. Blumenfeld, as well
as our ability to retain and motivate other officers and key employees, certain
of whom would be difficult to replace.

The Company does not have an employment agreement with Mr. Blumenfeld.
The Company does not have "key person" life insurance policies on any of its
officers or other employees.

The loss of services of certain of these executives and personnel could
have a material adverse effect on the Company. We cannot assure you that the
services of our personnel will continue to be available to us. In addition, we
believe that our success in attracting and retaining additional qualified
employees, and our failure to recruit such skilled personnel as needed, could
have a material adverse effect on the Company.

RISKS RELATED TO INTERNATIONAL SUPPLIERS

A significant amount of our revenues depends upon products purchased
from foreign suppliers, located primarily in the Far East. In addition, we
believe that many of the products we purchase from our domestic suppliers are
manufactured overseas.

Accordingly, we are subject to the risks of this international
component, including:

o Shipment delays;

o Fluctuation in exchange rates;

o Increases in import duties;

o Changes in customs regulations;

o Adverse economic conditions in foreign countries; and

o Political turmoil.

The occurrence of any one or more of the foregoing could materially and
adversely affect our business, financial condition, and result of operations.

RELIANCE ON THIRD PARTY CARRIERS

Our operations depend upon third party carriers to deliver our catalogs
and products to our customers.

We ship our products using common carriers, primarily UPS. The
operations of such carriers are outside the Company's control. Accordingly, our
business reputation and operations are subject to many risks, including:

o Shipment delays caused by such carriers;

o Labor strikes by the employees of such carriers;

o Increases in delivery cost, postage rate increases; and

o Other adverse economic conditions.

The occurrence of any one or more of the foregoing could adversely
affect our business, financial condition, and results of operations due to an
inability to make timely shipment to our customers or by utilizing other more
costly carriers or means of shipping.

CONTROL BY MAJOR STOCKHOLDER

Michael J. Blumenfeld, Chairman and Chief Executive Officer of
Collegiate Pacific, currently owns 2,203,067 shares (including 454,545 shares
issued upon conversion of a Note on April 19, 2000) or 50.7% of Common Stock,
and holds options and a Warrant convertible into 2,213,067 shares of the
Company's outstanding voting Common Stock. As a result, Mr. Blumenfeld has the
power to initiate or block corporate actions such as an amendment to the
Company's Articles of Incorporation, the

11
<PAGE> 14

consummation of any merger, or the sale of all or substantially all of the
assets of the Company. In addition, Mr. Blumenfeld may control the election of
directors and any other action requiring stockholder approval.

VOLATILITY OF STOCK PRICE

Historically, the stock market has been highly volatile.

The price of the Common Stock is determined in the marketplace and may
be influenced by many factors, including:

o The depth and liquidity of the market for the Common Stock;

o Investor perception of the Company and the industry within
which it competes;

o Quarterly variations in operating results; and

o General economic and market conditions.

Historically, the weekly trading volume of the Common Stock has been
relatively small. Any material increase in public float could have a significant
impact on the price of the Common Stock. In addition, the stock market has
occasionally experienced extreme price and volume fluctuations that often
affected market prices for smaller companies. These extreme price and volume
fluctuations often are unrelated or disproportionate to the operating
performance of the affected companies, and the price of the Common Stock could
be affected by such fluctuations.

12
<PAGE> 15

OUTSTANDING STOCK OPTIONS

Outstanding options may have an effect on the price of our securities.

There are 5,000 options, each to purchase one share of our Common
Stock, issued by DSSI Corporation under the Drug Screening Systems, Inc. Stock
Option Plan of 1994 that are still outstanding. In addition, we have granted
41,500 options, each to purchase one share of our Common Stock, to key
employees, officers, and directors under our 1998 Collegiate Pacific Inc. Stock
Option Plan. These outstanding options could have a significant adverse effect
on the trading price of our common stock, especially if a significant volume of
the options were exercised and the stock issued were immediately sold into the
public market.

THE EXERCISE OF OUTSTANDING WARRANTS AND OPTIONS COULD HAVE A DILUTIVE EFFECT

As of April 6, 2000, there were outstanding options and warrants to
purchase approximately 85,500 shares of Common Stock. Upon distribution of the
Warrants, there will be 4,323,248 outstanding options and warrants held by
shareholders and certain third parties to purchase shares of Common Stock. The
options and warrants have exercise prices ranging from $1.25 per share to $12.50
per share. The exercise of warrants or options and the sale of the underlying
shares of common stock (or even the potential of such exercise or sale) could
have a negative effect on the market price of our common stock, and will have a
dilutive impact on other shareholders.

If we attempt to raise additional capital through the issuance of
equity or convertible debt securities, the terms upon which we will be able to
obtain additional equity capital, if at all, may be negatively affected since
the holders of outstanding warrants and options can be expected to exercise
them, to the extent they are able, at a time when we would, in all likelihood,
be able to obtain any needed capital on terms more favorable than those provided
in such warrants or options.

DEPENDENCE OF WARRANT HOLDERS ON MAINTENANCE OF CURRENT REGISTRATION STATEMENT;
POSSIBLE LOSS OF VALUE OF WARRANTS.

Before exercising the Warrants, a current registration statement (or an
exemption therefrom) must be in effect with the Commission and with the various
state securities authorities in the states where Warrant holders reside. We
intend to keep effective a registration statement covering the Warrants and the
underlying Shares while the Warrants are exercisable. However, we expect to
incur substantial continuing expenses for legal and accounting

13
<PAGE> 16

fees in doing so. There can be no assurance that we will be able to maintain a
current registration statement while the Warrants are exercisable. Our inability
to maintain an effective registration statement and qualification in appropriate
states (or exemptions therefrom) covering the underlying shares would render the
Warrants unexercisable and may deprive them of all or a portion of their value.

POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS.

We may redeem each Warrant at $.10 per Warrant after the occurrence of
certain preconditions. Redemption of the Warrants could force the Warrant
holders to exercise the Warrants at a time when it may be disadvantageous for
the holders to do so or to sell the Warrants at their then current market price
when the holders might otherwise wish to hold the Warrants for possible
appreciation. Any holders who do not exercise warrants prior to their expiration
or redemption, as the case may be, will forfeit the right to purchase the shares
of Common Stock underlying the Warrants. See "Description of Securities - Common
Stock Purchase Warrants".

THE COMPANY

BUSINESS

The Company was originally incorporated in Pennsylvania in 1987. From
August 1989 to June 16, 1997, the Company developed and marketed drug testing
products under the name of Drug Screening Systems, Inc. On June 16, 1997, the
Company sold substantially all of its assets, changed its name to DSSI
Corporation, and thereafter had no formal operations.

On February 17, 1998, the Company's stockholders authorized the Company
to enter into the business of distributing sports equipment. This change in our
business was accomplished through the following steps:

o The Company sold 2,000,000 shares of Common Stock, a
controlling interest in the Company. The price of the shares
was $1.00 per share, which was the average of the bid and ask
price of the Common Stock on August 18, 1997, the date of the
Stock Purchase Agreement, or a total price of $2 million.
Michael J. Blumenfeld purchased 1,960,000 shares, and Adam
Blumenfeld purchased 40,000 shares.

o Michael J. Blumenfeld sold all of the assets, including the
corporate name, of Collegiate Pacific Inc. f/k/a Nitro Sports
Inc., a Texas corporation, to the Company, at cost. Mr.
Blumenfeld formed that company in 1997 to engage in the
catalog and mail order distribution of sports equipment.

o The Company changed its name to Collegiate Pacific Inc. at
that time.

We then entered into exclusive distribution agreements with the
following companies:

o Equipmart, Inc., a manufacturer of rollers and component parts
for the tennis industry, on February 24, 1998

o FunNets, Inc., a manufacturer of plastic frames and nets used
as soccer goals and other related purposes, on March 7, 1998

o Pro Gym Equipment, Inc., a manufacturer of weight lifting and
exercise equipment and other recreational and sporting goods,
on March 21, 1998

o Edwards Sports Products Limited, a manufacturer of tennis nets
and court equipment, on February 7, 2000

14
<PAGE> 17
On April 14, 1998, the Company acquired Product Merchandising, Inc., a
mail order distribution company that distributes products and equipment for
summer camps.

On May 31, 1998, we merged with Vantage Products International, Inc., a
distributor of baseball netting and other related baseball products.

On December 11, 1998, the Company's stockholders approved the
reincorporation of the Company from the Commonwealth of Pennsylvania to the
State of Delaware, pursuant to a merger agreement with a newly formed Delaware
corporation. The merger and reincorporation as a Delaware corporation was
effective on July 21, 1999.

On September 14, 1999, we obtained a $2 million revolving line of
credit from Chase Bank of Texas, N.A. We may need to seek additional third-party
financing to raise additional capital needed to support any future growth.

On October 25, 1999, we acquired certain assets of Mark One Inc., a
distributor of camping and sporting good related equipment as well as numerous
items for the recreation, military and municipal markets.

On January 14, 2000, our shareholders approved an amendment to the
Company's Articles of Incorporation authorizing a one-for-five reverse stock
split, which became effective on January 19, 2000.

On February 7, 2000, we obtained licensing and distribution agreements
with the Edwards Sports Company, a manufacturer of tennis nets and court
equipment.

On April 19, 2000, all of the Note Holders converted their Notes into
677,267 shares of Common Stock.

On June 8, 2000, the General Services Administration awarded a
long-term contract to us for the supply of sports and recreational products to
federal and military locations throughout the world.

Our revenues are not dependent upon any one or a few major customers.
Our institutional customers typically receive annual appropriations for sports
related equipment, which are generally spent in the period preceding the season
in which the sport or athletic activity occurs. While institutions are subject
to budget constraints, once allocations have been made, aggregate levels of
expenditures are typically not reduced.

We derive a significant portion of our revenues from the sale of
products purchased directly from suppliers in the Far East. Accordingly, we are
subject to the risks of this international component that may affect the our
ability to deliver products in a timely and competitive manner. These risks
include:

15
<PAGE> 18

o Shipment delays;

o Fluctuation in exchange rates;

o Increases in import duties;

o Changes in customs regulations;

o Adverse economic conditions in foreign countries; and

o Political turmoil.

As a result, we attempt to maintain a three to six week supply of
critical inventory items in stock.

Although the vast majority of products we distribute are purchased in
final form, a small percentage of the items require minor fabrication to
complete. We have welding machines and an assortment of tools to aid in this
fabrication process. The raw materials used in this process are in the form of
shipping supplies, nuts and bolts, and other commercially available products. We
believe there are multiple suppliers for these products nationwide.

SEASONAL NATURE OF BUSINESS

COMPETITION

We compete principally in the institutional market with local sporting
goods dealers and other direct mail companies, which collectively dominate the
institutional market. We compete on a number of factors, including price,
relationships with customers, name recognition, product availability, and
quality of service. We believe that we have an advantage on the institutional
market over traditional sporting goods retailers because our selling prices do
not include comparable price markups attributable to wholesalers, manufacturers,
and distributors. In addition, we believe that we have an advantage over other
direct mail marketers of sporting goods because we offer superior products,
coupled with prompt and accessible service, at the most competitive prices.

EMPLOYEES

We currently employ 31 people on a full-time basis. In addition, we may
hire temporary employees as seasonal increases in demand occur. None of our
employees are represented by a union, and we believe our relations with our
employees are good.

PROPERTIES

We lease our corporate headquarters and a warehouse facility located in
Farmers Branch, Texas, with approximately 30,000 square feet. The lease for this
facility expires in Fiscal Year 2003. We believe that this facility will be
adequate for our business needs for the foreseeable future. We do not own any
real property.

