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                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

   (Mark One)

              [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1999

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
              For the transition period from         to

                         Commission file number 0-19298

                               RIDDELL SPORTS INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                            <C>
                    Delaware                                                22-2890400
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>

            50 East 42nd Street, Suite 1808, New York, New York 10017
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (212) 808-5400

           Securities registered pursuant to Section 12(b) of the Act:

      Title of each class     Name of each exchange on which registered
            [none]                             [none]

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.01 par value
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES /x/ NO / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. /x/

The Registrant hereby incorporates by reference, in response to Part III, its
Proxy Statement for its 2000 Annual Meeting of Stockholders to be filed on or
before April 30, 2000 (except to the limited extent the rules and regulations of
the Commission authorize certain sections of such Proxy Statement not to be
incorporated herein by reference, as specifically indicated in such Proxy
Statement).

The aggregate market value of the 4,869,958 shares of outstanding voting stock
held by non-affiliates of the Registrant, computed by reference to the last sale
price of the Registrant's Common Stock on March 28, 2000, is $14,609,874.

As of March 28, 2000, the Registrant had 9,318,957 shares of Common Stock, $.01
par value per share, outstanding.


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SPECIAL CAUTIONARY NOTICE
REGARDING FORWARD-LOOKING STATEMENTS

         This report contains certain forward-looking statements, and
information relating to Riddell that are based on the beliefs of management as
well as assumptions made by and information currently available to management.
Such forward-looking statements are principally contained in the sections "Part
I--Item 1--Business," and "Part 2--Item 7--Management's Discussion and Analysis
of Financial Condition and Results of Operations." Our statements of plans,
intentions, objectives and future economic or operating performance contained in
this report are forward-looking statements. Forward-looking statements include
but are not limited to statements containing terms such as "believes," "does not
believe," "no reason to believe," "expects," "plans," "intends," "estimates,"
"will," "would," "anticipated" or "anticipates." Such statements reflect the
current views of Riddell with respect to future events and are subject to
certain risks and uncertainties and that could cause the actual results to
differ materially from those expressed in any forward-looking statements made by
Riddell. We do not intend to update these forward-looking statements.

                                     PART I

Item 1. BUSINESS

General

         Riddell is a leading marketer and manufacturer of branded products and
services to the extracurricular activities portion of the educational market. We
believe that the extracurricular activities market encompasses approximately 30
million young men and women in the United States who participate in team sports
and other organized activities outside the classroom. We estimate that this
market exceeds $5 billion in sales annually, including approximately $2 billion
of sales in athletic equipment and uniforms for team sports and various products
and services for cheerleaders and dancers.

         Under our many brands, the best known of which are Riddell and Varsity
Spirit, which we own, and Umbro, which we license, we are:

         o        a leading provider of athletic equipment and clothing for team
                  sports;

         o        the only national reconditioner of football protective and
                  other athletic equipment;

         o        the largest designer, marketer and supplier of innovative
                  cheerleader and dance team uniforms and accessories;

         o        the biggest operator of cheerleading and dance team training
                  camps and clinics;

         o        a leading organizer of special events for extracurricular
                  activities;

         o        a major provider of soccer apparel, equipment and footwear for
                  team play; and

         o        a supplier of sports collectible products through retailers in
                  the United States and internationally.

         We have built our various brands and lines of business, in large part,
based upon our long-standing marketing strategy through which our direct,
proprietary sales force establishes and builds relationships with the
participants, coaches and instructors among the 40,000 junior and senior high
schools, colleges and various youth organizations throughout the United States.
We believe that our sales force is unique within the extracurricular activities
market and provides us with a significant competitive advantage.

         We employ our relationship marketing strategy year-round, integrating
it with our other activities, including conducting training camps, clinics and
conventions and producing various nationally-televised and regional

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championships in the U.S. and performance events in the U.S. and Europe. These
activities, which are in themselves profitable, reinforce each other and the
sale of our products, while they enhance participation in the extracurricular
market and build loyalty to our brands.

         We believe that more than 50% of all high school and collegiate
football players either wear our football helmets or use other branded football
equipment sold by us. We also have a longstanding agreement with the NFL for the
promotion of our Riddell brand. Over 80% of the NFL players choose to wear our
helmets. We also use the Riddell brand to sell sports collectible products
through retailers in the U.S. and internationally. We believe that our Varsity
Spirit brand cheerleading uniforms are worn by approximately 40% of all high
school and 75% of all collegiate cheerleaders. Our cheerleading camps were
attended by more than 200,000 students in 1999, more than 25,000 people traveled
to the Walt Disney Resort in Orlando, Florida to participate in and view our
various cheerleading and dance competitions.

         We are a Delaware corporation that was formed in 1988 to acquire the
Riddell brand football protective equipment business. In 1991, we effected an
initial public offering of our common stock. Since 1995, we have been
distributing our products to the extracurricular market directly, rather than
through dealers. In 1997, we acquired Varsity Spirit Corporation, a leader in
the spirit industry, because we believed that there was a natural synergy
between the companies. Since the acquisition, we have successfully integrated
the operations of Riddell and Varsity. At the end of 1998, we became the
exclusive U.S. licensee for Umbro branded soccer team apparel, footwear,
equipment and accessories for the team channel of distribution. Umbro is one of
the leading soccer brands worldwide. We believe that the Umbro license
complements our existing product lines.

         Our strategy is to increase our current market share and broaden the
recognition of our brands in the extracurricular market. We intend to implement
this strategy by:

         o        continuing to focus on opportunities to market additional
                  products and services to our traditional customers in our team
                  sports and school spirit business;

         o        developing special events, competitions and championships to
                  create new relationships with participants in extracurricular
                  activities that we are currently not serving effectively, such
                  as youth baseball;

         o        expanding the size of our sales force; and

         o        implementing our Internet operations.

RECENT DEVELOPMENTS

         We launched our Internet business in the fourth quarter of 1999 with
our first two web sites: a community web site with e-commerce elements for
cheerleaders, www.varsity.com and our e-commerce web site for our sports
collectibles, www.riddell.com. Our Internet strategy is to build community sites
while simultaneously establishing complimentary commerce sites. The strategy
allows us to extend our relationship sales and marketing strategy to expand our
core business as well as to develop new lines of business. Over the next two to
three years, we intend to continuously develop additional community-based web
sites expanding from cheerleading to other extracurricular activity such as
football, soccer, and various other team sports and then to further expand into
other extracurricular activities, such as dance, band, etc.

BUSINESS SEGMENTS

         We presently employ our sales and marketing strategy and operate our
business through various wholly-owned subsidiaries in three business segments.

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         Extracurricular

         Our extracurricular segment, which we have historically referred to as
our institutional segment, markets, manufactures and distributes products and
services primarily through our 320 person direct sales force to customers such
as schools, recreational groups and other organizations. It is our largest
segment, and was responsible for over 90% of our revenues in 1999.

         Retail

         Our retail segment markets products through retailers in the U.S. and
internationally, and was responsible for approximately 9% of our revenues in
1999. Most of the products sold by this segment are sports collectible products,
such as authentic and replica football helmets which bear licensed National
Football League and collegiate team logos. We also have licenses from Major
League Baseball and NASCAR. This segment's operations also include sales of a
limited amount of recreational football, baseball and other athletic products
sold internationally and in the U.S. through consumer product retailers and
distributors.

         Licensing

         Our licensing segment consists of the licensing of our Riddell and
MacGregor trademark rights to other entities for use in marketing products such
as athletic footwear and equipment, and was responsible for approximately 1% of
our revenues in 1999.

         Financial information for each of our three business segments is
presented in Note 16 to our consolidated financial statements.

         EXTRACURRICULAR SEGMENT

         We believe that we are a leading marketer and manufacturer of branded
products and services to the extracurricular portion of the U.S. educational
market. Today, our extracurricular products and services segment includes our
team sports and school spirit business units.

         The extracurricular activities market includes most of the organized
activities for children that take place outside of classrooms in the United
States. It includes team sports, school spirit activities, private dance groups,
bands, orchestras, choirs and a wide variety of other school-sponsored clubs,
such as drama, debate and chess and is serviced by a highly-fragmented range of
suppliers.

         These activities take place in approximately 40,000 junior and senior
high schools and in colleges, as well as in youth leagues and organizations like
Little League, Pop Warner and parks and recreation leagues. In addition to the
6.5 million participants in high school team sports in the U.S., we estimate
that there are an additional 20 million participants in team sports in youth
leagues and junior high schools. We also estimate that there are an additional
10 million participants in other extracurricular activities, such as
school-sponsored cheerleading, bands and choirs and youngsters who take dance
lessons at private studios. We estimate that spending by these various
participants on the extracurricular activities that we are already targeting
exceeds $2 billion a year and represents aggregate spending of over $5 billion
annually.

         Team sports

         We believe that we are the world's leading manufacturer of football
helmets, which we sell under our Riddell brand. Our Riddell brand football
helmets are worn by football players throughout the world, including players on
all NFL teams, certain other professional leagues and on most teams in the NCAA.
High school teams, however, have historically been the largest market for our
football helmets. We offer several types of competitive and youth football
helmets which are different in their configurations, padding and other features.
Our helmets meet the industry standards set by the National Operational
Committee for Safety in Athletic Equipment, an independent entity organized by
various


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participants from the sporting goods industry which establishes industry-wide
standards for protective athletic equipment.

         We also sell a professional and collegiate line of shoulder pads under
the Power(R) name and several other lines of shoulder pads under the Riddell
name. Our shoulder pads are used by NFL, college, high school and youth players.

         We have been steadily widening the categories of athletic products we
sell to the extracurricular market. In late 1998, we introduced a line of custom
team uniforms for high school and youth participants. In 1996, we introduced a
line of baseball and softball products designed for high school and college
players and expanded this line to the youth market in 1998.

         Game uniforms

         We are seeking to capitalize on the same expertise and efficiency, and
apply the same design and manufacturing techniques that we have employed in
producing custom-made cheerleading and dance apparel in connection with
producing game uniforms for various team sports. We believe that the game
uniform market for team sports is a larger market than our other team sports
products and services lines of business. We believe that by using the suppliers
of our Varsity cheerleader uniforms we will be able to produce and deliver
competitively-priced, high-quality game uniforms faster than our competitors.

         In 1998, we began manufacturing athletic team uniforms for team sports.
We believe that the manufacturing capabilities of our cheerleader uniform
operations, coupled with the breadth and depth of our direct sales organization
to schools and youth organizations across the country, provide us with an
opportunity to successfully expand our historical line of athletic equipment
into game uniforms.

         At the end of 1998, we also began offering our Umbro team soccer
uniforms, along with a line of equipment and apparel, through a network of
independent sales representatives. These independent sales representatives
market and sell Umbro team soccer apparel, footwear and equipment to the team
channel of distribution in the United States.

         Reconditioning

         We are the leading national reconditioner of football helmets, shoulder
pads and athletic equipment. We believe that our share of the reconditioning
market exceeds 50%. Reconditioning typically involves the cleaning, sanitizing,
buffing or painting, and recertifying of helmets as conforming to the standards
set by the National Operational Committee for Safety in Athletic Equipment.
Reconditioning may also include replacing face guards, interior pads and chin
straps. We also recondition shoulder pads, as well as equipment for other
sports, including baseball and lacrosse helmets, catchers' masks and baseball
gloves. Our reconditioning services are marketed by our sales force to the same
athletic coaches responsible for equipment purchases. Our reconditioning
customers are primarily high schools, colleges and youth recreational groups.

         School spirit

         Cheerleader and dance team uniforms and accessories

         We design, market and manufacture cheerleader and dance team uniforms
and accessories, including sweaters, sweatshirts, jumpers, vests, skirts,
warm-up suits, t-shirts, shorts, pompons, socks, jackets, pins and gloves. We
market all of our cheerleading uniforms and accessories under the Varsity Spirit
trademark. Over 100,000 catalogs are mailed annually to schools and school
spirit advisors and coaches containing color photographs and descriptions of our
Varsity Spirit line of uniforms and accessories. We supplement our direct sales
force and catalog sales efforts with a telemarketing sales force of 13 full and
part-time employees.