LEGAL PROCEEDINGS

None.

16
<PAGE> 19

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The directors and executive officers of the Company are:

<TABLE>
<CAPTION>
Positions and Offices Held
Name Age With the Company
---------------------------------------------- --- ------------------------------------------------------
<S> <C> <C>
Michael J. Blumenfeld......................... 54 Chairman of the Board and Chief Executive Officer
Adam Blumenfeld............................... 29 President and Director
Arthur J. Coerver............................. 57 Chief Operating Officer and Director
Harvey Rothenberg............................. 56 Vice President Marketing and Director
William R. Estill............................. 51 Chief Financial Officer, Secretary and Treasurer
Chad H. Edlein................................ 29 Vice President Corporate Development
Jeff Davidowitz............................... 44 Director
Robert W. Philip.............................. 64 Director
William A. Watkins, Jr........................ 57 Director
</TABLE>

Michael J. Blumenfeld has served as Chairman of the Board and Chief
Executive Officer of the Company since February 1998, and he served as President
of the Company from February 1998 to January 2000. From July 1997 until February
1998, Mr. Blumenfeld served as President and Chief Executive Officer of
Collegiate Pacific, Inc., a Texas corporation that sold all of its assets to the
Company in February 1998. From 1992 until November 1996, Mr. Blumenfeld served
as Chairman of the Board and Chief Executive Officer of Sport Supply Group,
Inc., a New York Stock Exchange company engaged in the direct mail marketing of
sports related equipment.

Adam Blumenfeld joined the Company in January 2000 as President and a
director. From January 1998 through 1999, Mr. Blumenfeld was Vice President of
Sales and Marketing of Sport Supply Group, Inc., a New York Stock Exchange
company engaged in the direct mail marketing of sports related equipment. Mr.
Blumenfeld's other positions with Sport Supply Group included Vice President of
Youth Sales from January 1995 to January 1998, and Director of Youth Sales from
August 1993 to December 1994. Mr. Blumenfeld is Michael Blumenfeld's son.

Arthur J. Coerver joined the Company in February 1998 as Chief
Operating Officer and a director. From 1991 through 1997, Mr. Coerver was Vice
President, Sales and Marketing, of Sport Supply Group, Inc., a New York Stock
Exchange company engaged in the direct mail marketing of sports related
equipment.

Harvey Rothenberg joined the Company in February 1998 as Vice President
of Marketing and Secretary, and has served on the Board of Directors since
December 1998. In August 1999, Mr. Rothenberg resigned as Secretary. From 1977
to 1998 Mr. Rothenberg served as Vice President of Sales for Sport Supply Group,
Inc., a New York Stock Exchange company engaged in the direct mail marketing of
sports related equipment.

William R. Estill joined the Company in July 1999 as Chief Financial
Officer and Treasurer, and has been Secretary since August 1999. From December
1997 until February 1999, Mr. Estill served as Vice President of Finance for
FWT, Inc., a manufacturer of telecommunication structures. From May 1996 to
November 1997, Mr. Estill served as Chief Financial Officer of Bearcom, Inc.
From April 1985 to May 1996, Mr. Estill served as Vice President, Chief
Financial Officer, Secretary and Treasurer for Sport Supply Group, Inc., a New
York Stock Exchange company engaged in the direct mail marketing of sports
related equipment. Mr. Estill was also a member of the Board of Directors during
his tenure with Sport Supply Group, Inc. Mr. Estill holds a Bachelor of Business
Administration degree in Accounting from the University of Texas at Arlington
and passed the CPA exam in 1983.

Chad H. Edlein joined the Company in July 1997. From 1994 to 1997 Mr.
Edlein served as Marketing Manager for Sport Supply Group, Inc., a New York
Stock Exchange company engaged in the direct mail marketing of sports related
equipment.

17
<PAGE> 20

Jeff Davidowitz has served as a director of the Company since June
1994. Mr. Davidowitz also serves as President of Penn Footwear, a private
investment company, since January 1, 1991. Prior to that, Mr. Davidowitz was
Vice President of Penn Footwear.

Robert W. Philip has served as a director of the Company since February
1998. Mr. Philip served as Executive in Residence and Lecturer in the Department
of Accounting of the College of Business Administration at the University of
North Texas in Denton, Texas from September 1989 until May 1994. Prior to that
time, Mr. Philip served as an audit partner with Arthur Andersen, S.C. for
approximately 18 years. Mr. Philip is currently retired from the University of
North Texas and Arthur Andersen, S.C.

William A. Watkins, Jr. has served as a director since February 1998.
Mr. Watkins has been a partner of Watkins, Watkins and Keenan, a certified
public accounting firm, since December 1971.

EXECUTIVE COMPENSATION

The following Summary Compensation Table shows compensation for the
1999 and 1998 fiscal years of the Chief Executive Officer, and each executive
officer of the Company who earned over $100,000 (a "Named Executive Officer").
<TABLE>
<CAPTION>

Long Term Compensation
Annual Compensation Awards
------------------------------------------ ----------------------------
Other Securities All Other
Annual Restricted Under- Compen-
Compen- Stock lying sation
Name and Principal Salary Bonus sation Award(s) Options ($)
Position Year ($) ($) ($) ($) (#)
------------------------ ------- ------------- --------- ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Blumenfeld
Chairman, & Chief
Executive Officer (1) 1999 $ 78,000.00 $93,750.00 10,000
1998 $ 77,000.00 -- -- -- -- --

Arthur J. Coerver
Chief Operating
Officer & 1999 $108,000.00 $46,875.00 5,000
Director (2) 1998 $112,500.00 -- -- -- -- --
</TABLE>

(1) Mr. Blumenfeld became Chairman, President, and Chief Executive Officer
on February 17, 1998, and ceased to be President on January 14, 2000.

(2) Mr. Coerver became Chief Operating Officer on February 17, 1998.

DIRECTOR COMPENSATION

Directors receive $7,500.00 per year for their service on the Board of
Directors or any committee of the Board of Directors. Directors are reimbursed
for their reasonable out-of-pocket expenses associated with attending Board of
Directors and committee meetings.

EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS

None.

18
<PAGE> 21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to the Company
with respect to beneficial ownership of shares of Common Stock as of April 19,
2000 for:

o All persons who are beneficial owners of 5% or more of the
Company's Common Stock;

o Each director and nominee for director;

o The Company's Chief Executive Officer and the other Named
Executive Officer in the Summary Compensation Table above; and

o All executive officers and directors as a group.

<TABLE>
<CAPTION>
Executive Officers and Directors(1) Number of Shares Beneficially Owned(2) Percent of Class(3)
----------------------------------- -------------------------------------- -------------------

<S> <C> <C>
Michael J. Blumenfeld 4,416,134(4) 67.3%
Adam Blumenfeld 493,800(5) 10.7%
Arthur J. Coerver 81,780(6) 1.9%
Harvey Rothenberg 16,864(7) *
William R. Estill -- *
Chadd Edlein 29,500(8) *
Jeff Davidowitz 305,606(9) 6.8%
Robert W. Philip 48,302(10) 1.1%
William A. Watkins, Jr. 88,606(11) 2.0%

Executive Officers and Directors 5,480,592 77.2%
as a Group (9 persons)
</TABLE>

*Less than 1%

(1) The address for each person listed is 13950 Senlac, Suite 200, Farmers
Branch, Texas 75234.

(3) The percentage of each shareholder is based on the beneficial ownership
of that shareholder divided by the sum of the current outstanding
shares of Common Stock plus the additional shares, if any, that would
be issued to that shareholder (but not any other shareholder) when
exercising any Warrant or other right in the future.

(5) Consists of 246,900 shares of Common Stock, and 246,900 shares issuable
upon exercise of a Warrant expiring May 26, 2005.

(6) Consists of 23,240 shares of Common Stock, 6,060 shares held in trust
for the benefit of Mr. Coerver issued upon conversion of a Note on
April 19, 2000, 1,212 shares held in trust for the benefit of Mr.
Coerver's spouse issued upon conversion of a Note on April 19, 2000,
7,878 shares issued upon conversion of a Note on April 19, 2000, 5,000
shares issuable upon exercise of an option expiring February 24, 2009,
23,240 shares issuable upon exercise of a Warrant expiring May 26,
2005, 6,060 shares held in trust for the benefit of Mr. Coerver
issuable upon exercise of a Warrant expiring May 26, 2005 issued as a
special dividend of warrants on shares of Common Stock issued upon
conversion of a Note on April 19, 2000, 1,212 shares held in trust for
the benefit of Mr. Coerver's spouse issuable upon exercise of a Warrant
expiring May 26, 2005 issued as a special dividend of

19
<PAGE> 22

warrants on shares of Common Stock issued upon conversion of a Note on
April 19, 2000, and 7,878 shares issuable upon exercise of a Warrant
expiring May 26, 2005 issued as a special dividend of warrants on
shares of Common Stock issued upon conversion of a Note on April 19,
2000.

(7) Consists of 200 shares of Common Stock, 1,687 shares of Common Stock
held in trust for the benefit of Mr. Rothenberg's child, 3,030 shares
held in trust for the benefit of Mr. Rothenberg issued upon conversion
of a Note on April 19, 2000, 1,515 shares issued upon conversion of a
Note on April 19, 2000, 3,000 shares issuable upon exercise of an
option expiring February 24, 2009, 1,000 in shares issuable upon
exercise of an option expiring February 24, 2009 held by the spouse of
Mr. Rothenberg, 1,887 shares issuable upon exercise of a Warrant
expiring May 26, 2005, 3,030 shares held in trust for the benefit of
Mr. Rothenberg issuable upon exercise of a Warrant expiring May 26,
2005 issued as a special dividend of warrants on shares of Common
Stock issued upon conversion of a Note on April 19, 2000, and 1,515
shares issuable upon exercise of a Warrant expiring May 26, 2005 issued
as a special dividend of warrants on shares of Common Stock issued upon
conversion of a Note on April 19, 2000.

(8) Consists of 14,000 shares of Common Stock, 1,500 shares issuable upon
exercise of an option expiring February 24, 2009, and 14,000 shares
issuable upon exercise of a Warrant expiring May 26, 2005.

(9) Consists of 122,000 shares of Common Stock, 30,303 shares issued upon
conversion of a Note on April 19, 2000, 1,000 shares issuable upon
exercise of an option expiring February 24, 2009, 122,000 shares
issuable upon exercise of a Warrant expiring May 26, 2005, and 30,303
shares issuable upon exercise of a Warrant expiring May 26, 2005 issued
as a special dividend of warrants on shares of Common Stock issued upon
conversion of a Note on April 19, 2000.

(10) Consists of 8,500 shares of Common Stock, 15,151 shares issued upon
conversion of a Note on April 19, 2000, 1,000 shares issuable upon
exercise of an option expiring February 24, 2009, 8,500 shares issuable
upon exercise of a Warrant expiring May 26, 2005, and 15,151 shares
issuable upon exercise of a Warrant expiring May 26, 2005 issued as a
special dividend of warrants on shares of Common Stock issued upon
conversion of a Note on April 19, 2000.