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         Cheerleader and dance team camps

         We operate cheerleader and dance team camps in the United States. Camp
enrollment has increased every year since the camp division commenced operation
in 1975 with 20 cheerleading camps and 4,000 participants. During the 1999 camp
season, approximately 215,000 participants, consisting of students and their
coaches, attended Varsity's Universal Cheerleader Association and United Spirit
Association camps, including over 8,000 participants representing colleges and
junior colleges. During 1999, cheerleading and/or dance team squads from
approximately 75% of the universities comprising the Atlantic Coast, Big East,
Big Ten, Big Twelve, Pacific 10 and Southeastern collegiate athletic conferences
attended our camps.

         A significant majority of our cheerleader and dance team camps are
conducted on college or junior college campuses. We contract with the colleges
and universities for the provision of housing, food and athletic facilities. Our
camps generally are conducted over a four-day period and are attended by
resident and commuting students.

         Our instructors are mostly college cheerleaders who may have previously
attended our camp, and we believe that our training of many of the top college
cheerleading squads augments our recruiting of high school and junior high
school camp participants. Prior to the commencement of our camps, instructors
participate in an intensive six-day training session where they are taught new
cheerleading and dance material. We also place a high degree of emphasis on
teaching our instructors the most up-to-date teaching, training and safety
techniques.

         We were a founding member of and remain an active participant in the
American Association of Cheerleading Coaches and Advisors, an industry trade
group whose mission is to improve the quality of cheerleading and to maintain
established safety standards. In 1990, this industry trade group published
comprehensive certification and safety guidelines for cheerleading coaches. We
follow the safety guidelines established by the Association of Cheerleading
Coaches and Advisors in the training of our instructional staff and in the
conduct of our cheerleader and dance team camps and competitions.

         Special events

         We promote our Varsity Spirit brand products and services, as well as
the school spirit industry, through active and visible association with the
following annual championships and television specials:

         o        National High School Cheerleading Championship(R)

         o        National Dance Team Championship(R)

         o        College Cheerleading and Dance Team National Championship(R)

         o        National All Star Cheerleading Championship(R)

         o        Company Dance Championship(R)

         These championships and special events have been regularly televised on
the ESPN television network and have been sponsored by various companies and
products, including Nike, Unilever, Sprint, The Walt Disney World Resort,
Johnson & Johnson and Claire's Accessories.

         In addition to promoting cheerleading and dance team activities, these
championships, television specials and events are a source of revenues for us.
In 1999, over 25,000 persons, including cheerleaders and their families,
attended our special events.

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         Other extracurricular operations

         We are seeking to expand our uniform design, manufacturing and special
event expertise from cheerleading into the private dance studio market through
our venture called Company Dance. Company Dance operates weekend dance
conventions in seventeen U.S. cities and an annual championship from the Walt
Disney Resort in Orlando that is televised on ESPN.

         We also operate Intropa, a tour company, which specializes in
organizing trips for cheerleaders, bands, choirs and orchestras, dance and
theater groups and other school affiliated or performing groups, which tour in
the continental United States, Hawaii, Canada, Europe and Israel.

         Relationship marketing

         Our marketing model is based upon our longstanding relationships with
three distinct but equally important groups. First, our direct sales
organization, through personalized service, creates an important connection to
the participants, coaches and instructors of various team sports, school spirit
activities and other extracurricular activities in schools, youth leagues and
organizations and colleges. Second, instructors and staff at our camps, clinics
and performance tours and events motivate participants to get more instruction
and become better competitors. Third, we increase our brand awareness and
enhance our relationships with our customers through our affiliations with
strategic partners such as the Walt Disney Company, ESPN and other media and
marketing entities. These strategic relationships and the televised shows that
we produce reinforce the importance of our events and competitions. Our
extracurricular segment is supported and based upon our sales and marketing
strategy, which we believe provides us with a competitive advantage, and
features the following key components.

         o        Our proprietary, direct sales force

         o        Cross marketing of products and promotional activities

                  o        Camps and Clinics

                  o        Special events, conventions and competitions

                  o        Uniforms and accessories

         o        Key marketing alliances

         o        New Internet operations

         Proprietary, direct sales force

         Our comprehensive relationship marketing and sales strategy is made
possible by our 320 person direct sales force who are responsible for developing
and maintaining relationships among the 40,000 junior and senior high schools,
and colleges in the United States, visiting between 10,000 and 15,000 schools
every five weeks during the sales season. We believe that there is no other
nationwide direct sales force focusing on the product lines that we sell to the
extracurricular branch of the educational market and that this gives us a
significant competitive advantage. Our sales force develops relationships with
coaches and athletic directors throughout the U.S. by providing value-added
services that enhance the coach's management of his team. Examples of this
include: providing clinics, fitting football helmets and equipment, and quickly
servicing, designing and fitting custom-uniforms for participants in
cheerleading and team sports.

         Over the last several years, we have been increasing the size of our
sales force, and intend to continue to do so over the next few years. Increasing
the size of the sales force goes hand-in-hand with expanding the array of
products and services marketed by the sales force. In this way, we can shrink
the size of sales territories, while sales people become more efficient and
increase their incomes. As a result, we are seeking to make it easier for each
salesperson to


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better concentrate on and become more intimate with a smaller sales territory,
while at the same time having more products and services to offer to the
customers in that territory. The desired effect is to enable each salesperson to
generate increased sales by spending less time traveling and more time with
customers selling a greater array of products and services. Increased sales
enables the sales force to increase their incomes, because their compensation is
commission-based and smaller territories can also increase their incomes because
our salespeople pay for all of their travel and other related expenses.

         Cross marketing and promotional activities

         Since 1974, we have conducted, and we continue to refine, profit
generating activities, which are an integral part of our promotional efforts. We
create relationships through our camps and events and believe that these
relationships naturally translate to a sales opportunity for our cheerleading
uniforms or dance costumes when the campers return to school. When the sales
force interacts with cheerleaders or dance team participants and their coaches
during the design and fitting of custom uniforms, they also have the opportunity
to reinforce participation in our camps and special events. We intend to extend
this strategy to other extracurricular activities. The marketing of our various
activities is designed to provide logical extensions to basic participation and
to encourage participants, as they improve, to increasingly utilize more of our
products and services. All of our marketing activities are designed so that each
of our various products and services reinforce one another, as well as
strengthen overall brand awareness and loyalty.

         How we cross-market is evident from our marketing of special events and
competitions for cheerleaders. For example, in order to participate in the
various special events that we offer, such as the nationally-televised Macy's
Thanksgiving Day parade in New York City, a cheerleader must attend and excel at
one of our camps. Our camps are the only place that a cheerleader can get an
invitation to appear in one of our special events. Similarly, we hold local
cheerleading competitions that progress to various regional levels during the
course of the fall, which are the only way for a team to qualify for our
championships which are held at the Walt Disney Resort in Orlando, Florida and
nationally-televised on ESPN.

         Camps & Events

         Our approach to relationship building has inter-related parts. In the
case of cheerleading it is our camps which, more than anything else, build brand
loyalty. Special events, conventions and competitions enhance our relationship
marketing.

         Just as our camps build loyalty with respect to cheerleading, special
events, conventions and competitions, for other extracurricular activities can
build new allegiances from participants in a wide variety of other
extracurricular activities. We run regional and national cheerleading and dance
team competitions, organize a national dance competition for young individuals
and sponsor youth soccer tournaments. The national competitions and finals for
these activities are typically held at The Walt Disney Resort in Orlando,
Florida and are televised on ESPN and/or ESPN2. Participants in the school
spirit activities that we target are also given the opportunity to take part in
various performance events in the U.S. and Europe. These events include parades,
such as the annual Macy's Thanksgiving Day parade in New York City and year-end
parades in London and Paris. We also arrange half-time shows for college
football bowl games. We intend to extend our promotional activities to a greater
number of extracurricular activities with soccer and dance the most likely next
additions.

         Uniforms and accessories

         The cheerleaders who participate in our special events, such as
parades, often come from a variety of schools. They each need a uniform for the
special event so that they can portray a unified appearance. We design and sell
such uniforms and also sell a travel package, including hotel arrangements, to
the participants in our special events.

         At the same time, because participation in our various promotional
activities enhances our bond with cheerleaders, we believe that their team is
more likely to buy our uniforms and accessories.




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         Key marketing alliances

         We have a promotional rights agreement with the NFL's licensing
division which requires that our Riddell brand name appear on the front or back
of all of our helmets used in NFL play. Our agreement with the NFL requires all
teams in the NFL to cover any indicia of brand identification of any other
manufacturers that might otherwise appear on helmets, face masks or chin straps
not manufactured by us, but used during league play. In return, we agree to
supply specified quantities of Riddell helmets, shoulder pads and related
equipment, either at no cost or at reduced cost to each NFL team which has a
requisite percentage of its roster using the Riddell helmet. Presently, over 80%
of NFL players choose to wear our Riddell brand football helmets. The NFL
agreement, which dates back to 1989, has a term expiring in April 2004, but is
automatically extended for successive five-year periods provided that the
quality of Riddell's helmets remain comparable to the best available technology
as reasonably determined by the NFL.

         We also have longstanding marketing alliances with other strategic
partners such as the Walt Disney Company, ESPN and other media and marketing
entities. We are currently in our 17th year of broadcasting championship events
on ESPN and ESPN2, and our current agreement with ESPN extends through the year
2001. We have been holding championship events at the Walt Disney World in
Orlando Florida since 1995, and our current agreement with the Walt Disney
Company extends through the year 2004. All of these alliances serve to further
emphasize the prominence and importance of the activity and the participant. All
of these marketing relationships also enhance one another and serve to reinforce
and cross-market our products and services.

         New Internet operations

         We believe that our new Internet operations, which are described
further below, are a logical extension and application of this approach and are
designed to enhance our contact with customers and build brand loyalty.

         Production

         Team sports products

         We design, manufacture and package all of our full sized football and
baseball batting helmets at our plant in Chicago, Illinois. Our Elk Grove,
Illinois warehouse facility has a screen printing operation which can customize
practicewear and uniforms with almost any logo, team name or other design or
numbering that a customer requests.

         Power shoulder pads are manufactured for us by a single source in
Canada, Vortex Sales and Marketing, Inc., and we have a facility in Pennsylvania
that can customize these shoulder pads. As is the case with all of our material
suppliers, however, we do not have a long term agreement with Vortex for our
shoulder pads. All of our other shoulder pads are imported as finished products
from sources in the Far East.

         We purchase our baseball products, other than baseball batting helmets,
from suppliers in the Far East and we source our practicewear from domestic
suppliers. Athletic uniforms are purchased on a made-to-order basis from
domestic suppliers.

         All of our manufactured protective products are subjected to at least
four separate quality control procedures. Quality control inspections for
helmets are conducted when the product is molded, when liners are inserted, when
face guards are attached and when the product is finished, and samples of all
models produced are tested in accordance with National Operational Committee for
Safety in Athletic Equipment standards. We continually monitor our products for
quality.

         All adult competitive protective football helmet shells are covered by
a five-year warranty and youth football helmet shells are covered by a
three-year warranty. Helmet liners, protective padding and shoulder pads are
covered by a one-year warranty.

         Principal raw materials purchased by us for use in our protective
products include various custom and standard grades of resins, plastic and foam
as well as metal fasteners, paints and cardboard. Similar materials are used in
most purchased components and finished products along with steel wire used in
purchased face guard components and textile


                                      - 9 -

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products used in purchased practicewear and athletic uniforms. We purchase
resin, which is an integral component in the manufacture of helmets, for our
competitive helmets from a single supplier, a division of the General Electric
Company, although we do not have a long term agreement with General Electric. We
believe, however, that alternative sources of supply could be arranged without
any material harm to our business.

         We employ an engineering staff principally with respect to the design,
development and improvement of our helmets and shoulder pads and to the testing
of raw materials which are used in our products or in the development of new
products. We have eight employees mainly devoted to design, development and
quality and have several patents and patents pending that are applicable to our
protective products.