(11) Consists of 13,500 shares of Common Stock, 30,303 shares held in trust
for the benefit of Mr. Watkins issued upon conversion of a Note on
April 19, 2000, 1,000 shares issuable upon exercise of an option
expiring February 24, 2009, 13,500 shares issuable upon exercise of a
Warrant expiring May 26, 2005, and 30,303 shares held in trust for the
benefit of Mr. Watkins issuable upon exercise of a Warrant expiring May
26, 2005 issued as a special dividend of warrants on shares of Common
Stock issued upon conversion of a Note on April 19, 2000.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On February 17, 1998, the Company sold 1,960,000 shares of Common Stock
to Michael J. Blumenfeld and 40,000 shares to Adam Blumenfeld for $1.00 per
share, or an aggregate purchase price of $2,000,000, in cash, pursuant to the
Stock Purchase Agreement dated August 18, 1997 by and between the Company and
Michael and Adam Blumenfeld. Adam Blumenfeld is the son of Mr. Blumenfeld. Mr.
Blumenfeld was not an officer or director of the Company at the time of the
execution of the Stock Purchase Agreement. The consideration paid by Mr.
Blumenfeld for the Common Stock was based on the average of the high and low bid
price of the Common Stock as reported by the NASD on August 18, 1997, the date
of the Stock Purchase Agreement.

Also on February 17, 1998, in connection with the Stock Purchase
Agreement, the Company sold:

o 20,000 shares of Common Stock to Arthur J. Coerver;

o 13,500 shares of Common Stock to Robert W. Philip; and

o 13,500 shares of Common Stock to William A. Watkins, Jr.

These shares were sold at $1.00 per share, and Messrs. Coerver, Philip
and Watkins became directors of the Company upon consummation of the Stock
Purchase Agreement.

Since April 14, 1997, Michael J. Blumenfeld has made loans, net of
repayments, to the Company in an aggregate amount approximating $755,000. These
loans were payable on demand and bore interest at the rate of 12% per annum. The
aggregate amount outstanding for such loans (including accrued interest) at June
30, 1999 and June 30, 1998 was $980,720 and $899,836, respectively. On February
1, 2000, the aggregate outstanding amount

20
<PAGE> 23
under the note payable was $994,307, and pursuant to the Purchase Agreement, Mr.
Blumenfeld exchanged his outstanding loans for an equal amount of Notes.

MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

MARKET

The following table sets forth, for the periods indicated, the
quarterly range of the high and low bid prices of the Common Stock as reported
by the NASD on the Bulletin Board, and adjusted to reflect the Company's
one-for-five reverse stock split:

<TABLE>
<CAPTION>
Fiscal 2000 Quarter Ended Low High
------------------------- --- ----

<S> <C> <C>
March 31, 2000 $ 3.00 $ 15.00
December 31, 1999 4.53 11.88
September 30, 1999 9.22 14.22

Fiscal 1999 Quarter Ended Low High
------------------------- --- ----

June 30, 1999 8.75 17.19
March 31, 1999 7.50 14.06
December 31, 1998 7.50 12.50
September 30, 1998 7.19 13.59

Fiscal 1998 Quarter Ended Low High
------------------------- --- ----

June 30, 1998 10.31 13.44
March 31, 1998 5.70 14.06
December 31, 1997 4.69 8.75
September 30, 1997 0.86 9.06
</TABLE>

The foregoing quotations reflect inter-dealer prices, without mark-up, mark-down
or commissions, and may not reflect actual transactions.

On January 14, 2000 our shareholders approved an amendment to the
Company's Articles of Incorporation authorizing a one-for-five reverse stock
split, which became effective on January 19, 2000.

HOLDERS

As of April 4, 2000, there were 368 holders of record of Common
Stock, and there were 3,679,340 shares of Common Stock issued and outstanding.

DIVIDENDS

The Company did not declare or pay any cash or stock dividends on the
Common Stock during the fiscal year ended June 30, 1999. The Company currently
does not anticipate paying any cash dividends in the foreseeable future. Any
future determination to pay dividends will be at the discretion of the Company's
Board of Directors and will be dependent upon then existing conditions,
including the Company's financial condition, results of operations, contractual
restrictions, capital requirements, business prospects, and such other factors
as the Board deems relevant.

21
<PAGE> 24

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

OVERVIEW

Michael J. Blumenfeld formed Collegiate Pacific Inc. as a Texas
corporation on April 10, 1997. That company was originally named Nitro Sports
Inc. and it began business during the latter part of June 1997. Effective
February 7, 1998, Collegiate Pacific Inc. entered into a reverse acquisition
agreement with DSSI Corporation, which was then a publicly held shell
corporation.

On April 14, 1998, we acquired all of the issued and outstanding common
stock of Product Merchandising, Inc. We accounted for this transaction as a
purchase, and, accordingly, the results and operations of this entity were
included in the Company's results of operations commencing on April 14, 1998.
The Company also acquired Vantage Products International, Inc. on May 31, 1998
by issuing common stock for all of the issued outstanding common stock of that
entity. We accounted for this acquisition as a pooling of interests and,
accordingly, the results of operations of the Company include the results of
operations of the pooled entity for the entire fiscal year.

We solicit customers from a variety of catalogs designed for specific
uses, including summer camps, baseball, and general sports and recreation, and
we distributed approximately 550,000 catalogs to current and prospective
customers during Fiscal Year 1999. After the end of Fiscal Year 1999, the
Company entered into a supply agreement with the General Services Administration
of the federal government to furnish certain products to government agencies.
There were no sales to any federal government agencies in Fiscal Year 1999, and
sales to those agencies in Fiscal Year 2000 as of December 31, 1999 were
immaterial. We also solicit customers through trade shows, road salesmen,
broadcast fax programs, telemarketing, and the Internet.

Collegiate Pacific had no operations prior to June 30, 1997, and
accordingly this discussion covers subsequent periods.

RESULTS OF OPERATIONS - COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 2000 AND
1999

Sales

Revenues for the nine months ended March 31, 2000 increased by
approximately $2.5 million (59%) as compared to the same period in 1999. The
Company attributes the growth in revenues to an increase in marketing activity,
expansion of products offered to its existing customer base, an increase in
dealer-related revenues, and an overall growth in its customer base. As the
result of expanded operations and marketing activities, we believe that future
revenues will continue to rise from current levels. We also believe that
seasonality in revenues will continue to be a factor in future periods as
revenues during the third and fourth quarters of the Company's fiscal year are
typically higher due to the order pattern of the Company's customer base. If the
Company continues to expand its revenues, the expansion may change the
seasonality of its business, which may further distort a comparison of the
operating results on a quarterly basis.

Gross Profit

The Company's gross profit for the nine months ended March 31, 2000
increased by approximately $781 thousand (49%) as compared to the same period in
1999. As a percentage of sales the gross profit decreased to 36% as compared to
38% for the same period in 1999. The decrease was the result of lower product
selling prices to dealer-related customers.

Selling, General, and Administrative Expense

Selling, general and administrative expenses for the nine months ended
March 31, 2000 increased by approximately $1.0 million (67%) as compared to the
same period in 1999. As a percentage of sales, selling, general and
administrative expenses increased to 38% from 36%. The increase in selling,
general, and administrative expense in dollars and as a percentage of sales is
due to the Company's increased personnel-related cost to manage the increased
sales volume and an increase in advertising related expenses as the Company
slightly increased its catalog mailings. We anticipate that as sales continue to
increase that operating expenses, as a percentage of sales, should decrease.

We recently changed the compensation structure for our outside sales
force from receiving a salary to commission-only compensation. Rather than seek
to expand this sales force as originally planned, we are now seeking alliances
with several team dealers who employ larger and more experienced sales forces.
In the short term, this change in marketing plans will reduce or eliminate the
previously anticipated revenues from our in-house sales force, and will reduce
or eliminate the expenses associated with this sales force as well. The company
believes that the new marketing alliances will have a greater short and long
term benefit to revenues and earnings.

Interest Expense

Interest expense increased by approximately $57 thousand (73%) for the
nine months ended March 31, 2000 as compared to same the period in 1999. As a
percentage of sales, interest expense remained at 2%. The increase was the
result of borrowing used to fulfill working capital requirements caused by the
increase in sales.

22
<PAGE> 25

RESULTS OF OPERATIONS - COMPARISON OF THE YEAR ENDED JUNE 30, 1999 TO THE YEAR
ENDED JUNE 30, 1998

Net Sales

Net sales for the fiscal year ended June 30,1999 increased by
approximately $3.5 million (107%) as compared to the period ended June 30, 1998.
The increase in net sales of approximately 33% reflects the addition of the camp
catalog to the Company's lines of business. The balance of the increase is due
to higher volume in the our primary catalog sales. We believe this trend in
increased sales volume will continue in future periods, however no assurances
can be made that the increased sales level will be as high.

Gross Profit

Gross profit for the fiscal year ended June 30, 1999 increased by
approximately $1.3 million (107%) as compared to the period ended June 30,1998.
As a percentage of sales, the gross profit was approximately 36% for both
periods ended June 30, 1999 and 1998.

Selling, General, and Administrative Expense

Selling, general, and administrative expense for the period ended June
30,1999 increased by approximately $640 thousand as compared to the period ended
June 30, 1998. As a percentage of net sales, the selling, general, and
administrative expense decreased to approximately 34% for the period ended June
30, 1999, as compared to 52% for the period ended June 30,1998. The increase in
the selling, general, and administrative expense was due primarily to the
following:

o An increase in salaries and personnel related cost of
approximately $200 thousand as the Company staffed additional
personnel in the camp-related business and to manage the
increase in the primary catalog sales.

o An increase in advertising of approximately $160 thousand due
to mailing catalogs to the camp-related customers and an
increase in catalogs and fliers to baseball and other primary
catalog customers.

o An increase in shipping cost of approximately $70 thousand due
to the increased sales activity.

o An increase in amortization expense of approximately $52
thousand due to the amortization of the cost in excess of net
tangible assets acquired in late Fiscal Year 1998.

o An increase in warehouse-related expense of approximately
$50 thousand due to the increased sales activity.

23
<PAGE> 26

Operating Profit

Operating profit increased by approximately $630 thousand for the
period ended June 30,1999 as compared to the period ended June 30, 1998. As a
percentage of net sales, the operating profit increased to approximately 2% as
compared to a 16% operating loss for the period ended June 30, 1998. The
increase is attributable to the increase in net sales.

Interest Expense

Interest expense decreased by approximately $60 thousand for the period
ended June 30, 1999 as compared to the period ended June 30, 1998. As a
percentage of sales, interest expense decreased to approximately 2% for the
period ended June 30, 1999 as compared to 5% for the period ended June 30, 1998.
The decrease reflects the lower borrowing requirements due to decreased
inventory purchases made in Fiscal Year 1999. All of the interest incurred in
Fiscal Years 1999 and 1998 relates to interest paid on the note to Mr.
Blumenfeld. (See "Liquidity and Capital Resources")

Provision for Income Taxes

The provision for taxes increased by approximately $34 thousand for the
period ended June 30, 1999 as compared to the period ended June 30,1998. The
increase is the result of the Company and its subsidiaries filing separate
returns during the period ending June 30, 1999.

Net Loss

The net loss decreased by approximately $648 thousand for the period
ended June 30, 1999 as compared to the period ended June 30, 1998. As a
percentage of sales, the net loss as a percentage of sales, decreased to
approximately 1/2% for the period ended June 30, 1999 as compared to 21% for the
same period ended June 30, 1998. The decrease is primarily due to the increase
in net sales and the resulting increase in gross profit and lower selling,
general and administrative expenses.

LIQUIDITY AND CAPITAL RESOURCES

Cash used in operations for the nine months ended March 31, 2000 was
approximately $1.6 million as compared to approximately $344 thousand for the
same period in 1999. The increase was due primarily to the Company's net loss,
the purchase of additional inventories of approximately $700 thousand, an
increase of accounts receivables of approximately $300 thousand, and an increase
in prepaid expense of approximately $451 thousand. For the comparable 1999
period, cash used in operations of approximately $344 thousand resulted
primarily from increases in inventory and accounts receivables.

The Company used approximately $428 thousand in cash in investing
activities in the nine month period ending on March 31, 2000. The primary use of
cash in investing activities was the acquisition of certain assets of a camp
sporting goods related business, the acquisition of a distribution agreement
with an internet related business, the acquisition of a license and distribution
agreement with a tennis equipment business, and the purchase of property and
equipment.

The Company generated approximately $1.9 million from financing
activities for the nine months ending on March 31, 2000. The cash generated from
financing activities was approximately $1.2 million of net proceeds from the
issuance of the Notes to certain stockholders, officers and certain third
parties, and approximately $795 thousand in proceeds from the issuance of Common
Stock upon the exercise of common stock options and warrants, partially offset
by the purchase of additional treasury shares.

Current assets totaled approximately $4.8 million at the end of the
third quarter, providing the Company with working capital of approximately $4.2
million.

Cash used in operations for the period ended June 30, 1999 was
approximately $190 thousand as compared to $2.7 million for the period ended
June 30, 1998. The decrease of approximately $2.6 million was primarily due to
lower purchases after the initial buildup, when operations commenced, and lower
inventory levels as a result of the increased sales volume, as well as the
decrease in net loss, and was partially offset by an increase in accounts
receivable also due to the increased sales.

On March 31, 1999 the Company amended the Promissory Note to Mr.
Blumenfeld. The amended note reflected a maturity date of April 10, 2001 and
borrowings under the note bore an interest rate of 12% per annum. As of June 30,
1999 the aggregate outstanding amount under the note payable was approximately
$981 thousand. On February 29, 2000,

24
<PAGE> 27

the aggregate outstanding amount under the note payable was approximately $995
thousand, and pursuant to the Purchase Agreement, Mr. Blumenfeld exchanged his
outstanding loans for a Note in an amount equal to the then outstanding balance
of the loans. On April 19, 2000, Mr. Blumenfeld converted his Note into 454,545
shares of Common Stock.

On September 14, 1999, the Company agreed to terms for a $2 million
Revolving Line of Credit with Chase Bank of Texas, N.A. The Revolving Line of
Credit allows the Company to borrow funds based upon a certain percentages of
accounts receivable and inventories, will mature on October 31, 2001, and
includes a provision for letters of credit. Borrowings under the Revolving Line
of Credit will bear interest at the prevailing prime rate plus 1/4% or LIBOR
plus 2 1/2%. Mr. Blumenfeld guarantees the Revolving Line of Credit up to $1
million.

We believe that the Company will satisfy its short term and long-term
liquidity needs from borrowings under the Revolving Line of Credit and the
proceeds of the Notes, and from cash flows from operations. We may experience
periods of higher borrowing under the credit facility due to the seasonal nature
of the Company's business cycle. We are actively seeking expansion through
acquisitions and/or joint ventures, and the success of such efforts may require
additional bank debt, equity financing, or private financing.

On February 3, 2000, a former DSSI Corporation executive exercised
common stock purchase warrants for 98,974 shares of Common Stock. These warrants
were granted to the warrant holder during his tenure as a DSSI Corporation
executive. The Company received approximately $500 thousand or $5.05 per share.

YEAR 2000 IMPACT

The Year 2000 issue is the result of computer programs written using
two digits rather than four digits to define "date" fields. Information systems
have time sensitive operations that, as a result of this data field limitation,
could disrupt activities in the normal business cycle. We purchased and
implemented new information systems in Fiscal Year 1999, which brought the
information systems into Year 2000 compliance.

We are not currently aware of any material year 2000 problem relating
to any of our material internal system or applications. We have not discussed
the Year 2000 issue with our customers and suppliers. There can be no assurance
that the systems of these other companies were timely converted, and the failure
of our significant suppliers and customers to make necessary Year 2000
modifications could have a material adverse impact on the our results and
operations.

We believe that, absent a systemic failure outside our control, such as
a prolonged loss of electrical or telecommunications service, year 2000 problems
at third parties will not have a material impact on our operations. The failure
of our internal systems or the systems of third parties to be year 2000 ready
could temporarily prevent us from providing service to our customers, issuing
invoices and could require us to devote significant resources to correct such
problems. The costs associated with remediating any year 2000 problems have not
been material to date. Although we do not anticipate that these costs will be
material in the future, we cannot assure you that these costs will not be
material.

25
<PAGE> 28

DESCRIPTION OF SECURITIES

GENERAL

As of the closing of the offering, the Company's authorized capital
stock will consist of 50,000,000 shares of Common Stock, par value $.01 per
share and 1,000,000 shares of Preferred Stock, par value $.01 per share.

COMMON STOCK

The holders of shares of Common Stock are entitled to one vote per
share on all matters to be voted on by stockholders. The holders of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the Board of Directors out of legally available funds. See
"Dividends." In the event of liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities then outstanding. The Common Stock has no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are fully paid and nonassessable.

PREFERRED STOCK

As of the date of this Prospectus, there are no outstanding shares of
Preferred Stock. The Board of Directors may authorize the issuance of Preferred
Stock in one or more series and may determine, with respect to any such series,
the designations, powers, preferences, and rights of such series, and its
qualifications, limitations, and restrictions, including, without limitation:

o The designation of the series;

o The number of shares of the series, which number the Board of
Directors may (except where otherwise provided in the
designations for such series) increase or decrease (but not
below the number of shares of such series then outstanding);

o Whether dividends, if any, will be cumulative or noncumulative
and the dividend rate of the series;

o The conditions upon which and the dates at which dividends, if
any, will be payable, and the relation that such dividends, if
any, will bear to the dividends payable on any other class or
classes of stock;

o The redemption rights and price or prices, if any, for shares
of the series;

o The terms and amounts of any sinking fund provided for the
purchase or redemption of share of the series;

o The amounts payable on and the preferences, if any, of shares
of the series, in the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the affairs of the
Company;

o Whether the shares of the series will be convertible into
shares of any other class or series, or any other security, of
the Company or any other corporation, and, if so, the
specification of such other class or series or such other
security, the conversion price or prices or rate or rates, any
adjustments, the date or dates as of which such shares will be
convertible and all other terms and conditions upon which such
conversion may be made; and

o The voting rights, if any, of the holders of shares of such
series.

COMMON STOCK PURCHASE WARRANTS

Special Dividend of Warrants

Each Warrant entitles the holder to purchase one share of Common Stock
at an exercise price of $10.00 per share. Warrants are exercisable through May
26, 2005 provided that at the time of exercise the Common Stock is qualified for
sale or exempt from qualification under applicable state securities laws. The
Company has the right at

26
<PAGE> 29

any time to call the Warrants for cancellation by giving at least 30 days, but
not more than 90 days, notice, at a price of $.10 per Warrant. Holders of
Warrants automatically forfeit their rights to purchase the shares of Common
Stock issuable upon exercise of such Warrants unless the Warrants are exercised
before the close of business on the business day immediately prior to the date
set for redemption. A notice of redemption shall be mailed to each of the
registered holders of the Warrants by First Class mail, postage prepaid, at
least 30 days before the date fixed for redemption. The notice of redemption
shall specify the redemption price, the date fixed for redemption, the place
where the Warrant certificates shall be delivered and the redemption price to be
paid, and that the right to exercise a Warrant shall terminate at 5:00 p.m. (New
York City time) on the business day immediately preceding the date fixed for
redemption.

The Warrants may be exercised upon surrender of the Warrant
certificate(s) on or prior to the expiration or the redemption date at the
offices of Continental Stock Transfer & Trust Company, the Company's warrant
agent (the "Warrant Agent") with the subscription form on the reverse side of
the certificate(s) completed and executed as indicated, accomplished by payment
(in the form of a certified or cashier's check payable to the order of the
Company) of the full exercise price for the number of warrants being exercised.

The exercise price and number and kind of shares of Common Stock or
other securities or assets purchasable on exercise of the Warrants and the
Cancellation Price are subject to adjustment if the Company:

o Combines or subdivides its outstanding shares of Common Stock,
including stock splits effected through a dividend; or

o Merges or consolidates with another corporation.

There will be no adjustment to the Warrants if the Company:

o Makes any cash dividends or asset distributions with respect
to outstanding shares of Common Stock;

o Sells additional shares of Common Stock; or

o Sells all or substantially all of its assets.

In the event of any other type of recapitalization or reorganization of
the Company, the Company may, at its option, provide for adjustment to the
Warrants' terms.

The Company is not required to issue fractional shares of Common Stock,
and, in lieu of a fractional share, the Company will make a cash payment based
upon the current market value of such fractional shares. The Warrants holder
will not have any right as a shareholder of the Company unless or until the
holder exercises the Warrants.

On-Line Sports, Inc. Warrants

On April 24, 1999, the Company issued Mike Farkus and Christopher Haupt
Warrants to purchase an aggregate of 40,000 shares of Common Stock. The Company
issued these Warrants in connection with a License Agreement with On-Line
Sports, Inc. Each Warrant entitles Messrs. Farkus and Haupt to purchase one
share of Common Stock at an exercise price of $12.50 per share. The Warrants are
exercisable through April 24, 2004. The Company does not have the right to call
these Warrants for cancellation.

Messrs. Farkus and Haupt may only transfer the Warrants to Immediate
Family Members, defined as:

o The Warrant holder and his spouse;

o The Warrant holder's lineal descend and their spouses; or

o Any entity established by one or more of the above persons for
charitable or estate planning purposes.

27
<PAGE> 30

The Warrants may be exercised upon the delivery to the Company of a
notice of exercise, payment of the exercise price, and the Warrant.

The exercise price and number of shares of Common Stock are subject to
adjustment if there is a stock split, stock dividend, reverse stock split, or
other subdivision of the Common Stock.

The Company is not required to issue fractional shares of Common Stock,
and the Warrant holder will be entitled to receive, in lieu of any fraction
shares, either:

o A cash payment equal to the excess of the fair market value
for the fractional share; or

o A whole share if the Warrant holder pays the exercise price
for one whole share.

The Warrant holders will not have any rights as a shareholder of the
Company unless and until the holder exercises the Warrants.

SUBORDINATED CONVERTIBLE PROMISSORY NOTES

GENERAL. The Notes were general obligations of ours limited to
$2,235,000 in aggregate principal amount. The Notes bore interest at a variable
rate equal to the Prime Rate plus 2 1/2 percentage points per year.

28
<PAGE> 31

NOTE HOLDERS. The following table and accompanying footnotes identify
each of the Note Holders based upon information provided to the Company, set
forth as of April 19, 2000, the date the Note Holders converted their Notes into
shares of Common Stock. This information also states the principal amount of the
Notes, the number of shares the Notes were converted into, shares beneficially
held by or acquired by, as the case may be, each Note Holder. Beneficial
ownership is stated as of the conversion of the Notes. Percentages are based on
3,679,340 shares of Common Stock outstanding on April 19, 2000.