         Reconditioning

         Our reconditioning services include the sanitizing, buffing or
painting, replacing certain parts and recertifying of athletic equipment as
conforming to National Operational Committee for Safety in Athletic Equipment
standards. These services are performed at our reconditioning facilities which
are located throughout the United States.

         Cheerleading and dance team uniforms and accessories

         Most of the cheerleading and dance team uniforms designed, manufactured
and marketed by us are made to order. During 1999, we contracted for our
production requirements with nine independent U.S. garment manufacturers. The
manufacturers provide knitting, cutting, sewing, finishing and shipping, and we
provide the patterns, fabrics, yarn and manufacturing specifications and quality
control supervision. We also provide some cutting, knitting and lettering at two
specialized production facilities. The use of independent manufacturing
facilities to fulfill our production needs affords us with the flexibility to
adjust our production output to meet our highly seasonal selling cycle. The use
of independent manufacturers also reduces our fixed costs, which we believe is
beneficial in a highly seasonal business.


         Cheerleading accessories such as shoes, pompons and campwear are
purchased from various suppliers including Nike(R), Capezio(R) and Converse(R),
among others. We have expanded the variety and number of accessories we market,
which has contributed to the increase in our revenues in recent years.

         RETAIL SEGMENT

         Our retail segment markets our Riddell branded products through
retailers and distributors in the United States, and to a lesser extent
internationally. Although we sell some recreational football and baseball
equipment, most of the products sold by our retail segment are sports
collectibles. In the fourth quarter of 1999, we launched a web site for our
collectibles, www.riddell.com.

         Our sports collectibles are sold under licenses from NFL Properties,
which has granted us a license to use the names, symbols, emblems, designs and
colors of the member clubs of the NFL and the "League Marks" (such as "National
Football League, " "NFL", "AFC", "Super Bowl," "Pro Bowl," the "NFL Shield"
design and other insignia adopted by the NFL) on authentic and replica football
helmets sold for display purposes to fans and collectors. We also have licenses
from most major colleges, Major League Baseball and NASCAR.

         We sell football helmets in various miniature and full-sized models. We
also sell lamps and desk organizers bearing the colors and logos of NFL and
college football teams. We sell miniature baseball batter's helmets and lamps
under licenses from Major League Baseball and a desk organizer bearing logos and
designs licensed from NASCAR and various professional drivers.

         Marketing sales and promotion

         The products in our retail segment are primarily sold to retail and
specialty sporting goods stores and distributors through independent
commissioned sales representatives. We use different price points and product
types to strategically target different channels of retail trade.


                                     - 10 -

<PAGE>

         In support of our sports collectible products, we have initiated
various advertising and public relations efforts. Advertisements are placed in
publications targeted toward the sports collectible industry as well as other
licensed products retailers. We also provide incentives to retail outlets to
advertise and display Riddell products during promotional periods and
participate in a major national sporting goods show where we promote our
products.

         The retail segment also benefits from the promotional exposure under
the NFL Agreement described above within the extracurricular segment.

         Production

         We engineer, manufacture and package our full size collectible helmets
at our plant in Chicago, Illinois in a process similar to that used for our
competitive helmets. We purchase our miniature helmets and other collectible
products principally from two sources in China.

         We have retained a design company to assist us in developing new retail
collectible products on terms that we believe are customary in the industry and
from time to time we work with other design companies.

         Athletic products sold as part of the retail segment are manufactured
or purchased, together with similar products sold through our extracurricular
segment.

         LICENSING SEGMENT

         We license our Riddell and MacGregor trademarks to third parties for
use on various products, including clothing and footwear.

         We are continually exploring additional opportunities for licensing the
MacGregor and Riddell trademarks and retain the services of an independent
licensing agent to assist our worldwide efforts in this regard.

         The licensing segment also benefits from the promotional exposure of
our agreement with the NFL because it gives our Riddell brand national
television exposure on a weekly basis during the football season.

         Riddell licensing

         We license the Riddell trademark to third parties for certain types of
casual clothing, socks and athletic footwear.

         We license the "Riddell" name to an affiliate of Enterprise Rent-a-Car
for the use of the Riddell brand on footwear. Under the terms of a settlement
agreement reached in 1997 with the bankruptcy trustee for MacGregor Sporting
Goods, Inc., and others, we have ceded all of the royalties from this license
until the earlier of the second half of 2007 or such time as the license
produces $3.0 million (plus interest) of royalties to certain third parties.

         MacGregor licensing

         We have granted Kmart Corporation a non-exclusive license to use the
MacGregor trademark on athletic socks until June 30, 2001. We have also granted
Footstar, Inc. an exclusive license to use the MacGregor trademark on athletic
footwear sold at Kmart stores under a license with an initial term expiring on
June 30, 2001. The license granted to Footstar is renewable at Footstar's option
for an additional two-year period if certain conditions are satisfied.

Our Internet business

         We believe that we can take advantage of commercial opportunities
offered by electronic community-building and commerce as it relates to the
extracurricular activities market because we have the largest nationwide
proprietary sales force in the U.S. in the extracurricular activities market. We
believe that our Internet strategy of building community sites and
simultaneously establishing complementary commerce sites affords us an
opportunity to extend our relationship sales and marketing strategy to expand
our core business and to develop new lines of business.


                                     - 11 -

<PAGE>



         We launched our Internet business in the fourth quarter of 1999 with
our first two web sites: a community web site with e-commerce elements for
cheerleaders, www.varsity.com, and our e-commerce web site for our sports
collectibles, www.riddell.com.

         We plan to devote a substantial portion of our Internet efforts towards
developing community-based web sites, with dance, football and soccer the most
likely near-term additions.

         Unlike the Internet operations of other companies, which are looking
for a portion of a large generic market, such as teenage girls, our approach to
the Internet is to focus on well-defined special interest groups such as
participants in football, soccer, baseball and softball, and cheerleading and
dance teams. We also plan to eventually develop sites for other extracurricular
activities, such as bands and choirs.

         The age group of our target market includes the demographic sector
commonly called Generation Y, the 56 million boys and girls between the ages of
10 and 24.

         We currently operate our electronic commerce business through several
of our existing subsidiaries, although we may at some future date establish a
separate subsidiary to run our Internet business.

         Our Internet advantages

         Strong community identification

         We believe that our target customers are so dedicated to the
extracurricular activities in which they participate that the activity often
becomes a defining aspect of their lives. For example, cheerleaders, football
players and other high school and youth athletes are typically very enthusiastic
about these activities. As a result of the enthusiasm typically displayed by
these individuals, we believe that we can aggregate a large audience through our
Internet operations by gradually adding additional web sites for these distinct
groups.

         Our community sites will feature original, frequently-updated,
highly-relevant content that speaks directly to each targeted group's need for
information which helps individuals improve the quality of their participation
and increase their enjoyment of their activity. Through their involvement with
our Internet sites, community members will not only be able to get information,
but will also have the opportunity to be interactively involved to benefit
themselves and their teams. They will be encouraged to submit articles and
pictures, ask questions of the experts, make postings on various message boards,
enter contests, play games, etc.

         For example, for cheerleaders, there would be information on new
routines, safety tips, upcoming competitions, etc., as well as discussions of
other logical outside interests of cheerleaders, such as beauty, fashion, style,
etc. The site will also serve as a secure Intranet among the cheerleading squad
itself, allowing the squad, as a supplement or alternative to traditional
methods of communication, to post the schedule of games and practices, letting
the coach communicate with the cheerleading squad, and permit squad members to
exchange ideas, schedule practice times, and otherwise chat or communicate. We
believe that a secure Internet site for a cheerleading squad is, in many
instances, a more efficient way for the members of the squad to communicate than
traditional means, such as by telephone or by meeting in person.

         Cost-effective web site promotion

         We will use our direct sales force to promote our web sites. When the
sales force is calling on coaches and squads to sell our traditional products,
they will be educating them about the benefits of our web sites. In addition the
sales force will be able to help coaches get their own squad pages up on our
site at no cost to the team, group or school.


         We believe that we have a marketing advantage as compared to other
Internet companies in promoting our web sites, because we already have our own
320 salespeople calling on 10,000 to 15,000 high schools every four or five
weeks during our sales season.


                                     - 12 -

<PAGE>



         In addition, we also run cheerleading camps for over 200,000
cheerleaders in the summer, recondition over 600,000 football helmets, and sell
approximately 200,000 new football helmets and approximately 2,200,000 million
pieces of cheerleading and team sport clothing, equipment and accessories each
year. In connection with all of these activities, we plan to gather e-mail
addresses, distribute fliers at schools and cheerleading camps and attach hang
tags on all of our uniforms, equipment and accessories, promoting the
appropriate community web site. We believe these efforts will increase the
awareness of our brands and web sites on a very cost-effective basis.

         We believe that the coaches and instructors who have come to rely on us
for various goods and services will find that their jobs can be made easier by
our Internet offerings and therefore are likely to become even more supportive
of us and our products.

         Internet benefits

         New revenue streams

         We believe that the Internet will give rise to new revenue streams from
product sales, advertising and sponsorships and strategic alliances.

         Direct link to our customers

         The content and community-building aspects of our web sites will
enhance existing relationships with coaches and participants in extracurricular
activities.

         Market penetration

         We believe that the Internet will be particularly effective in selling
uniforms and equipment to the recreational youth leagues, a large market that is
not a part of an organized public or private school system. This is a highly
fragmented market which we believe includes approximately 20 million boys and
girls between the ages of 5-18 who participate in a variety of team sports and
purchase in excess of $1.5 billion of athletic equipment and clothing for use in
these activities each year.

         The coaches and parents who typically organize and are in charge of
these various recreational youth leagues are typically pressed for time. The
ability of these individuals to readily access, order and purchase uniforms,
equipment and accessories easily over the Internet in a single transaction will
be very attractive to these individuals. As a consequence, we believe that
electronic commerce can rapidly increase our sales to this market.

         Broaden distribution of sports collectibles and customized products

         We believe that our web site dedicated to our retail products will
overcome the geographical and inventory limitations of stores, which preclude
our ability to offer collectibles of every team in every city. Over the
Internet, our extensive line of NFL, MLB and collegiate full and miniature size
helmets and other collectibles such as our lamps and desk organizers will be far
more readily available to consumers. For instance, on the Internet, even a
Cincinnati Bengals fan living in Phoenix, Arizona can readily obtain any of the
Cincinnati Bengals collectible items, many if not all of which are unlikely to
be carried in the local Phoenix stores.

         The Internet will also enable us to offer customized products (i.e.,
your high school team's helmet for Father's Day with a memento printed on the
helmet) that cannot readily be sold through traditional commercial channels.

Seasonality and backlog

         Our operations are highly seasonal. In recent years, our operations
have been most profitable in the second and third quarters, with the third
quarter typically the strongest, while losses have typically been incurred in
the first and fourth quarters.

         The following table sets forth selected unaudited operating results of
Riddell for each of the four quarters in


                                     - 13 -

<PAGE>

1999, 1998 and 1997. The results presented for the first and second quarter of
1997 have been adjusted on a pro forma basis to include the results of Varsity
Sprit Corporation for the period before its acquisition and other matters
related to the Varsity acquisition. The pro forma adjustments are described in
Note 2 of the consolidated financial statements included elsewhere in this
report. You should read this information together with the consolidated
financial statements, the notes related to those financial statements and the
other financial data included elsewhere in this report.