<TABLE>
<CAPTION>
Number of Shares Number of Shares
Principal Amount Issued Upon Conversion Beneficially
Name of Note Holder of Note of Note(1) Owned(2) Percent of Class(3)
---------------------------- ---------------- ------------------------ ---------------- --------------------

<S> <C> <C> <C> <C>
Michael J. Blumenfeld, $1,500,000 454,545 4,416,134(4) 67.3%
Chief Executive Officer of
the Company
Watkins Brothers Trust $ 100,000 30,303 88,606(5) 2.0%
Arthur J. Coerver, IRA $ 20,000 6,060 81,780(6) 1.9%
Arthur J. Coerver $ 26,000 7,878 81,780(6) 1.9%
Colleen C. Coerver, IRA $ 4,000 1,212 81,780(6) 1.9%
Penn Footwear Retirement $ 50,000 15,151 305,606(7) 6.8%
Trust
Davidowitz Foundation Inc. $ 50,000 15,151 32,302(8) 0.7%
JIBS Equities, L.P. $ 50,000 15,151 305,606(7) 6.8%
William Davidowitz $ 100,000 30,303 110,660(9) 2.5%
Robert W. Philip or Sharon $ 50,000 15,151 48,302(10) 1.1%
A. Philip Joint Tenants
with Right of Survivorship
Myrna G. Kulp(11) $ 100,000 30,303 65,926 1.5%
Harvey Rothenberg and $ 5,000 1,515 16,864(12) 0.4%
Elizabeth Rosenberg
Harvey Rothenberg, IRA $ 10,000 3,030 16,864(12) 0.4%
H. I. Schendle IRA Rollover $ 50,000 15,151 48,902(13) 1.1%
Eric Green GST Trust $ 120,000 36,363 72,726 1.7%

Total $2,235,000 677,267
-----
</TABLE>

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

(1) The number of shares issued upon conversion of the Notes is based on
a conversion price equal to $3.30 per share, with the Note Holder
receiving a cash payment in lieu of any fractional shares that would
otherwise be issued.

(2) As required by SEC regulations, the number of shares shown as
beneficially owned includes shares that could be purchased within 60
days after the date of this Prospectus. The table shows the total
shares issued on the conversion of all of outstanding Notes as well as
the shares issuable upon the exercise of all Warrants to acquire shares
of Common Stock described in this Prospectus. The actual number of
shares of Common Stock issuable upon the exercise of the Warrants is
subject to

29
<PAGE> 32
adjustment and could be materially less than the number estimated in
this table. This variation is due to factors that cannot be predicted
by us at this time. The most significant of these factors is the future
market price of our Common Stock.

(5) Consists of 13,500 shares of Common Stock, 30,303 shares held in trust
for the benefit of Mr. Watkins issued upon conversion of a Note on
April 19, 2000, 1,000 shares issuable upon exercise of an option
expiring February 24, 2009, 13,500 shares issuable upon exercise of a
Warrant expiring May 26, 2005, and 30,303 shares held in trust for the
benefit of Mr. Watkins issuable upon exercise of a Warrant expiring May
26, 2005 issued as a special dividend of warrants on shares of Common
Stock issued upon conversion of a Note on April 19, 2000.

(7) Consists of 122,000 shares of Common Stock, 30,303 shares issued upon
conversion of a Note on April 19, 2000, 1,000 shares issuable upon
exercise of an option expiring February 24, 2009, 122,000 shares
issuable upon exercise of a Warrant expiring May 26, 2005, and 30,303
shares issuable upon exercise of a Warrant expiring May 26, 2005 issued
as a special dividend of warrants on shares of Common Stock issued upon
conversion of a Note on April 19, 2000.

(8) Consists of 1,000 shares of Common Stock, 15,151 shares issued upon
conversion of a Note on April 19, 2000, 1,000 shares issuable upon
exercise of a Warrant expiring May 26, 2005, and 15,151 shares issuable
upon exercise of a Warrant expiring May 26, 2005 issued as a special
dividend of warrants on shares of Common Stock issued upon conversion
of a Note on April 19, 2000.

(9) Consists of 8,500 shares of Common Stock, 15,151 shares issued upon
conversion of a Note on April 19, 2000, 1,000 shares issuable upon
exercise of an option expiring February 24, 2009, 8,500 shares issuable
upon exercise of a Warrant expiring May 26, 2005, and 15,151 shares
issuable upon exercise of a Warrant expiring May 26, 2005 issued as a
special dividend of warrants on shares of Common Stock issued upon
conversion of a Note on April 19, 2000.

(10) Consists of 25,000 shares of Common Stock, 30,303 shares issued upon
conversion of a Note on April 19, 2000, 25,000 shares issuable upon
exercise of a Warrant expiring May 26, 2005, and 30,303 shares issuable
upon exercise of a Warrant expiring May 26, 2005 issued as a special
dividend of warrants on shares of Common Stock issued upon conversion
of a Note on April 19, 2000.

(11) Myrna G. Kulp is Michael J. Blumenfeld's sister-in-law.

(12) Consists of 200 shares of Common Stock, 1,687 shares of Common Stock
held in trust for the benefit of Mr. Rothenberg's child, 3,030 shares
held in trust for the benefit of Mr. Rothenberg issued upon conversion
of a Note on April 19, 2000, 1,515 shares issued upon conversion of a
Note on April 19, 2000, 3,000 shares issuable upon exercise of an
option expiring February 24, 2009, 1,000 shares issuable upon exercise
of an option expiring February 24, 2009 held by Mr. Rothenberg's
spouse, 1,887 shares issuable upon exercise of a Warrant expiring May
26, 2005, 3,030 shares held in trust for the benefit of Mr. Rothenberg
issuable upon exercise of a Warrant expiring May 26, 2005 issued as a

30
<PAGE> 33

special dividend of warrants on shares of Common Stock issued upon
conversion of a Note on April 19, 2000, and 1,515 shares issuable upon
exercise of a Warrant expiring May 26, 2005 issued as a special
dividend of warrants on shares of Common Stock issued upon conversion
of a Note on April 19, 2000.

(13) Consists of 9,300 shares of Common Stock, 15,151 shares issued upon
conversion of a Note on April 19, 2000, 9,300 shares issuable upon
exercise of a Warrant expiring May 26, 2005, and 15,151 shares issuable
upon exercise of a Warrant expiring May 26, 2005 issued as a special
dividend of warrants on shares of Common Stock issued upon conversion
of a Note on April 19, 2000.

31
<PAGE> 34

WARRANT AGENT, STOCK TRANSFER AGENT AND REGISTRAR

The warrant agent, stock transfer agent and registrar for the Common
Stock is Continental Stock Transfer & Trust Company.

STOCKHOLDER REPORTS

The Company furnishes its stockholders with annual reports containing
audited financial statements and may furnish its stockholders quarterly or
semi-annual reports containing unaudited financial information.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS

Section 203 of the Delaware General Corporation Law

The Company is subject to the provisions of Delaware General
Corporation Law ("DGCL") Section 203 (the "Anti-takeover Law") regulating
corporate takeovers. The Anti-takeover Law prevents certain Delaware
corporations from engaging, under certain circumstances, in a "business
combination" (which includes a merger or sale of more than 10% of the
corporation's assets) with any "interested stockholder" (defined as a
stockholder who acquires 15% or more of the corporation's outstanding voting
stock without the prior approval of the corporation's Board of Directors) for
three years following the date that such stockholder became an "interested
stockholder". A Delaware corporation may "opt out" of the Anti-takeover Law with
an express provision in its original certificate of incorporation or an express
provision in its certificate of incorporation or bylaws resulting from an
amendment approved by at least a majority of the outstanding voting shares. The
Company has not "opted out" of the application of the Anti-takeover Law.

32
<PAGE> 35

LEGAL MATTERS

The validity of the Shares and the Warrants offered hereby will be
passed upon for the Company by Hughes & Luce, L.L.P., Dallas, Texas.

EXPERTS

The consolidated financial statements of the Company as of June 30,
1999 and June 30, 1998, and for the years then ended, are included in the
Registration Statement of which this Prospectus is a part in reliance on the
reports of, respectively, GRANT THORNTON LLP and SUTTON FROST LLP, independent
auditors, which reports are included herein. The consolidated financial
statements audited by GRANT THORNTON LLP and SUTTON FROST LLP have been included
herein in reliance on their reports given on their authority as experts in
accounting and auditing.

INDEMNIFICATION

The Company's Bylaws provide that any officer or director who is made a
party to or is threatened to be made a party to or is otherwise involved in any
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was an officer or a director of the Company or is or was serving at the
request of the Company as a director or an officer of another entity shall be
indemnified and held harmless by the Company to the fullest extent authorized by
the DGCL against all expense, liability, and loss reasonably incurred or
suffered by such person in connection therewith. The right to indemnification
includes the right to be paid by the Company for expenses incurred in defending
any such proceeding in advance of its final disposition. Officers and directors
are not entitled to indemnification if such persons did not meet the applicable
standard of conduct set forth in the DGCL for officers and directors.

DGCL Section 145 provides, among other things, that the Company may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Company) by reason of the fact that the person is or was a
director, officer, employee or agent of the Company, or is or was serving at the
Company's request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding. The power to indemnify applies (a) if such person is successful
on the merits or otherwise in defense of any action, suit or proceeding, or (b)
if such person acted in good faith and in a manner he reasonably believed to be
in the best interest, or not opposed to the best interest, of the Company and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The power to indemnify applies to actions
brought by or in the right of the Company as well, to the extent of expenses
(including attorneys' fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit if the person
acted in good faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the Company, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Company, unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.

The indemnification provisions contained in the Company's Bylaws are
not exclusive of any other rights to which a person may be entitled by law,
agreement, vote of stockholders or disinterested directors or otherwise.

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

33
<PAGE> 36

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Index to Consolidated Financial Statements.................................................... 34
Reports of Independent Auditors............................................................... F-1
Consolidated Balance Sheets as of June 30, 1999 and 1998...................................... F-3
Consolidated Statements of Operations for the year ended June 30, 1999 and 1998............... F-5
Consolidated Statement of Stockholders' Equity for the year ended June 30, 1999 and 1998...... F-6
Consolidated Statements of Cash Flows for the year ended June 30, 1999 and 1998............... F-7
Notes to Consolidated Financial Statements.................................................... F-9
Condensed Consolidated Balance Sheets as of March 31, 2000 (Unaudited) and June 30, F-19
1999..........................................................................................
Condensed Consolidated Statements of Operations for the nine months ended
March 31, 2000 and 1999 (Unaudited)........................................................... F-20
Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2000
and 1999 (Unaudited).......................................................................... F-21
Notes to Condensed Consolidated Financial Statements (Unaudited).............................. F-22
</TABLE>

34
<PAGE> 37

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

REPORT OF INDEPENDENT AUDITORS

The Stockholders and Board of Directors
COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

We have audited the accompanying consolidated balance sheet of COLLEGIATE
PACIFIC INC. AND SUBSIDIARIES as of June 30, 1999, and the related consolidated
statements of operations, stockholders' equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
COLLEGIATE PACIFIC INC. AND SUBSIDIARIES as of June 30, 1999, and the
consolidated results of their operations and their consolidated cash flows for
the year then ended, in conformity with generally accepted accounting
principles.

GRANT THORNTON LLP

Dallas, Texas
August 25, 1999
(except for Note 10,
as to when the date is
January 14, 2000)

F-1
<PAGE> 38

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

REPORT OF INDEPENDENT AUDITORS

The Stockholders and Board of Directors
COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

We have audited the accompanying consolidated balance sheet of COLLEGIATE
PACIFIC INC. AND SUBSIDIARIES as of June 30, 1998, and the related consolidated
statements of operations, stockholders' equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
COLLEGIATE PACIFIC INC. AND SUBSIDIARIES as of June 30, 1998, and the
consolidated results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.

SUTTON FROST LLP

Arlington, Texas
August 25, 1998

F-2
<PAGE> 39

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND 1998

ASSETS

<TABLE>
<CAPTION>
1999 1998
------------- --------------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 518,844 $ 514,494
Accounts Receivable, less allowance for doubtful accounts of
$38,806 in 1999 and $-0- in 1998 1,142,708 685,974
Inventory 1,843,820 2,149,020
Prepaid Expenses and other Current Assets 23,581 40,064
------------- --------------
Total Current Assets 3,528,953 3,389,552

Property and Equipment, net of accumulated depreciation of
$98,785 in 1999 and $50,155 in 1998 150,585 120,626
Other Assets:
License Agreements, net of accumulated amortization of
$50,030 in 1999 and $12,408 in 1998 253,586 279,258
Cost in Excess of Net Tangible Assets Acquired, net of
accumulated amortization of $42,373 in 1999 and $7,590
in 1998 509,373 544,156
Other Assets, net 54,409 54,552
------------- --------------
$ 4,496,906 $ 4,388,144
============= ==============
</TABLE>

F-3
<PAGE> 40

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND 1998

LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Current Liabilities:
Accounts Payable $ 537,056 $ 552,618
Accrued Expenses 51,181 192,066
Note Payable to Stockholder -- 754,671
Other Current Liabilities 86,826 59,365
----------- -----------
Total Current Liabilities 675,063 1,558,720

Note Payable to Stockholder 980,720 --
----------- -----------
Total Liabilities 1,655,783 1,558,720
----------- -----------

Commitments and Contingencies -- --

Stockholders' Equity:
Common Stock, $.01 par value; authorized 20,000,000
shares; issued and outstanding: 3,440,366 in 1999 and
3,403,366 in 1998 34,404 34,034
Additional Paid-in Capital 3,506,568 3,456,938
Accumulated Deficit (660,462) (629,928)
Treasury Shares, at Cost; 900 shares in 1999 (10,982) --
----------- -----------
2,869,528 2,861,044

Less: Notes Receivable from Stockholders (28,405) (31,620)
----------- -----------

Total Stockholders' Equity 2,841,123 2,829,424
----------- -----------

$ 4,496,906 $ 4,388,144
=========== ===========
</TABLE>

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

F-4
<PAGE> 41

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
----------- -----------

<S> <C> <C>
Sales $ 6,813,333 $ 3,283,825

Cost of Sales 4,367,382 2,106,581
----------- -----------

Gross Profit 2,445,951 1,177,244

Selling, General and Administrative Expenses 2,343,434 1,704,859
----------- -----------

Operating Profit (Loss) 102,517 (527,615)
----------- -----------

Other Income (Expense):
Interest Expense (110,534) (172,027)
Interest Income 11,373 20,737
----------- -----------

Total Other Income (Expense) (99,161) (151,290)
----------- -----------

Income(Loss) Before Provision for Taxes 3,356 (678,905)

Provision for Taxes 33,890 --
----------- -----------

Net loss $ (30,534) $ 678,905)
=========== ===========

Weighted average shares of common stock outstanding 3,409,257 3,321,205

Net loss per share of common stock (basic and diluted) $ (0.01) $ (0.20)
=========== ===========
</TABLE>

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

F-5
<PAGE> 42

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
COMMON STOCK
----------------------
NOTES
TREASURY RECEIVABLE
ADDITIONAL RETAINED SHARES FROM
SHARES AMOUNT PAID-IN CAPITAL EARNINGS/(DEFICIT) AT COST STOCKHOLDERS TOTAL
--------- ----------- --------------- --------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1997 3,280,200 $ 32,802 $ 2,847,504 $ 48,977 $ -- $ (31,620) $ 2,897,663

Issuance of stock for cash 69,000 690 68,310 -- -- -- 69,000

Issuance of stock for
purchase of Product 27,500 275 274,725 -- -- -- 275,000
Merchandising, Inc.

Issuance of stock for
license agreements 26,666 267 266,399 -- -- -- 266,666

Net loss -- -- -- (678,905) -- -- (678,905)
--------- ----------- ----------- ----------- ----------- ---------- -----------

Balance at June 30, 1998 3,403,366 34,034 3,456,938 (629,928) -- (31,620) 2,829,424

Issuance of stock for cash 37,000 370 49,630 -- -- -- 50,000

Purchase of 900 shares of
stock for cash -- -- -- -- (10,982) -- (10,982)

Repayments on Notes Receivable
from Stockholders -- -- -- -- -- 3,215 3,215

Net loss -- -- -- (30,534) -- -- (30,534)
--------- ----------- ----------- ----------- ----------- ---------- -----------
Balance at June 30, 1999 3,440,366 $ 34,404 $ 3,506,568 $ (660,462) $ (10,982) $ (28,405) $ 2,841,123
========= =========== =========== =========== =========== ========== ===========
</TABLE>

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

F-6
<PAGE> 43

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (30,534) $ (678,905)
Adjustments to reconcile net loss to net cash used by operating
activities:
Depreciation 32,367 23,606
Amortization 75,618 26,420
Change in assets and liabilities, net of effects of business
acquisitions:
Accounts Receivable (456,734) (634,862)
Inventory 305,200 (2,149,020)
Prepaid Expenses and Other Current Assets 16,483 (40,064)
Other Assets, net (3,070) 48,029
Accounts Payable (15,562) 455,477
Accrued Expenses (140,885) 190,051
Other Liabilities 27,461 (2,343)
----------- -----------

Net cash used by operating activities (189,656) (2,761,611)
----------- -----------

Cash flows from investing activities:
Purchase of Property and Equipment (62,326) (128,263)
Cash in public entity in connection with reverse acquisition -- 582,660
Cash paid for Licenses (11,950) (25,000)
Cash paid for Treasury Shares (10,982)
Cash received from Notes Receivable from Stockholders 3,215
Cash used in business acquisition net of cash acquired -- (182,963)
----------- -----------

Net cash provided by(used in) investing activities (82,043) 246,434
----------- -----------
</TABLE>

(Continued)

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

F-7
<PAGE> 44

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Cash flow from financing activities
Net proceeds from Notes Payable to Stockholder 226,049 754,671
Proceeds from issuance of Common Stock 50,000 2,275,000
---------- ----------

Net cash provided by financing activities 276,049 3,029,671

Increase in cash 4,350 514,494

Cash and cash equivalents at beginning of year 514,494 --
---------- ----------

Cash and cash equivalents at end of year $ 518,844 $ 514,494
========== ==========

Noncash investing activities:

Common stock issued to stockholders for notes receivable $ -- $ 31,620
========== ==========

Common stock issued for license agreements $ -- $ 266,666
========== ==========

Common stock issued for purchase of subsidiary $ -- $ 275,000
========== ==========

Cash Payments for:
Income taxes $ 26,020 $ --
========== ==========
Interest $ 255,699 $ --
========== ==========
</TABLE>

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

F-8
<PAGE> 45

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

1 - GENERAL AND BACKGROUND

Collegiate Pacific Inc. ("CPI") was incorporated on April 10, 1997 and began
business in June 1997. The Company is a Delaware corporation and is primarily
engaged in the mail order marketing of professional sports equipment to schools,
colleges and other organizations throughout the United States.

Effective February 17, 1998 CPI entered into a reverse acquisition agreement
with DSSI, Inc. ("DSSI"), a publicly held "shell" corporation. DSSI issued
1,960,000 (approximately 62.5%) shares of DSSI's voting common stock in exchange
for all of the outstanding shares of CPI (a tax free reorganization). The public
entity then changed its name to Collegiate Pacific, Inc. The year-end was
previously December 26, but changed to June 30, the public entity's year-end.
For accounting purposes, the transaction was treated as a recapitalization of
CPI, with CPI as the acquirer (a reverse acquisition). Accordingly, the
financial statements prior to the reverse acquisition date included herein are
those of CPI. The recapitalization has been given retroactive effect to July 1,
1997.

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

The consolidated financial statements include the accounts of CPI and its wholly
owned subsidiaries Product Merchandising, Inc. ("PMI"), and Vantage Products
International, Inc. ("VPI") (collectively referred to as the "Company").
Significant intercompany accounts and transactions have been eliminated.

FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATIONS

Financial instruments, which are potentially subject to concentrations of credit
risk, consist principally of cash and accounts receivable. Cash deposits are
placed with high credit quality financial institutions to minimize risk.
Accounts receivable are unsecured. The fair value of these financial instruments
and notes payable approximate their carrying values.

RECLASSIFICATIONS

Certain amounts for June 30, 1998 have been reclassified to conform to the
current year classifications.

F-9
<PAGE> 46

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

ESTIMATES AND ASSUMPTIONS

Management uses estimates and assumptions in preparing consolidated financial
statements in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosures of contingent assets and liabilities, and the reported amounts
of revenues and expenses. Actual results could vary from the estimates used in
preparing the accompanying consolidated financial statements.

CASH AND CASH EQUIVALENTS

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

INVENTORIES

Inventories, which consist of goods held for resale, are carried at the lower of
cost or market using the average cost method.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives (5 to 7 years). The cost of
maintenance and repairs is charged to expense as incurred; significant renewals
and betterments are capitalized.

COST IN EXCESS OF NET TANGIBLE ASSETS ACQUIRED

Cost in excess of net tangible assets acquired is the difference between the
purchase price paid and liabilities assumed over the estimated fair market value
of assets acquired. Cost in excess of net tangible assets acquired in connection
with acquisitions is amortized using the straight-line method over 15 years.
Amortization expense relating to cost in excess of net tangible assets amounted
to $36,542 and $7,590 for the years ended June 30, 1999 and 1998. On an on-going
basis management reviews recoverability, the valuation and amortization of cost
in excess of net tangible assets. As a part of this review, the Company
considers the undiscounted projected future net cash flows in evaluating the
recoverability of cost in excess of net tangible assets. If the undiscounted
future net cash flows were less than the stated value, cost in excess of net
tangible assets would be written down to fair value.

F-10
<PAGE> 47

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

LICENSE AGREEMENTS

License agreements represent amounts paid to acquire exclusive distribution
rights for specific products and are amortized over their estimated useful life
ranging from 3 to 15 years. Amortization expense relating to license agreements
was $37,622 and $12,408 for the year ended June 30, 1999 and 1998, respectively.

STOCK BASED COMPENSATION

The Company measures compensation cost for its stock based compensation plans
under the provisions of Accounting Principles Board Opinion No. 25 ("APB 25"),
"Accounting for Stock Issued to Employees". The excess, if any, of the fair
value of the stock on the date of grant over the amount to be paid for the stock
is accrued over the related vesting period. Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123")
requires companies electing to continue to use APB 25 to account for its
stock-based compensation plan to make pro forma disclosures of net income and
earnings per share as if SFAS 123 had been applied. See Note 8.

INCOME TAXES

The Company utilizes the asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax payable or
refundable for the period plus or minus the change during the period in deferred
tax assets and liabilities.

ADVERTISING

The Company expenses the cost of advertising as incurred or when such
advertising initially takes place. Advertising expense approximated $489,000 and
$337,000 for the years ended June 30, 1999 and 1998, respectively.

F-11
<PAGE> 48

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

LOSS PER SHARE

Loss per common share was computed by dividing the net loss by the weighted
average number of shares of common stock outstanding. Loss per share for fiscal
1998 has been restated from the previously reported of $.20, to properly reflect
the capital structure of DSSI for the entire year. The effect of outstanding
options on the computation of net loss per share would be anti-dilutive and
therefore is not included in the computation of weighted average shares.

3 - BUSINESS ACQUISITIONS

VANTAGE PRODUCTS INTERNATIONAL, INC.