<TABLE>
<CAPTION>
                                                                First           Second          Third           Fourth
                                                                Quarter         Quarter         Quarter         Quarter
                                                                -------         -------         -------         -------
                                                                                  (In thousands)
Year ended December 31, 1999:
<S>                                                             <C>             <C>             <C>             <C>
   Revenues                                                      $34,259         $65,526         $79,965         $28,847
       Percent of total annual revenues                              16%             32%             38%             14%
   Operating income (loss)                                      $(2,709)        $  9,464         $14,002        $(5,072)
   Net income (loss)                                             (6,367)           5,367           9,174         (8,783)

Year ended December 31, 1998:
   Revenues                                                      $30,979         $59,008         $69,339         $27,274
       Percent of total annual revenues                              17%             32%             37%             14%
   Operating income (loss)                                      $(3,749)          $7,965         $10,702        $(7,401)
   Net income (loss)                                             (3,409)           2,164           5,049        (10,943)

Year ended December 31, 1997 (first and second quarter
pro forma):
   Revenues                                                      $26,916         $56,146         $62,974         $28,049
       Percent of total annual revenues                              16%             32%             36%             16%
   Operating income (loss)                                      $(2,571)          $2,004          $9,645        $(1,118)
   Net income (loss)                                             (6,002)         (1,821)           6,014         (4,461)
</TABLE>

         The loss for the fourth quarter of 1998 included a $3.1 million charge
relating to strategic actions taken at the end of 1998 as further discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations". Net income for the third quarter of 1999 included income tax
expense of $905,000 relating to the valuation of deferred taxes.

         This seasonal pattern is influenced by the following factors:

         o        Orders and shipments for our extracurricular segment's
                  athletic products and reconditioning services are solicited
                  over a sales cycle that begins late in the fall of each year
                  and continues until just before the start of a new school year
                  at the end of the following summer. Delivery of products and
                  performance of reconditioning services reach a low point in
                  the fall of each year after school begins and during the
                  football playing season. These activities contribute most to
                  profitability in the first through third quarters of each
                  calendar year.

         o        Cheerleading and dance uniforms and accessories are typically
                  ordered and shipped between late March, when new cheerleaders
                  are selected for the coming school year, and August, just
                  before the new school year begins.

         o        Most of the extracurricular segment's camp revenues relate to
                  our cheerleading camps. We incur costs relating to our camp
                  business from the fourth quarter through the second quarter as
                  we prepares for the upcoming camp season, while most revenue
                  relating to camps is earned during the June to August period.

         o        Our retail segment's sports collectible products are sold to
                  retailers throughout the year. However, sales are usually at
                  their highest during the third and fourth quarters as
                  retailers build inventory in anticipation of both the football
                  and the holiday shopping seasons.


                                     - 14 -

<PAGE>



         o        The sale of Umbro branded items is also seasonal,
                  substantially following the pattern of our existing
                  extracurricular athletic products as soccer, like football, is
                  primarily a fall sport. Soccer, however experiences a spring
                  season as well, which may somewhat temper the seasonality of
                  the sale of Umbro branded products.

         Our sales order backlog was $20.6 million at February 29, 2000 an 8%
increase over February 28, 1999 backlog of $19.0 million. Backlog increased in
all of our business units. We expect substantially all of the backlog to be
shipped within the 2000 calendar year.

Competition

         Athletic products

         Our principal competitor in the football helmet market is Schutt,
manufacturer of the AIR helmet. Also, Bike Athletic Co., Inc. has recently
introduced a football helmet. We compete principally with Bike Athletic Co.,
Inc., Douglas, Inc., Gear 2000, Inc. and Rawlings Sporting Goods Company, Inc.
in the football shoulder pad business. We compete principally with Diamond
Sports Co., Rawlings Sporting Goods Company, Inc., Wilson Sporting Goods Company
and other companies in baseball and softball products. We also compete with
Champion Products, Inc., Russell Athletic, Inc., and other companies for
practicewear and athletic game uniforms. We principally compete with Adidas,
Nike, and other companies for soccer team apparel, footwear and equipment. We
also compete with numerous independent dealers throughout the United States who
market our competitors' products. Some of our competitors are substantially
larger and have greater resources than us.

         We believe that we compete in the football market on the basis of
quality, price, reliability, service, comfort and ease of maintenance. With
respect to football and other athletic products, we believe that our direct
sales force provides us with a competitive advantage in terms of our ability to
provide superior customer service and that our factory-direct pricing is a
significant price advantage due to the elimination of independent dealers which
are used by our competitors.

         Reconditioning

         Reconditioners compete on the basis of quality, price, reputation,
convenience and customer loyalty. We believe that we are the largest nationwide
participant among the approximately 30 competitors in the highly fragmented
athletic reconditioning industry.

         Spirit products and services

         We are one of two major companies that design and market cheerleader,
dance team and booster club uniforms and accessories on a national basis.
Besides us and our major national competitor, National Spirit Group, there are
many other smaller regional competitors serving the uniform and accessories
market in the United States. We believe that the principal factors governing the
selection of cheerleader and dance team uniforms and accessories are the
quality, variety, design, delivery, service and, to a lesser extent, price.

         We are also one of two companies that annually operate a significant
number of cheerleader and dance team camps in the United States, again the other
being National Spirit Group. There are also many other smaller companies and
schools that operate cheerleading camps and clinics on a regional basis. We
believe that the principal factors governing the selection of a cheerleader or
dance team camp or clinic are the reputation of the camp operator for providing
quality instruction and supervision, location, schedule and the tuition charged
for camp participation.

         Retail collectible products

         Our collectible products compete with a large number and wide array of
manufacturers and sellers of sports and other collectible and memorabilia
products, some of which have greater resources than us. Among our competitors in
this large marketplace are sellers of products such as autographed photographs
and uniforms and other memorabilia and manufacturers of clothing, such as caps
and jackets.


                                     - 15 -

<PAGE>



         Licensing

         Competition in the licensing of sports equipment, apparel and footwear
is substantial, and the Riddell and MacGregor brands compete with numerous
companies also having significant brand recognition, many of which have greater
financial, distribution, marketing and other resources. Brand recognition and
reputation for quality are important competitive factors in the licensing of
sports apparel and footwear. Competing brands include Adidas(R), Champion(R),
Converse(R), Nike(R), Rawlings(R), Reebok(R), Russell(R) and Wilson(R).

Patents and trade secrets

         Some of our football helmet liner systems and other items are protected
by patents and trade secrets, including a patent on our inflatable liner
expiring in 2010. Other patents on the liners will expire in 2008. We also have
patents expiring in 2006, 2007 and 2008 on various components of our shoulder
pads which improve absorption of shock.

Trademarks and service marks

         We own various common law and registered trademarks in the U.S. and
various foreign countries including the following: Riddell, MacGregor, ProEdge,
Power, Air Pac, Warrior, Biolite, Maxpro, Universal Cheerleaders Association,
Varsity Spirit, United Spirit Association, National High School Cheerleading
Championship, the Universal Dance Association, Universal Dance Camps, Varsity
Spirit Fashions and The National Dance Team Championship, among others.

         Our use of the MacGregor trademark is limited by an agreement with
Global Licensing Corporation, which owns the similar trademark McGregor. Under
this agreement, the parties have agreed on certain restrictions in the use of
their respective trademarks. We have licensed the MacGregor trademark in
connection with certain team sports items sold to extracurricular customers. We
do not have the MacGregor trademark rights to golf products.

Governmental regulation

         Our products and accessories are subject to the Federal Consumer
Product Safety Act, which empowers the Consumer Product Safety Commission to
protect consumers from hazardous sporting goods and other articles. The Consumer
Product Safety Commission has the authority to exclude from the market certain
articles which are found to be hazardous and can require a manufacturer to
repurchase such goods. Similar local laws exist in some states and cities in the
United States, Canada and Europe. We maintain a quality control program for our
protective equipment operations and other products that is designed to comply
with applicable laws. To date, none of our products have been deemed to be
hazardous by any governmental agency.

         There is no national governing body regulating cheerleading and dance
team activities at the collegiate level. Although voluntary guidelines relating
to safety and sportsmanship have been issued by the NCAA and some of the
athletic conferences, to date cheerleading and dance teams are generally free
from rules and restrictions similar to those imposed on other competitive
athletics at the college level. However, if rules limiting off-season training
are applied to cheerleading and/or dance teams similar to rules imposed by the
NCAA on some inter-collegiate sports, it is likely that we would be unable to
offer a significant number of our camps either because participants would be
prohibited from participating during the summer or because enough suitable sites
would not be available. Although we are not aware of any school officially
adopting these activities as a competitive sport, recognition of cheerleading
and/or dance teams as "sports" would increase the possibility that cheerleader
or dance activities may become regulated. We currently do not believe that any
regulation of collegiate cheerleading or dance teams as a "sport" is forthcoming
in the foreseeable future, and in the event any rules are proposed to be adopted
by athletic associations, we expect to participate in the formulation of such
rules to the extent permissible.

         At the high school level, some state athletic associations have
classified cheerleading as a sport and in some cases have imposed certain
restrictions on off-season practices and out-of-state travel to competitions.
However, in all cases to date, we have been able to work with these state
athletic associations to designate acceptable times for the cheerleaders within
these states to attend camps. We have also signed agreements with several state
associations to assist with sponsoring and executing official competitions
within these states. To date, state regulations have not had


                                     - 16 -

<PAGE>

a material effect on our ability to conduct our normal business activities.

         Operations at all of our facilities are subject to regulation by the
Occupational Safety and Health Agency and various other regulatory agencies.

         Our operations are also subject to environmental regulations and
controls. While some of the raw materials used by us may be potentially
hazardous, we have not received any material environmental citations or
violations and have not been required to spend significant amounts to comply
with applicable law.

Employees

         At December 31, 1999, we had approximately 1,254 employees.
Approximately 1,118 of these employees were employed on a full time basis and
approximately 136 were part time or temporary employees. Approximately 26
employees employed in manufacturing at the Chicago factory are represented by
the Chicago and Central States Joint Board, Amalgamated Clothing and Textile
Workers Union, under a collective bargaining agreement which expires in March
2002. Approximately 26 of our employees working in reconditioning at our New
York facility are represented by the Local #500A United Food and Commercial
Workers Union (AFL-CIO) under a collective bargaining agreement which expired in
January 2000. We have been discussing a renewal of this agreement with the
union.

         During the summer of 1999, we employed approximately 2,000 summer camp
instructors, trainers and administrators on a seasonal basis.

         We believe that our relations with our employees are satisfactory.

Insurance and product liability proceedings

         Insurance

         We carry general liability insurance with coverage limits which we
believe is adequate for our business.

         We also maintain product liability insurance under an occurrence-based
policy providing coverage against all claims currently pending against us and
future claims relating to injuries occurring between December 1994 and January
2005 even if such claims are filed after the end of the policy period. The
insurance program provides certain basic and excess coverages with combined
aggregate coverage of over $40,000,000 subject to the limitations described
below.

         The first level of insurance coverage under the policy provides basic
coverage of up to $2,250,000 per claim(with an annual limit of $4,500,000) in
excess of an uninsured retention (deductible) of $750,000 per occurrence. This
basic coverage has an aggregate limit which is currently $4,900,000, but the
policy requires us to increase this maximum limit to $7,700,000 by paying a
fixed annual payment or by prepaying the required premium at any time, which
counts at 120% of the amount paid toward the limit.

         The insurance program also provides for additional coverage, which may
be subject to certain state statutes limiting the applicability of such coverage
in certain instances, of up to $20,000,000 per occurrence, in excess of the
first $3,000,000 of each claim which is covered by the uninsured retention and
basic coverage, to the extent available. Claims covered by this excess coverage
are subject to one of two separate $20,000,000 aggregate policy limits,
depending on the date of the related injury. The first $20,000,000 aggregate
limit applies to claims for injuries occurring prior to January 31, 1998 while
claims occurring after January 1998, are covered under the second separate
$20,000,000 aggregate limit.

         In March 1999, a jury rendered a verdict against us in a Texas product
liability lawsuit for an accident that occurred prior to January 31, 1998 for
approximately $11.4 million plus interest from February 1996. We have filed an
appeal of the verdict. If the verdict was paid in full it would be covered by
the insurance described above, except for an amount equal to the $750,000
uninsured retention. This amount, however, is already included in our balance
sheet reserves. Any such payment by the insurance company would reduce the
aggregate limits of insurance coverage available for other claims, as discussed
above.