On May 31, 1998, the Company issued 80,000 shares of its common stock in
exchange for all the outstanding shares of VPI common stock. This transaction
was accounted for as a pooling-of-interests, and, accordingly, common stock,
additional paid-in capital and retained earnings at July 1, 1997 have been
adjusted.

PRODUCT MERCHANDISING, INC.

On April 14, 1998, the Company acquired all of the issued and outstanding common
stock of PMI for $200,000 cash and 27,500 shares of CPI common stock valued at a
fair market value of $2 per share. The acquisition has been accounted for as a
purchase and, accordingly, the net assets and results of operations of PMI have
been included in the Company's consolidated financial statements commencing on
April 14, 1998. The total acquisition cost exceeded the fair value of the net
assets acquired by approximately $552,000.

F-12
<PAGE> 49

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

4 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Displays $ 1,237 $ 1,237
Leasehold improvements 6,178 6,178
Fixtures and equipment 230,255 167,927
Automobile 11,700 11,700
--------- ---------

Total property and equipment 249,370 187,042
Less accumulated depreciation (98,785) (66,416)
--------- ---------

Property and equipment, net $ 150,585 $ 120,626
========= =========
</TABLE>

5 - NOTE PAYABLE TO STOCKHOLDER

The note payable to stockholder (also the president of the Company) is payable
on demand, uncollateralized, and bears interest at an annual rate of 12%.
Accrued interest on this note, which was paid in full in Fiscal Year 1999 and
totaled $145,165 at June 30, 1998, and is included in accrued expenses for the
period ended June 30,1998. On March 31,1999 the note payable to stockholder was
renewed with a maturity date of April 30, 2001.

6 - FEDERAL INCOME TAXES

CPI and its subsidiaries file separate income tax returns. Deferred tax assets
and liabilities consist of the following:

<TABLE>
<CAPTION>
JUNE 30,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
Deferred tax assets
Accrued expenses $ -- $ 65,222
Net operating loss carry forward 714,000 656,000
Other 5,018 17,399
--------- ---------
Total deferred tax assets 719,018 738,621
Valuation allowance (719,018) (738,621)
--------- ---------
Net deferred tax assets $ -- $ --
========= =========
</TABLE>

F-13
<PAGE> 50

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

6 - FEDERAL INCOME TAXES (Continued)

The Company has provided a valuation allowance against deferred tax assets
because their recovery is uncertain. Following is a reconciliation of income
taxes at the federal statutory rate to income tax expense:

<TABLE>
<CAPTION>
JUNE 30,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
Tax benefit at statutory rate $ 1,114 $ 230,828
Loss for which benefits were not used (1,114) (230,828)
Taxes attributable to filing on a separate return 23,896 --
basis
State income taxes 9,994 --
--------- ---------
Income tax expense $ 33,890 $ --
========= =========
</TABLE>

At June 30, 1999, the Company had net operating loss carryovers of approximately
$2,100,000, of which approximately $900,000 were carryforwards of DSSI. Because
of the ownership change rules, use of the DSSI carryforwards are limited to
approximately $80,000 per year.

The carryovers of CPI and its subsidiaries expire from 2013 through 2019. The
DSSI carryovers expire through 2011.

F-14
<PAGE> 51

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

7 - RELATED PARTY TRANSACTIONS

Included in accounts payable at June 30, 1998 is $100,000 due to the prior owner
of PMI. This amount was paid in full subsequent to June 30, 1998. See Note 5
regarding stockholders loans.

8 - STOCK OPTIONS AND WARRANTS

On September 22, 1994, DSSI established a non-qualified stock option plan, which
provides for the granting of non-qualifying stock options to purchase up to
100,000 shares of common stock at the fair market value at the date of grant.
There were 69,000 options outstanding at June 30, 1998. No options were granted,
exercised or canceled during the year ended June 30, 1998, and approximately
37,000 shares were exercised and no additional shares were granted or cancelled
under the terms of this plan during the year ended June 30, 1999.

On December 11, 1998, the Company's stockholders approved a new stock option
plan, ("1998 Collegiate Pacific Inc. Stock Option Plan"). The new plan
authorizes the Company's Board of Directors to grant employees, directors and
consultants of the Company up to an aggregate of 400,000 shares of the Company's
common stock, $0.01 par value per share. Pursuant to the approval of the stock
option plan by the Company's stockholders, the Company's Board of Directors on
February 24, 1999 granted 41,500 shares to employees and non-employee directors
of the Company at the closing price of the Company's common stock, which was
$9.40. These options vested at date of grant.

F-15
<PAGE> 52

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

8 - STOCK OPTIONS AND WARRANTS (Continued)

A summary of the Company's option and warrant activity for the years ended June
30, 1998 and 1999 follows:

<TABLE>
<CAPTION>
WARRANTS ISSUED OPTIONS
TO DIRECTORS WARRANTS ISSUED TO WEIGHTED
OFFICERS ISSUED TO OFFICERS AND AVERAGE
AND EMPLOYEES OTHER PARTIES EMPLOYEES EXERCISE PRICE
------------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Outstanding at June 30, 1997 28,936 54,269 69,000 $ 8.35

Options and warrants expired (28,936) (54,269) -- --
---------- ---------- ----------- ------------
Outstanding and exercisable at June 30, 1998 -- -- 69,000 2.00

Options and warrants granted -- -- 41,500 9.40

Options and warrants exercised -- -- (37,000) 1.35

Options and warrants expired -- -- -- --
---------- ---------- ----------- ------------
Outstanding and exercisable at June 30, 1999 -- -- 73,500 $ 6.20
========== ========== =========== ============
</TABLE>

The weighted average fair value of options granted in Fiscal 1999 was $6.15 per
share.

The Company has adopted the disclosure provisions of Statement No. 123, as
discussed in Note 2, and continues to apply Opinion 25 for stock options granted
to employees. If the Company had recognized compensation expense based upon the
fair market at the date of grant for options granted to employees, the effect on
net loss and loss per share for the year ended June 30, 1999 would have been as
follows:

<TABLE>
<CAPTION>
<S> <C>
Net loss
As reported $ (30,534)
Pro forma (285,000)
Loss per common share
As reported $ (0.01)
Pro forma (0.08)
</TABLE>

The fair value of these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions: expected volatility of 140%; risk free interest rate of 5.50%; no
dividend yield; and expected lives of seven years.

F-16
<PAGE> 53

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

8 - STOCK OPTIONS AND WARRANTS (Continued)

The following table summarizes additional information about stock options at
June 30,1999:

<TABLE>
<CAPTION>
OUTSTANDING AND EXERCISABLE
---------------------------
WEIGHTED
AVERAGE
REMAINING WEIGHTED
CONTRACTUAL AVERAGE
LIFE EXERCISE
EXERCISE PRICE SHARES (IN YEARS) PRICE
-------------- ------ ---------- -----

9 - LEASES

The Company leases office and warehouse facilities located in Dallas, Texas and
Memphis, Tennessee under the terms of operating leases which expire at various
dates through 2003. Rent expense approximated $90,000 for the year ended June
30, 1998, and $107,000 for the year ended June 30, 1999.

Future minimum lease commitments on all operating leases with terms in excess of
one year are as follows:

2000 $ 94,890
2001 104,000
2002 105,000
2003 8,750
----------
$ 312,640
==========

F-17
<PAGE> 54

COLLEGIATE PACIFIC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

10 - STOCK SPLIT

On January 14, 2000, the stockholders of the Company approved a one-for-five
reverse stock split of the Company's $.01 par value common stock. As a result of
the reverse stock split additional paid in capital was increased by $137,614 and
136,134 for the periods ended June 30, 1999 and 1998, respectively, and common
stock was reduced by the same amount. All references in the accompanying
financial statements to the numbers of shares of Common Stock and the per-share
amounts have been restated to reflect the reverse stock split.

11 - SUBSEQUENT EVENTS (UNAUDITED)

On September 14, 1999 the Company agreed to terms for a new $2,000,000 Revolving
Line of Credit with Chase Bank of Texas, N.A. The new Revolving Line of Credit
will allow the Company to borrow funds based upon certain percentages of
accounts receivable and inventories. The Revolving Credit Facility matures on
October 31, 2001 and includes a provision for letters of credit. Borrowings
under the Revolving Line of Credit will bear interest at the prevailing Prime
Rate plus 1/4% or LIBOR plus 2-1/2%. The Note Payable to Stockholder is
subordinate to the Revolving Line of Credit, and the Revolving Line of Credit is
partially guaranteed by the Stockholder holding the existing Note Payable.

F-18
<PAGE> 55

COLLEGIATE PACIFIC INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
(Unaudited)
March 31, 2000 June 30, 1999
-------------- --------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 391,830 $ 518,844
Accounts receivable, net of the allowance for doubtful accounts of $50,236
and $38,806, respectively 1,479,849 1,142,708

Inventories 2,530,774 1,843,820
Prepaid expenses and other assets 474,065 23,581
----------- -----------
Total current assets 4,876,518 3,528,953

PROPERTY AND EQUIPMENT 264,484 249,370
Less accumulated depreciation (123,682) (98,785)
----------- -----------
140,802 150,585

OTHER ASSETS
License agreements, net of accumulated amortization of $96,937 and
$50,030, respectively 504,981 253,586
Cost in excess of net tangible assets acquired, net of accumulated
amortization of $70,142 and $42,373, respectively 596,148 509,373
Other assets, net 53,513 54,409
----------- -----------
$ 6,171,962 $ 4,496,906
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable $ 571,925 $ 537,056
Accrued expenses 52,181 51,181
Other current liabilities 56,372 86,826
----------- -----------
Total current liabilities 680,478 675,063

Note payable to stockholders 2,235,000 980,720
----------- -----------

Total liabilities 2,915,478 1,655,783

STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 50,000,000 shares; issued and
outstanding, 3,567,340 and 3,440,367 shares, respectively 35,673 34,404
Additional paid-in capital 4,300,242 3,506,568
Accumulated deficit (953,787) (660,462)
Treasury shares; at cost 10,860 and 900 shares, respectively (125,644) (10,982)
----------- -----------
3,256,484 2,869,528
Less notes receivable from stockholders -- (28,405)
----------- -----------
Total stockholders' equity 3,256,484 2,841,123
----------- -----------
$ 6,171,962 $ 4,496,906
=========== ===========
</TABLE>

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

F-19
<PAGE> 56

COLLEGIATE PACIFIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
Nine Months Ended
March 31,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Revenues $ 6,580,552 $ 4,133,851
Cost of sales 4,219,744 2,553,672
----------- -----------
Gross margin 2,360,808 1,580,179

Selling, general and administrative expenses 2,521,837 1,503,579
----------- -----------
Operating profit (loss) (161,029) 76,600
Interest expense (136,463) (79,037)
Other income 4,167 5,439
----------- -----------
Net earnings (loss) $ (293,325) $ 3,002
=========== ===========
Net loss per share - basic and diluted $ (0.08) $ 0.00
=========== ===========
Shares used in computing net earnings
(loss) per share
Basic 3,482,485 3,407,168
Diluted 3,482,485 3,407,168
</TABLE>

The accompanying notes are an integral part of these
condensed consolidated financial statements

F-20
<PAGE> 57

COLLEGIATE PACIFIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
Nine months ended
March 31,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Operating activities
Net earnings (loss) $ (293,325) $ 3,002
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization 101,982 79,024
Changes in operating assets and liabilities (1,470,678) (426,089)
----------- -----------
Net cash used in operating activities (1,662,021) (344,063)

Investing activities
Purchase of property and equipment (15,114) (55,540)
Cash paid for licenses (298,302) --
Cash used in business acquisition, net of cash acquired (114,543) --
----------- -----------
Net cash used in investing activities (427,959) (55,540)

Financing activities
Proceeds from borrowings 1,254,280 327,978
Cash paid for treasury shares (114,662) --
Cash received for notes receivable from stockholders 28,405 --
Proceeds from issuance of common stock 794,943 6,250
----------- -----------
Net cash provided by financing activities 1,962,966 334,228
----------- -----------

Net decrease in cash and cash equivalents (127,014) (65,375)

Cash and cash equivalents at beginning of period 518,844 514,494
----------- -----------
Cash and cash equivalents at end of period $ 391,830 $ 449,119
=========== ===========
Supplemental disclosure of cash flow information
Cash paid during the period for interest $ 136,463 $ 198
=========== ===========
</TABLE>

The accompanying notes are an integral part of these
condensed consolidated financial statements

F-21
<PAGE> 58

NOTE 1 - GENERAL AND BACKGROUND

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
for interim financial information. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements.
The condensed consolidated financial statements as of March 31, 2000 and the
periods ended March 31, 2000 and 1999 are unaudited and reflect all adjustments
which are, in the opinion of management, necessary for a fair presentation of
the financial position and operating results for the interim period. The
condensed financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, for the year ended June 30,
1999 together with management's discussion and analysis of financial condition
and results of operations, contained in the 10-KSB and Form SB-2 filed with the
Securities and Exchange Commission. The results of operations for the nine
months ended March 31, 2000 are not necessarily indicative of the results for
the entire fiscal year.