                                     - 17 -

<PAGE>

         There is no certainty that coverage will remain available to us after
January 2005 or that the insured amounts will be sufficient to cover all
existing or future claims. Our product liability insurance carrier is a division
of American International Group, Inc.

         Product liability proceedings

         We have historically been a defendant in product liability personal
injury suits allegedly related to the use of football helmets manufactured or
reconditioned by us. As of March 1, 2000, five product liability cases were
pending against us.

         We have established reserves for pending product liability claims and
determine our reserves based on the level of insurance that is available and
estimates of losses and defense and settlement costs which we anticipate would
result from such claims based on information available at the time the financial
statements are issued. Due to the uncertainty involved with estimates, actual
results have at times varied substantially from earlier estimates and could do
so in the future. Accordingly, there can be no assurance that the ultimate costs
of these claims or potential future claims will fall within the established
reserves. See Note 11 to the Consolidated Financial Statements.


                                     - 18 -

<PAGE>

Item 2:  PROPERTIES

         We own our principal football helmet manufacturing facility located in
Chicago, Illinois and we lease various facilities throughout the U.S.

         We believe our properties, machinery and equipment are adequate for our
current requirements.

         Set forth below is information regarding our principal properties:


<TABLE>
<CAPTION>
                                                                       Square
Location                                 Principal Use                 Footage     Lease Expiration Date
--------                                 -------------                --------     ---------------------
<S>                             <C>                                   <C>          <C>
New York, New York              Corporate headquarters                     650      September 2000(1)

Chicago, Illinois               Headquarters of Riddell, Inc.           95,000      Owned
                                and helmet manufacturing

Elk Grove Village, Illinois     Warehouse and distribution             105,000      March 2005
                                center

Elyria, Ohio                    Headquarters for All                    72,000      September 2014
                                American Sports Corporation
                                reconditioning operations and
                                customer service

Stroudsburg, Pennsylvania       Reconditioning and shoulder             44,000      October 2001
                                pad customizing

Memphis, Tennessee              Headquarters for Varsity's              64,000      November 2000
                                Operations  and
                                Manufacturing

Olive Branch, Mississippi       Warehouse                               80,000      October 2000
</TABLE>

         We also lease several smaller facilities throughout the country. With
respect to those facilities whose leases expire later this year, we either have
made or intend to make arrangements to either extend these leases or for
alternate facilities. We do not believe that we will be harmed by any of these
lease expirations.



ITEM 3. LEGAL PROCEEDINGS

         Riddell and its subsidiaries from time to time become involved in
various claims and lawsuits incidental to their businesses including without
limitation, employment related, product liability and personal injury
litigation. See Item I "Insurance and Product Liability Proceedings."

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         None.

--------
         (1) We currently anticipate that we will be moving our corporate
headquarters in the early part of the second quarter of 2000.


                                     - 19 -

<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Our common stock was quoted on the The Nasdaq National Stock Market
System under the symbol RIDL in 1997 and through November 20, 1998. Commencing
November 23, 1998 our common stock was listed on the American Stock Exchange
under the symbol RDL. As of December 31, 1999, there were approximately 730
holders of record of our common stock. The following table sets forth the high
and low sales prices for our common stock as reported by the NASDAQ-NMS for 1997
and through November 23, 1998, and as reported by the American Stock Exchange
for the rest of 1998 and for 1999:

                                                 High              Low

Year Ended December 31, 1997:
First Quarter                                    5 1/2             3 7/8
Second Quarter                                   5 7/8             3 5/8
Third Quarter                                    6                 4 5/16
Fourth Quarter                                   5 3/8             3 7/8

Year Ended December 31, 1998:
First Quarter                                    5 5/8             4
Second Quarter                                   6 3/8             4 7/8
Third Quarter                                    5                 3 3/4
Fourth Quarter                                   6 5/8             2 5/8


Year Ended December 31, 1999:
First Quarter                                    7 7/8             3 5/8
Second Quarter                                   4 3/16            3
Third Quarter                                    4                 2 7/8
Fourth Quarter                                   3 1/2             2 13/16

         The closing sale price of the Common Stock on December 31, 1999 was $3
7/16.

Dividend Policy

         Since our inception, we have not declared or paid, and do not currently
intend to declare or pay, any dividends on shares of our common stock, and
intend to retain future earnings for reinvestment in our business. Any future
determination to pay cash dividends will be at the discretion of our Board of
Directors and will be dependent upon our results of operations, financial
condition, contractual restrictions and other factors deemed relevant by our
Board of Directors. Our revolving credit facility prohibits us from paying any
cash dividends until such time as it has been repaid in full. In addition, the
terms of our senior notes include restrictions which require us to meet certain
financial ratios before cash dividends could be paid and which limit the payment
of cash dividends to 50% of cumulative net income earned while the senior notes
are outstanding.


                                     - 20 -

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

         The following selected consolidated financial information should be
read in conjunction with the Consolidated Financial Statements and related note
included elsewhere in this report.

                    (In thousands, except per share amounts)


<TABLE>
<CAPTION>
Statement of Operations Data (1)                                      Year Ended December 31,
                                        ----------------------------------------------------------------------------------
                                             1999           1998 (2)           1997             1996             1995
                                        --------------   --------------   --------------   --------------   --------------
<S>                                     <C>              <C>              <C>              <C>              <C>
Net revenues                                  $208,597         $186,600         $138,273          $72,382          $67,043
Cost of revenues                               123,762          113,541           80,675           38,813           35,794
                                        --------------   --------------   --------------   --------------   --------------
Gross profit                                    84,835           73,059           57,598           33,569           31,249
Selling, general and
  administrative expenses (3)                   69,210           64,617           46,278           27,853           25,983
Other charges (credits) (4)                       (60)              925               --               --               --
                                        --------------   --------------   --------------   --------------   --------------
Income from operations                          15,685            7,517           11,320            5,716            5,266
Interest expense                                15,379           14,656           11,879            2,763            2,795
                                        --------------   --------------   --------------   --------------   --------------
Income (loss) before taxes
  and extraordinary item                           306          (7,139)            (559)            2,953            2,471
Income taxes                                       905               --               --              110              100
                                        --------------   --------------   --------------   --------------   --------------
Income (loss) before
  extraordinary item (5)                        $(599)         $(7,139)           $(559)           $2,843           $2,371
                                        ==============   ==============   ==============   ==============   ==============
Earnings (loss) per share before
  extraordinary item:
         Basic                                 $(0.06)          $(0.78)          $(0.07)            $0.35            $0.29
         Diluted                                (0.06)          $(0.78)           (0.07)             0.33             0.29


<CAPTION>
Balance Sheet Data (1) (6)                                                 December 31,
                                        ----------------------------------------------------------------------------------
                                             1999             1998             1997             1996             1995
                                        --------------   --------------   --------------   --------------   --------------
<S>                                     <C>              <C>              <C>              <C>              <C>
Working capital                                $49,908          $37,963          $37,599          $25,957          $19,286
Total assets                                   194,336          186,211          181,761           76,361           74,125
Long-term debt, less
  current portion                              136,097          126,900          122,500           29,984           23,600
Stockholders' equity                            24,865           25,451           32,125           27,745           24,902

<CAPTION>
                                                                     Year Ended December 31,
                                        ----------------------------------------------------------------------------------
                                             1999             1998             1997             1996             1995
                                        --------------   --------------   --------------   --------------   --------------
<S>                                     <C>              <C>              <C>              <C>              <C>
Statements of Cash Flows Data:
  Cash flows from operating
     activities (7)                           ($6,655)             $682           $4,361         ($4,584)         ($2,203)
  Cash flows from investing
     activities (7)                            (3,228)          (4,479)         (93,225)          (1,313)          (1,392)
  Cash flows from financing
     activities (7)                              8,644            4,538           89,518            5,639          (4,020)
Other Data (unaudited):
   EBITDA (8)                                  $21,519          $13,230          $15,330           $7,909           $7,433
</TABLE>
-----------------------

1)       In June 1997 Riddell acquired Varsity Spirit Corporation.


                                     - 21 -

<PAGE>

2)       Operations for 1998 were impacted by $1.5 million of losses relating to
         new product initiatives and $3.1 million of costs (including the
         restructuring plan costs referred to in note 4 below) relating to
         certain strategic changes which were undertaken to improve future
         profitability, see "Management's Discussion and Analysis of Financial
         Condition and Results of Operations, " for greater detail regarding our
         restructuring.

3)       In 1994 selling, general and administrative expenses included an
         adjustment to record a $4.6 million charge for a product liability
         litigation loss.

4)       Other charges of $1,188,000 in 1994 consisted of certain costs relating
         to a change in Riddell's method of distributing team sports products.
         Other charges of $925,000 in 1998 consisted of lease termination and
         employee severance costs related to a restructuring plan adopted in
         1998, see "Management's Discussion and Analysis of Financial Condition
         and Results of Operations," for greater detail regarding our
         restructuring.

5)       An extraordinary item in 1995 consisted of a $1,900,000 ($0.23 per
         share) provision for costs relating to fraudulent transfer litigation.

6)       See Note 11 to the consolidated financial statements relating to
         contingent liabilities.

7)       For more detail regarding cash flow from these activities see the
         Consolidated Statements of Cash Flow on page F-6.

8)       EBITDA is the sum of our earnings or loss before extraordinary items
         (and the cumulative effect of changes in accounting principles (as
         applicable)), interest, income taxes, depreciation and amortization
         expense. EBITDA is a widely accepted financial indicator of a company's
         ability to service indebtedness. However, EBITDA should not be
         considered as an alternative to income from operations or to cash flows
         from operating activities (as determined in accordance with generally
         accepted accounting principles) and should not be construed as an
         indication of our operating performance or as a measure of our
         liquidity. The measure of EBITDA presented above may not be comparable
         to similarly titled measures reported by other companies because EBITDA
         is not a standardized measure of profitability or cash flow as defined
         by generally accepted accounting principals.

                                     - 22 -

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
        FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

         We acquired Varsity Spirit Corporation on June 19, 1997. The Varsity
acquisition significantly increased the size of our business and significantly
changed our financial structure. Varsity's operations include the design and
marketing of cheerleader and dance team uniforms and the operation of
cheerleader and dance team camps, clinics and special events. These operations
are a part of our extracurricular segment.

         On a pro forma basis, 1997 revenue for Riddell combined with Varsity
was $174.1 million, more than double our 1996 historical stand alone revenues in
the year before the acquisition. Revenues have since grown to $186.6 million in
1998 and $208.6 million in 1999.

         Our historical operating results in 1997 do not include Varsity's
operations for the portion of the period before the Varsity acquisition. This
makes comparisons of operating results for that period less meaningful. In order
to overcome this limitation, part of the discussion and analysis that follow is
based on comparisons to operating results in 1997 adjusted on a pro forma basis
to include Varsity's results for the period before the acquisition and other
matters related to the acquisition as if the acquisition had taken place on
January 1, 1997. The pro forma adjustments are described in Note 2 of the
Consolidated Financial Statements.

         The net purchase price for Varsity Spirit Corporation was $91.2
million, including costs of the acquisition and was paid in cash. In
transactions directly related to the acquisition, Riddell issued $115 million of
10.5% senior notes, sold approximately $4.4 million of Riddell common stock to
four key managers of Varsity and entered into a new working capital credit
facility, which was subsequently revised in April 1999. The net proceeds from
these transactions were used to finance the acquisition, to refinance Riddell's
former credit agreement, to pay fees and expenses of the acquisition and to
repay $5.6 million of long term debt.

         Set forth below is the percentage of our revenues generated by each of
our three business segments in the years ended December 31, 1997, 1998 and 1999.
Information for the year ended December 31, 1997 is pro forma, giving effect to
our acquisition of Varsity in June, 1997.

<TABLE>
<CAPTION>
                                                             Year ended December 31,
                                                       --------------------------------
                                                         1997         1998        1999
                                                       --------     --------     ------
<S>                                                    <C>          <C>          <C>
         Extracurricular Segment:
              Spirit and dance products and services     58.2%        60.1%        57.7%
              Team sports products and services          30.0%        29.3%        33.1%
                                                         -----        -----        -----
              Total extracurricular segment              88.2%        89.4%        90.8%

         Retail Segment                                  10.4%         9.7%         8.7%
         Licensing Segment                                1.4%         0.9%         0.5%
</TABLE>

Results of operations

Year ended December 31, 1999 compared to the year ended December 31, 1998

         Overview

         In 1999, we achieved significant improvement in the profitability of
our business. Income before taxes increased $7.4 million, from a $7.1 million
loss in 1998 to a profit before taxes of $0.3 million in 1999.

         Revenues increased both from initial sales of new product lines as well
as increased volume from our traditional lines of products and services. We also
began to see benefits from actions taken late in 1998 to reduce costs and
improve profitability. Some of these actions resulted in charges that totaled
$3.1 million, which contributed to our

                                     - 23 -

<PAGE>

loss in 1998. These charges included $925,000 classified as a restructuring
charge and are discussed in more detail below in the overview of 1998 operations
and the discussion of the restructuring plan.

         Most of our operating improvement occurred in our extracurricular
segment where operating income increased $7.1 million from $11.4 million in 1998
to $18.5 million in 1999. We also achieved significant improvement in our retail
segment which generated operating income of $1.2 million in 1999, up from
operating income of under $0.1 million in 1998.

         Our pre-tax profit in 1999 was achieved notwithstanding expenses and
losses of approximately $1.8 million relating primarily to two new initiatives,
our strategy for the Internet and our entry into the U.S. team-soccer market
through our license from Umbro, both of which provide us with significant growth
potential. The $1.8 million includes approximately $0.5 million of expenses
incurred as we began to develop our internet operations and $1.3 million of
losses relating to the start-up of our line of Umbro branded team soccer
products which began at the end of 1998. Spending on our Internet operations is
likely to continue in 2000 at an increased rate, as we continue to invest in our
Internet strategy. Our Internet operations are still being developed and we do
not yet know the ultimate size and scope of these operations. Consequently, at
the present time we cannot ascertain the ultimate costs for our internet
operations over future periods.

         Revenues

         Revenues in 1999 increased $22.0 million, or 12%, to $208.6 million in
comparison to revenues of $186.6 million in 1998.

         All of the revenue gain came from our extracurricular segment where
revenues increased 14% or $22.6 million, from $166.8 million in 1998 to $189.4
million in 1999. The extracurricular segment includes team sports and school
spirit lines of products and services.

         Sales of team sports products and services grew by 27% or $14.5
million, from $54.6 million in 1998 to $69.1 million in 1999. Sales of our new
line of Umbro-branded team soccer products and our new line of athletic game
uniforms generated $9 million of the increase. We also benefitted from increased
focus on sales to youth leagues as well as increased volume and generally higher
selling prices on our traditional team sports products.

         Revenues from school spirit lines products and services grew by 7% or
$8.1 million, from $112.2 million in 1998 to $120.3 million in 1999. More than
half of the revenue growth came from increased volume of uniforms and
accessories. Camp and event revenues increased as well with the number of camp
participants growing by 8,000 to 215,000 in 1999 after being relatively flat
between 1997 and 1998.

         Revenues from the retail segment were $18.1 million in both 1998 and
1999. Sales of sports collectible products increased while there was an
offsetting decease in the volume of youth football equipment sold to retailers,
as we shifted our youth emphasis to direct sales within our extracurricular
segment.

         Royalty income from trademark licensing decreased by $0.6 million to
just over $1.0 million in 1999 in comparison to trademark licensing royalties of
$1.6 million in 1998. The decline was anticipated due to the expiration of
certain licenses in 1998.

         Gross profit

         Gross profit in 1999 increased to $84.8 million from $73.1 million in
1998. Gross margins increased as a percentage of revenues to 40.7% in 1999 from
39.2% in 1998. Gross margins in 1998 had been negatively impacted by $1.7
million of charges relating to product line changes and other strategic
decisions which affected the realizable value of inventories. Gross margins in
1998 were 40.1% if adjusted to eliminate the impact of these charges.

         The gross margin rate for the extracurricular segment increased to
40.8% in 1999 from 39.5% in 1998. Gross margins in 1998 were 40.2% if adjusted
to eliminate the impact of the portion of the 1998 charges discussed above which
related to the extracurricular segment. Margin rates improved in 1999 as a
result of modest increases in selling

                                     - 24 -

<PAGE>

prices, favorable negotiations with vendors and contractors, improved leverage
due to higher absorption of the fixed portion of operating costs against higher
revenue and certain other actions taken at the end of 1998 which reduced costs
in 1999.

         Gross margins for the retail segment increased to 35.7% of revenues in
1999 from 31.0% of revenues in 1998. Gross margins in 1998 were 33.7% if
adjusted to eliminate the impact of the portion of the 1998 charges discussed
above which related to the retail segment. The increase in margins in 1999 was
principally due to a shift in product mix as the decline in retail segment
sales, as discussed above, occurred in product lines that carry below average
margins in the segment. Many of the factors contributing to the margin
improvement in the extracurricular segment also contributed to the margin
improvement in the retail segment.

         While trademark licensing does have some costs including selling,
general and administrative expenses, there are no costs that are deducted in
arriving at gross profit. Accordingly, any increase or decrease in royalty
income results in a corresponding increase or decrease in gross profit for the
licensing segment.

         Selling, general and administrative expenses

         Selling, general and administrative expenses in 1999 increased by $4.6
million from $64.6 million in 1998 to $69.2 million in 1999. This increase
included $1.5 million of commissions relating to higher sales and $3.4 million
of expense increases relating to our new line of Umbro-branded team soccer
products leaving a net overall decrease of $0.3 million in all other selling,
general and administrative expenses. Selling, general and administrative
expenses decreased as a percentage of sales to 33.2% in 1999 from 34.6% in 1998.
Selling, general and administrative expenses in 1998 were impacted by $0.4
million of charges relating to strategic changes, as discussed above, and would
have been 34.4% of revenues before consideration of this charge. The improvement
in the expense percentage in 1999 is principally due to the cost saving
initiatives implemented at the end of 1998 and improved absorption of the
relatively fixed portions of selling, general and administrative expenses
resulting from the increase in revenues. Expenses in 1999 were negatively
impacted by approximately $0.5 million of expenses incurred in initial
development costs relating to our Internet operations.

         Extracurricular segment selling, general and administrative expenses
decreased as a percentage of revenues to 31.1% of revenues in 1999 from 32.5% in
1998. The improvement in the expense ratio was due to the reasons discussed in
the preceding paragraph. Expenses in 1998 included $0.3 million of the charges
relating to strategic changes, as discussed above.

         Retail segment selling, general and administrative expenses decreased
as a percentage of revenues to 29.2% of revenues in 1999 from 30.7% in 1998. The
improvement in the expense ratio was due to the cost saving initiatives
implemented at the end of 1998, as well as planned reductions in product
development costs.

         Licensing segment selling, general and administrative expenses were
stable in comparison to the prior year, at approximately $0.8 million in both
1999 and 1998.

         Interest expense

         Interest expense in 1999 increased 5%, or $0.7 million over 1998 levels
due to an increase in average indebtedness. Debt levels were higher in 1999 due
to higher indebtedness at the beginning of 1999 than at the beginning of 1998
and increased working capital demands related to our new line of Umbro-branded
team soccer products and volume growth in other product lines.

         Income taxes

         Income tax expense in 1999 reflects an adjustment relating to the
valuation of deferred taxes and not a cash payment of taxes. No tax expense,
other than this adjustment, was recorded in 1999, as we have net operating loss
carryforwards which offset any such taxes.

         In 1998 we did not recognize income tax benefits arising from the
year's net loss. The unrecognized tax


                                     - 25 -

<PAGE>

benefits, after any amount offset against 1999 taxable income and together with
unrecognized tax benefits arising from net operating losses in earlier years,
would be utilized with the generation of approximately $5.0 million in future
pre-tax income and adjustments.

         We have certain nondeductible annual expenses which are added as
adjustments to pretax income to calculate taxes. These expenses include
nondeductible amortization of approximately $2.1 million, much of which arises
from goodwill associated with the Varsity acquisition. The effect of these
adjustments, as well as other items effecting our tax rates, are shown in the
reconciliation of our tax provision to taxes based on statutory rates shown in
Note 11 to our Consolidated Financial Statements.

Year ended December 31, 1998 compared to pro forma year ended December 31, 1997

         Overview

         Operations for 1998 resulted in a net loss of $7.1 million. While we
achieved satisfactory performance in our core extracurricular business, we
incurred a loss of $1.5 million relating to several new product initiatives and
suffered from weak performance in our retail and licensing segments. We also
incurred costs of $3.1 million relating to certain strategic changes being
undertaken to improve future profitability. These factors are discussed in
greater detail in the following paragraphs and comparisons.

         The loss of $1.5 million from new initiatives within our
extracurricular segment included start up costs for a new line of team soccer
apparel, equipment and footwear to be marketed under the newly acquired license
to use the Umbro trademark in the United States; entry into new areas of the
school and private dance studio dance market including the Company Dance
program; and the introduction of athletic game uniforms. These activities were
unprofitable during 1998 due to start up costs and because some activities were
started too late in the year to generate enough revenues to offset the costs. We
believe that the losses incurred for these activities are valuable investments
in the future and view these areas as important to our future growth potential.

         Operations for 1998 were also impacted by lower profits from the
trademark licensing and retail product segments. Licensing declined as our
license to Kmart for MacGregor branded apparel and bags was not renewed when it
expired in June 1998, although the license was renewed for other products.
Profitability of the retail segment decreased due to a decline in sales of
sports collectible products.

         We also initiated a series of strategic actions in late 1998 which we
believe will assist in facilitating future profitability. These actions included
the implementation of a restructuring plan which led to a $925,000 charge in
1998. See "Restructuring plan" below for a description of the plan.

         Other strategic actions generated additional charges of $2.1 million in
1998. The charges included costs related to product line changes, and were
comprised of $0.1 million for further minimum royalties on products
discontinued, $1.7 million of inventory valuation matters, and $0.3 million for
changes in marketing materials. The impact of these changes is discussed further
in the comparisons of gross margins and selling, general and administrative
expenses, below.

         Revenues

         Revenues in 1998 increased $12.5 million, or 7%, to $186.6 million in
comparison to pro forma revenues of $174.1 million in 1997.

         All of our revenue gains came from the extracurricular segment where
revenues increased 9% or $13.2 million, from $153.6 million on a pro forma basis
in 1997 to $166.8 million in 1998. Increased volume in cheerleading and dance
uniform and accessory products accounted for the largest part of this revenue
increase, registering a sales increase of $7.1 million, with most of the gain
occurring in the line's core products. In addition, camp and event revenue
increased $3.7 million primarily due to a strong increase in special event
attendance. Athletic product volume increased $2.4 million due largely to
expanded offerings of athletic practice wear and a new emphasis on the youth
football market where sales had been declining in recent years.

                                     - 26 -

<PAGE>

         Revenues from the retail segment were relatively stable with 1998
revenues of $18.1 million compared to 1997 revenues of $18 million. Sales of
athletic products to recreational team dealers and distributors increased,
offsetting declines in the sales of sports collectible products. Sales of sports
collectible products decreased due to lower demand for certain products
introduced in recent years such as miniature hockey and baseball helmets.

         Royalty income from trademark licensing decreased by $0.8 million to
$1.6 million in 1998 in comparison to trademark licensing royalties of $2.4
million in 1997. This decrease is attributable to the expiration in June 1998 of
a license for MacGregor branded apparel and bags with Kmart.

         Gross profit

         Gross profit in 1998 increased to $73.1 million from $71.0 million on a
pro forma basis in 1997. Gross margins decreased as a percentage of revenues to
39.2% in 1998 from 40.8% on a pro forma basis in 1997. Gross profits were
impacted by a 1998 charge to reflect product line changes and other strategic
decisions which affected the realizable value of inventories. This charge
impacted margins for both the extracurricular segment and the retail segment
and, along with the decrease in royalty income discussed above, accounted for
most of the decline in margins. Margins were also impacted by a shift in the mix
of products sold by both the extracurricular and retail segments as most of the
year's revenue gains occurred in product lines that carry lower margins than the
average of our other products.