The consolidated financial statements for the period ended March 31, 2000
include the accounts of Collegiate Pacific Inc. and its wholly owned subsidiary
Product Merchandising, Inc., (collectively referred to as the "Company").

NOTE 2 - BUSINESS COMBINATIONS

On October 22, 1999, the Company acquired certain assets of Mark One
Distributors, Inc. in an all cash transaction. The purchased assets related to
sales and distribution activities by Mark One in the camp sporting goods
business. The acquisition was accounted for as a purchase, and accordingly, the
net assets and results of operations of Mark One's camping related business have
been included in the Company's consolidated financial statements commencing on
October 22, 1999.

NOTE 3 - EQUITY

On January 14, 2000, the stockholders of the Company approved a one for five
reverse stock split of the Company's $.01 par value common stock (the "Common
Stock"). As a result of the reverse stock split additional paid in capital was
increased by approximately $139 thousand and Common Stock has been reduced by
the same amount. All references in the accompanying financial statements to the
number of shares of Common Stock and the per-share amounts have been restated to
reflect the reverse stock split.

In February 2000, a former executive of the DSSI Corporation ("DSSI"), which was
the predecessor of the Company, exercised common stock warrants for 98,974
shares of Common Stock. The warrants were originally granted to the warrant
holder during his tenure as an executive of DSSI. The terms of the warrants were
extended at the February 18, 1998 meeting of the Board of Directors of DSSI.
Although the extension of the terms of the warrants was not disclosed to the
Company's current management, the Company accepted the exercise of the warrants
and the Company received funds for the exercise of the warrants in the amount of
approximately $500 thousand or $5.05 per share.

F-22
<PAGE> 59

In January 2000, the Company declared a special warrant dividend to the holders
of the Company's Common Stock. One warrant will be issued for each share of
Common Stock held and will entitle the warrant holder to purchase, for cash, one
share of Common Stock at $10 per share and the warrant holders may exercise the
warrant any time on or before May 26, 2005. The warrants are callable and
cancelable at a cancellation price of $.10 per warrant. If the Company calls the
Warrants for cancellation, holders may exercise the warrants at any time prior
to the close of business on the business day preceding the date fixed for
cancellation. The record date for the distribution of the warrants was May 26,
2000.

NOTE 4 - RELATED PARTY TRANSACTION

During the period the Company purchased certain inventory items from a
manufacturing supplier which is also owned by the majority stockholder of the
Company. Purchases for the period from the manufacturing supplier were
approximately $776 thousand for the nine month period ended on March 31, 2000
and the Company had no outstanding payable to the supplier at the end of the
period.

NOTE 5 - NOTE PAYABLE TO STOCKHOLDERS

In February 2000, the Company agreed to exchange the note payable to stockholder
for a subordinated convertible note. In addition, the Company solicited and
received additional subscriptions from Company directors and officers including
the holder of the existing note payable to stockholder, and third party
investors for approximately $1.3 million in subordinated convertible notes. The
subordinated convertible notes bore interest at the prevailing Prime Rate plus
2.5%, were non-callable by the Company for a period of two years, and were
convertible to Common Stock at $3.30 per share, which was set by a formula equal
to 110% of the closing price of the Common Stock on January 17, 2000. The
subordinated convertible notes were subordinate to the Company's Revolving Line
of Credit with Chase Bank of Texas, N.A and were uncollateralized. Interest paid
on these notes and the note payable to stockholder during the period was
approximately $84 thousand.

NOTE 6 - SUBSEQUENT EVENTS

On April 19, 2000, the holders of the Subordinated Convertible Notes converted
the entire outstanding balance of approximately $2.3 million in notes to 677,267
shares of Common Stock.

F-23
<PAGE> 60

PART II

ITEM 27. EXHIBITS.

The Exhibits to this Registration Statement are listed in the Index to
Exhibits of this Registration Statement, which Index is incorporated herein by
reference.

II-1
<PAGE> 61

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on June 22, 2000.

COLLEGIATE PACIFIC INC.

By: /s/ MICHAEL J. BLUMENFELD
-----------------------------------------------
Michael J. Blumenfeld,
Chairman, Chief Executive Officer
and Director (Principal Executive Officer)

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

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>

*By: /s/ MICHAEL J. BLUMENFELD Chairman, Chief Executive Officer, and June 22, 2000
------------------------------------ Director
Michael J. Blumenfeld (Principal Executive Officer)
Attorney In Fact

* President and Director June 22, 2000
-----------------------------------------
Adam Blumenfeld

* Chief Operating Officer and Director June 22, 2000
-----------------------------------------
Arthur J. Coerver

* Director June 22, 2000
-----------------------------------------
Jeff Davidowitz

* Chief Financial Officer, Secretary, and June 22, 2000
----------------------------------------- Treasurer (Principal Accounting and
William R. Estill Financial Officer)

* Director June 22, 2000
-----------------------------------------
Robert W. Philip

* Vice President Marketing and Director June 22, 2000
-----------------------------------------
Harvey Rothenberg

* Director June 22, 2000
-----------------------------------------
William A. Watkins, Jr.
</TABLE>

II-2
<PAGE> 62

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------ -----------------------
<S> <C>
2.1 Purchase and Sale Agreement dated March 14, 1997 for the sale of the majority of
the Company's assets and business to Casco Standards, Inc. (1)

2.2 Stock Purchase Agreement dated August 18, 1997 with Michael J. Blumenfeld. (2)

2.3 Agreement and Plan of Merger dated July 20, 1999 for the reincorporation of the
Company in Delaware. (3)

3.1 Intentionally omitted.

3.2 Intentionally omitted.

3.3 Intentionally omitted.

3.4 Intentionally omitted.

3.5 Intentionally omitted.

3.6 Intentionally omitted.

3.7 Copy of Articles of Incorporation of the Company filed on December 15, 1998. (4)

3.8 Copy of Certificate of Merger of the Company filed on July 20, 1999. (4)

3.9 Copy of By-Laws of the Company. (4)

3.10 Copy of Certificate of Amendment to Articles of Incorporation of the Company filed
on January 18, 2000. (13)

4.1 Intentionally omitted.

4.2 Specimen Certificate of Common Stock, $0.01, par value, of the Company. (4)

4.3 Specimen Common Stock Purchase Warrant of the Company. (13)

5.1 Opinion of Hughes & Luce, L.L.P. (13)

10.1 Copy of Warrant Agency Agreement dated as of June 4, 1993 between the Company and
Continental Stock Transfer & Trust Company, as Warrant Agent. (5)

10.2 Proof of Redeemable Warrant expiring June 3, 1996 of the Company. (5)

10.3 Form of Underwriter's Unit Purchase Warrant of the Company. (6)

10.4 Form of Underwriter's Warrant of the Company. (6)

10.5 Copy of the 1988 Stock Option Plan of the Company. (7)

10.6 Copy of the 1994 Stock Option Plan of the Company. (8)

10.7 Copy of Employee Restricted Stock Plan of the Company. (9)

10.8 Copy of Lease dated July 1, 1997 between the Company, as tenant, and Post-Valwood,
Inc., as landlord. (10)

10.9 Copy of exclusive Distribution Agreement dated February 24, 1998, between the
Company and Equipmart, Inc. (10)

10.10 Copy of exclusive Distribution Agreement dated March 7, 1998, between the Company
and FunNets, Inc. (10)

10.11 Copy of exclusive Distribution Agreement dated March 21, 1998, between the Company
and Pro Gym Equipment, Inc. (10)

10.12 Copy of the Stock Acquisition Agreement dated April 14, 1998, between the Company
and Product Merchandising, Inc. (10)

10.13 Copy of the Agreement and Plan of Merger dated May 31, 1998, between the Company
and Vantage Products International, Inc. (10)

10.14 Copy of the 1998 Collegiate Pacific Inc. Stock Option Plan. (3)

10.15 Copy of Credit Agreement, dated as of June 30, 1999, between Chase Bank of Texas,
National Association, and the Company for a $2,000,000 line of credit, and related
documents. (11)

10.16 Copy of the Promissory Note dated March 31, 1999 from the Company to Michael J.
Blumenfeld in the principal amount of $1,082,648.75. (11)

10.17 Copy of Warrant Agreement dated as of May 26, 2000 between the Company and
Continental Stock Transfer & Trust Company, as Warrant Agent, with the form of
Common Stock Purchase Warrant attached. (13)
</TABLE>

<PAGE> 63

<TABLE>
<S> <C>
10.18 Copy of Purchase Agreement dated as of February 29, 2000,
between the Company and the Note Holders, with the form of
Subordinated Convertible Promissory Note attached as an
exhibit. (13)
23.1 Consent of Hughes & Luce, L.L.P. (included in Exhibit 5.1) (13)
23.2 Consent of SUTTON FROST LLP
23.3 Consent of GRANT THORNTON LLP
24.1 Power of Attorney (included in Part II of this Registration Statement) (13)
</TABLE>

--------------------
(1) Filed as an exhibit to the Company's Definitive Proxy Statement for its
Annual Meeting held on June 16, 1997.

(2) Filed as an exhibit to the Company's Form 8-K/A filed on
September 11, 1997.

(3) Filed as an exhibit to the Company's Definitive Proxy Statement for its
Annual meeting held on December 11, 1998.

(4) Filed as an exhibit to the Company's Form 8-A dated September 9, 1999.

(5) Filed as an exhibit to the Company's Form 8-A dated June 28, 1993.

(6) Filed as an exhibit to the Company's Current Report on Form 8-K filed
on July 12, 1993.

(7) Filed as an exhibit to the Company's Registration Statement on Form
S-18, File No. 33-19770-NY.

(8) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
the year ended June 30, 1994.

(9) Filed as an exhibit to a Post-Effective Amendment to the Company's
Registration Statement on Form S- 18, File No. 33-19770-NY.

(10) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
the year ended June 30, 1998.

(12) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
the year ended June 30, 1999.

(13) Filed as an exhibit to the Company's Registration Statement on Form
SB-2 (No. 333-34294) dated April 7, 2000, and amended May 8, 2000.