         Gross margins for the extracurricular segment decreased to 39.5% of
revenues in 1998 from 40.2% of revenues on a pro forma basis in 1997. The
decrease was due to the factors described in the preceding paragraph. Charges
arising from product line changes and other strategic decisions which impacted
margins for the extracurricular segment in 1998 amounted to $1.2 million.

         Gross margins for the retail segment decreased to 31.0% of revenues in
1998 from 37.8% of revenues in 1997. The retail segment's margin decrease was
also due to the factors described above. Charges arising from product line
changes and other strategic decisions which impacted margins for the retail
segment in 1998 amounted to $0.5 million.

         Selling, general and administrative expenses

         Selling, general and administrative expenses in 1998 increased by $1.6
million to $64.6 million from $63.0 million on a pro forma basis in 1997.
Selling, general and administrative expenses decreased as a percentage of sales
to 34.6% in 1998 from 36.2% on a pro forma basis in 1997. The comparison to 1997
is affected by $2.8 million of expenses in 1997 relating to the settlement of
certain non-product liability litigation and by the segment related factors
discussed below.

         Extracurricular segment selling, general and administrative expenses
decreased as a percentage of revenues to 32.5% of revenues in 1998 from 33.2% on
a pro forma basis in 1997. The total of these expenses increased $3.2 million
over pro forma 1997 levels. In addition to a normal level of growth related
expenses, the 1998 expenses included approximately $0.3 million of expenses
relating to strategic changes and over $2.0 million of expenses related to new
initiatives, both of which are discussed in the overview above. The 1997
expenses included unusual expenses from the Varsity acquisition including a
charge of $0.6 million for in-the-money Riddell stock options contractually
granted to certain employees who were previously employed by Varsity and a
charge of $0.4 million stemming from a revaluation of receivable reserves in
June 1997 that was included in Varsity's preacquisition results.

         Retail segment selling, general and administrative expenses increased
as a percentage of revenues to 30.7% of revenues in 1998 from 28.2% in 1997. The
total of these expenses increased $0.5 million over 1997 levels. The expenses
increased due to an increase in marketing and product development costs and also
included expenses relating to the strategic changes discussed above.

         Selling, general and administrative expenses relating to trademark
licensing decreased approximately 15% to $0.8 million in 1998.

                                     - 27 -

<PAGE>

         Interest expense

         Interest expense in 1998 increased 3%, or $0.4 million over 1997
interest computed on a pro forma basis. The increase is due to a higher level of
working capital indebtedness during the year.

Umbro license

         In 1998, we entered into a license agreement with Umbro International,
Inc. which entitles us to market and manufacture Umbro brand soccer team
apparel, footwear, equipment and accessories on an exclusive basis to the team
channel of distribution throughout the United States, Puerto Rico and the U.S.
Virgin Islands. The term of the license is five years with an option to renew
for an additional five-year period if we achieve certain performance levels. The
license is royalty-free in 1999. We are required to begin paying royalties in
the year 2000, at which time we are also required to meet annual minimum sales
figures. If we fail to meet required minimum sales levels subsequent to 1999 for
two consecutive annual periods, Umbro has the right to terminate the license.

MacGregor trademark

         We acquired certain rights to the MacGregor trademark as part of an
acquisition in 1988 at an allocated cost of approximately $18.0 million. We are
amortizing the trademark over a period of forty years. The unamortized cost of
this asset included in intangible assets at December 31, 1999 was approximately
$12.8 million (See Note 7 of the Consolidated Financial Statements). If there
were a material decline in the revenues from the MacGregor trademark, then the
carrying amount of the MacGregor trademark rights could be deemed to have been
impaired. A write-down for such impairment could have a material adverse effect
on our financial position and results of operations.

Restructuring plan

         As discussed in the results of operations section above, in the fourth
quarter of 1998 we formulated and initiated a restructuring plan involving the
consolidation of several of our reconditioning facilities and the elimination of
approximately 40 jobs including two senior positions. Together these actions led
to a $925,000 restructuring charge in 1998. The charge includes a provision of
$800,000, included in accrued liabilities at December 31, 1998, for certain
lease termination and employee severance costs, most of which were expected to
be expended during 1999. The restructuring actions are expected to yield annual
savings of over $1.0 million once facility closures are completed and new
centralized operations are fully implemented. The restructuring actions resulted
in cost savings of approximately $400,000 in 1999, net of non-recurring current
year expenses of $160,000 for restructuring related costs such as moving
expenses.

         The initial restructuring plan called for essentially all of our
restructuring activities to have been completed by the end of 1999. We completed
and commenced operations of a new, larger reconditioning facility in 1999.
However, the consolidation of reconditioning facilities originally scheduled for
the fall of 1999 has been delayed until late in the first quarter or early in
the second quarter of 2000. The cessation of reconditioning operations at
certain other facilities has been delayed to allow additional time for the new
reconditioning facility to reach full capacity. As a result, while the
anticipated senior positions were eliminated, none of the employee severance
costs related to the elimination of jobs at reconditioning facilities was
expended in 1999. We are also now planning to use one of the leased
reconditioning facilities originally slated for closure for the alternative
purpose of warehousing finished goods. Accordingly, in the fourth quarter of
1999 accrued restructuring costs were reduced by the $60,000 of accrued lease
termination expenses which will not be incurred.

         Of the $800,000 of restructuring costs included in accrued liabilities
at December 31, 1998, approximately $480,000 was paid in 1999 and, as discussed
above, $60,000 of lease termination costs were reversed to income. The remaining
$260,000 is included in accrued liabilities at December 31, 1999 and is
anticipated to be disbursed in 2000.

                                     - 28 -

<PAGE>

Liquidity and capital resources

         We have filed a registration statement relating to a proposed rights
offering to Riddell's stockholders and a proposed concurrent offering of
additional shares of our common stock. The rights offering would afford our
current stockholders the right to purchase an aggregate of up to 1,000,000
shares of our common stock. We intend to assemble a standby group of purchasers,
which would include members of our management, our officers and directors, and
certain outside investors, who would agree to purchase a portion, or all, of the
shares in the rights offering not otherwise purchased by our stockholders. The
concurrent offering will seek to sell 250,000 shares of our common stock and
will be underwritten by H.C. Wainwright & Co., Inc., which will also act as our
Solicitation Agent in connection with the rights offering.

         We are conducting the rights offering and concurrent offering to
finance our Internet business and for additional working capital. We believe
that we could finance our Internet business at some level from our existing
capital resources. However, the resources provided by the rights offering and
concurrent offering will provide us with greater flexibility in developing our
Internet business and not require that we divert capital that we would otherwise
use for our base business. It is not likely that our Internet business will be
profitable over the next year, and it could generate losses which could exceed
the proceeds from the rights offering and the concurrent offering. Since our
Internet operations are still being developed we do not yet know the ultimate
size and scope of these operations. Consequently, future development of Internet
operations could possibly require additional capital.

         The seasonality of our working capital needs is primarily impacted by
three factors. First, a significant portion of the products we sell into the
extracurricular segment are sold throughout the year on dated-payment terms,
with the related receivables becoming due when the school year begins during the
following July to October period. Second, we incur costs relating to our summer
camp business from the fourth quarter and into the second quarter as we prepare
for the upcoming camp season, while camp revenues are mostly collected in the
June to August period. Lastly, our debt structure impacts our working capital
requirements as the semi-annual interest payments on our $115 million, 10.5%
Senior Notes come due each January and July.

         To finance these seasonal working capital demands, we maintain a credit
facility in the form of a revolving line of credit. The outstanding balance on
the credit facility follows the seasonal cycles described above, increasing
during the early part of the operating cycle in the first and second quarters of
each year and then decreasing from the third quarter and into the fourth quarter
as collections are used to reduce the outstanding balance.

         At December 31, 1999 the outstanding balance under the credit facility
was $13.6 million. This compares with outstanding balances of $4.4 million at
December 31, 1998. The increase in outstanding borrowings between December 31,
1998 and December 31, 1999 reflects the factors discussed above in the paragraph
on interest expense in the comparison of results of operations between these
periods.

         In April 1999, we entered into a revised credit facility with Bank of
America National Trust and Savings Association. The revised credit facility
replaced our $35 million credit facility with NationsBank (now named Bank of
America) and NBD Bank which subsequently became a participant in the revised
facility. The revised credit facility consists of a line of credit in a
principal amount not to exceed $48 million, expiring at the end of December
2003. Draws under the line of credit are limited to a percentage of some of our
receivables and inventory. The outstanding balance of the line accrues interest
at a rate of LIBOR plus a margin of 2.25% on draws so designated by us, payable
at the end of the applicable interest period, but not less frequently than
quarterly, and on other draws at the higher of the bank's prime rate plus a
margin of 0.75% or the Federal Funds rate plus 1.25%, payable monthly. The
credit facility also calls for an unused line fee equal to an annual rate of
0.375% applied to the amount by which the lesser of $40 million and the then
maximum revolving amount exceeds the average daily balance of outstanding
borrowings under the line. Starting April 29, 2000, the margin of the interest
rate over the related rates is subject to quarterly adjustment dependent on
certain financial ratios. The interest rate margin can vary between 1.75% and
2.75% over LIBOR, 0.25% to 1.25% over the prime rate and 0.75% and 1.75% over
the Federal Funds rate. The initial adjustment on April 29, 2000, will increase
the margin to its maximum level. The credit facility agreement contains
covenants which, among other things, require us to meet certain financial ratio
and net worth tests, restrict the level of additional indebtedness we may incur,
limit payments of dividends, restrict the sale of assets and limit investments
we may make. The credit facility also requires repayment of the principal amount
upon the occurrence of a change in the control, as defined, of


                                     - 29 -

<PAGE>

Riddell. We have pledged essentially all of our tangible assets as collateral
for the credit facility. We sought the increased size of the credit facility to
provide working capital for new initiatives, especially our new line of
Umbro-branded team soccer products.

         Our current debt service obligations are significant and, accordingly,
our ability to meet our debt service and other obligations will depend on our
future performance and is subject to financial, economic and other factors, some
of which are beyond our control. Furthermore, due to the seasonality of working
capital demands described above, year-over-year growth in our business and
working capital could lead to higher debt levels in future periods. We believe
that operating cash flow together with funds available from our credit facility
will be sufficient to fund our current debt service, seasonal and other current
working capital requirements.

Year 2000 issues

         Riddell, like virtually all companies and organizations, was faced with
addressing the Year 2000 issue which relates to the possibility that computer
systems and computer chips embedded in equipment may not be able to properly
process data after December 31, 1999.

         While we have not experienced any Year 2000 problems, at this time we
cannot be sure whether any Year 2000 problems will surface and interfere with
our business over the coming months. We believe that we completed the process of
assessing which of our information systems were subject to Year 2000 problems
and have taken corrective actions to minimize the potential impact of Year 2000
problems. However, the issues involved remain full of complexities and
uncertainties, so there can be no assurance that our corrective actions have
been sufficient to protect us from Year 2000 problems. We also may still face
potential Year 2000 issues with third parties such as our customers and our
suppliers. If Year 2000 problems impact our business, our operating results and
financial condition could be materially harmed.

         The most significant Year 2000 issues Riddell faced were associated
with the computer information systems used to plan, operate and track our
business. The following is a summary of the actions which were taken for each of
our four major computer information systems:

         Helmet manufacturing and retail operations: Year 2000 issues were
addressed by replacing hardware and software with new systems certified as Year
2000 compliant by the vendor. The system replacement is part of a modernization
effort that was initiated in early 1997 and was completed in November 1999.

         Extracurricular athletic product distribution and reconditioning
operations: Existing system software was upgraded and modified to address Year
2000 issues. The process was completed in the fourth quarter of 1998, and the
system was tested and certified by our vendor as Year 2000 compliant.

         Spirit products: Year 2000 issues were satisfied through corrective
modifications of existing software. The process, including system testing, was
completed early in October 1999. We are also still in the process of replacing
the existing software with a new system, that is certified as Year 2000
compliant by the vendor, as part of an overall upgrade of system capabilities,
but we made the Year 2000 corrections to the existing software as the new system
could not be fully implemented before the end of 1999.

         Camps and events: Year 2000 issues were satisfied through corrective
modifications of existing software. The process was completed, including system
testing, early in the second quarter of 1999.

         We also faced potential Year 2000 problems relating to embedded
computer chips which control equipment used in our business, such as telephone
equipment and a limited amount of machinery. We repaired or replaced equipment
found to have Year 2000 problems.

         We also may still face potential Year 2000 issues with third parties.
These third parties include customers who purchase our extracurricular and
retail products and suppliers of raw materials and finished goods, among others.
Because our extracurricular products and services are sold to a large number of
schools and other customers, it has been impractical to poll them all in order
to determine their Year 2000 readiness. However, because this customer base is


                                     - 30 -

<PAGE>

large, the potential of a negative impact on us may be lowered as none of these
customers individually account for a material portion of our revenues.

         Expense for Year 2000 remedial programs for the years ended December
31, 1997, 1998 and 1999 was approximately $200,000, $250,000 and $150,000,
respectively. We have also incurred capital expenditures for computer hardware
and software related to the system replacements described above, of
approximately $150,000, $800,000 and $800,000 for the years ended December 31,
1997, 1998 and 1999, respectively. These capital expenditures include all of the
system upgrade and modernization aspects of the replacement programs discussed
above.

         Readers are cautioned that forward-looking statements contained in the
Year 2000 disclosure should be read in conjunction with our Special Cautionary
Notice Regarding Forward-Looking Statements located at the beginning of this
report.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See Item 14(a) in Part IV and page F-1 of this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         None.

                                    PART III

         The Registrant hereby incorporates by reference in response to Part III
its Proxy Statement to be filed pursuant to Regulation 14A by April 17, 2000
(except to the limited extent the rules and regulations of the Commission
authorize certain sections of such Proxy Statement not to be incorporated herein
by reference, as specifically indicated in such Proxy Statement).

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a)(1) and (a)(2) Financial Statements and Schedules to Financial
Statements

                  The financial statements, notes thereto, financial statement
                  schedules and accountants' report listed in the "Index to
                  Financial Statements" on page F-1 of this Report are filed as
                  part of this Report.

         (a)(3) Exhibits

                  The exhibits listed in the Exhibit Index attached to this
                  Report are filed as part of this Report.

         (b) Reports on Form 8-K

                  None.

                                     - 31 -

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                               RIDDELL SPORTS INC.



Dated:  March 28, 2000                            By:   David Mauer
                                                        -----------------------
                                                        Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



DAVID MAUER              Chief Executive Officer                 March 28, 2000
------------             and Director
David M. Mauer           (Principal Executive Officer)



ROBERT  NEDERLANDER      Chairman of the Board                   March 28, 2000
-------------------
Robert Nederlander



JEFFREY G. WEBB          Vice Chairman of the Board              March 28, 2000
---------------          and Chief Operating Officer
Jeffrey G. Webb



LEONARD TOBOROFF         Vice President and Director             March 28, 2000
----------------
Leonard Toboroff



DAVID GROELINGER         Executive Vice President and            March 28, 2000
----------------         Chief Financial Officer
David Groelinger         (Principal Financial Officer)



LAWRENCE SIMON           Senior Vice President                   March 28, 2000
--------------           (Principal Accounting Officer)
Lawrence Simon



DON KORNSTEIN            Director                                March 28, 2000
-------------
Don Kornstein



JOHN MCCONNAUGHY, JR.    Director                                March 28, 2000
---------------------
John McConnaughy, Jr.



                         Director                                March 28, 2000
---------------------
Glenn E. Schembechler



ARTHUR N. SEESSEL        Director                                March 28, 2000
-----------------
Arthur N. Seessel


                                     - 32 -

<PAGE>

Item 14(c) PART IV

         Exhibit Index

EXHIBIT
NUMBER           DESCRIPTION

2.1      Agreement and Plan of Merger, dated as of May 5, 1997, by and among
         Riddell Sports Inc., Cheer Acquisition Corp. and Varsity Spirit
         Corporation (15).

3.1      Amended and Restated Articles of Incorporation of Riddell Sports Inc.
         (11).

3.2      First Amended and Restated Bylaws of Riddell Sports Inc. (9).

3.3      Certificate of Incorporation of All American Sports Corporation
         (formerly known as Ameracq Corp) (17).

3.4      Bylaws of All American Sports Corporation (formerly known as Ameracq
         Corp) (17).

3.5      Certificate of Incorporation of Cheer Acquisition Corp. (17).

3.6      Bylaws of Cheer Acquisition Corp. (17).

3.7      Certificate of Incorporation of Equilink Licensing Corporation (17).

3.8      Bylaws of Equilink Licensing Corporation (17).

3.9      Certificate of Incorporation of Proacq Corp. (17).

3.10     Bylaws of Proacq Corp. (17).

3.11     Certificate of Incorporation of RHC Licensing Corporation (17).

3.12     Bylaws of RHC Licensing Corporation (17).

3.13     Amended and Restated Articles of Incorporation of Riddell, Inc.
         (formerly known as EN&T Associates Inc.) (17).

3.14     Bylaws of Riddell, Inc. (formerly known as EN&T Associates Inc.) (17).

3.15     Amended and Restated Articles of Incorporation of Ridmark Corporation
         (17).

3.16     Bylaws of Ridmark Corporation (17).

3.17     Charter of International Logos, Inc. (17).

3.18     Bylaws of International Logos, Inc. (17).

3.19     Charter of Varsity/Intropa Tours, Inc. (17).

3.20     Bylaws of Varsity/Intropa Tours, Inc. (17).

3.21     Amended and Restated Charter of Varsity Spirit Fashions & Supplies,
         Inc. (17).

3.22     Bylaws of Varsity Spirit Fashions & Supplies, Inc. (17).

3.23     Amended and Restated Charter of Varsity USA, Inc. (17).

3.24     Bylaws of Varsity USA, Inc. (17).

                                     - 33 -

<PAGE>

4.1      Indenture, dated as of June 19, 1997, between Riddell, certain
         subsidiaries of Riddell Sports Inc., as guarantors, and Marine Midland
         Bank, as Trustee (14).

9.1      Voting Trust Agreement dated May 1991 (2).

10.1     Settlement Agreement, dated April 9, 1981, among McGregor-Doniger Inc.,
         Brunswick Corporation and The Equilink Corporation (2).

10.2     1997 Stock Option Plan (13).

10.3     Lease, dated November 12, 1993, between the International Brotherhood
         of Painters and Allied Trade Union and Industry Pension Fund and
         Riddell, Inc., (8); and Amendment dated March 20, 1995 (8); and
         Amendment dated September 19, 1996 (12); and Amendment dated February
         2000 (1).

10.4     Lease Agreement, dated April 1991, by and between Stroudsburg Park
         Associates and All American Corp. (3); as amended March 31, 1995 (9).

10.5     1991 Stock Option Plan (2) as amended by amendments described in
         Riddell Sports Inc.'s proxy materials for its annual stockholders
         meetings held on August 20, 1992, September 30, 1993, June 27, 1996 and
         June 24, 1997.

10.6     Employment Agreement, dated June 22, 1992, between Riddell Sports Inc.
         and Robert F. Nederlander (4); amended July 27, 1994 (6).

10.7     Employment Agreement, dated June 22, 1992, between Riddell Sports Inc.
         and Leonard Toboroff (4); amended July 27, 1994 (6).

10.8     Employment Agreement, dated March 19, 1993, commencing March 25, 1993
         between David Mauer and Riddell Sports Inc. (5), as amended January 17,
         1994; November 1, 1994 (7); November 28, 1994 (8).

10.9     Employment Agreement, dated as of March 7, 1996, between Riddell Sports
         Inc. and David Groelinger (10), as amended March 7, 1998 (18) and as
         amended March 1, 2000 (1).

10.10    Note Purchase Agreement, dated October 30, 1996, between Riddell Sports
         Inc. and Silver Oak Capital, L.L.C., as amended by letter agreement
         dated May 2, 1997 (11).

10.11    Registration Rights Agreement, dated November 8, 1996, between Riddell
         Sports Inc. and Silver Oak Capital L.L.C. (11).

10.12    Shareholders Agreement, dated as of May 5, 1997, between Riddell Sports
         Inc., Cheer Acquisition Corp. and certain shareholders of Varsity
         Spirit Corporation (16).

10.13    Employment Agreement, dated as of May 5, 1997, between Riddell Sports
         Inc. and Jeffrey G. Webb (16).

10.14    Employment Agreement, dated as of May 5, 1997, between Riddell Sports
         Inc. and W. Kline Boyd (16), as amended August 2, 1999 (1).

10.15    Umbro License Agreement, dated as of November 23, 1998, between Umbro
         International, Inc. and Varsity Spirit Fashions & Supplies, Inc. (19).

10.16    Asset and USISL Stock Purchase Agreement, dated as of November 1998,
         between Umbro International, Inc. and Varsity Spirit Fashions &
         Supplies, Inc. (19).



                                     - 34 -

<PAGE>

10.17    Amended and Restated Loan, Guaranty And Security Agreement dated as of
         April 20, 1999 among the financial institutions named therein, as the
         Lenders, Bank of America National Trust and Savings Association, as the
         Agent, Riddell Sports Inc., as the Parent Guarantor, Riddell, Inc., All
         American Sports Corporation, Varsity Spirit Corporation, and Varsity
         Spirit Fashions & Supplies, Inc. collectively, as the Borrower and all
         other subsidiaries of the Parent Guarantor, collectively, as the
         Subsidiary Guarantors (19), as amended July 16, 1999 (1) and as amended
         January 1, 2000 (1).

10.18    Industrial Lease and Agreement dated October 1, 1998, between Laphiew
         Gin Company and Varsity Spirit Corporation (19).

10.19    Sublease between Nederlander Television and Film Production, Inc. and
         Riddell Sports Inc., as amended (1).

10.20    Agreement to Build and Lease dated as of December 30, 1998 between MMCA
         Development, LLC and All American Sports Corporation (1), as amended
         February 1, 2000 (1).

21       List of subsidiaries (17).

23       Consent of Grant Thornton LLP regarding Riddell Sports Inc. (1).

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

(1)      Filed herewith.

(2)      Incorporated by reference to Riddell Sports Inc.'s Registration
         Statement on Form S-1 (Commission File No. 33-40488) effective June 27,
         1991 (including all pre-effective amendments to the Registration
         Statement).

(3)      Incorporated by reference to Riddell Sports Inc.'s Form 10-K report
         (Commission File No. 0-19298) for the year ended December 31, 1991.

(4)      Incorporated by reference to Riddell Sports Inc.'s Form 10-Q report
         (Commission File No. 0-19298) for the quarter ended June 30, 1992.

(5)      Incorporated by reference to Riddell Sorts Inc.'s Form 10-K report
         (Commission File No. 0-19298) filed on March 30, 1993.

(6)      Incorporated by reference to Riddell Sports Inc.'s Form 10-Q for the
         quarter ended June 30, 1994.

(7)      Incorporated by reference to Riddell Sports Inc.'s Form 10-Q for the
         quarter ended September 30, 1994.

(8)      Incorporated by reference to Riddell Sports Inc.'s Form 10-K for the
         year ended December 31, 1994.

(9)      Incorporated by reference to Riddell Sports Inc.'s Form 10-K for the
         year ended December 31, 1995, dated November 11, 1996.

(10)     Incorporated by reference to Riddell Sports Inc.'s Form 10-Q dated May
         14, 1996.

(11)     Incorporated by reference to Riddell Sports Inc.'s Form 10-Q dated
         November 11, 1996.

(12)     Incorporated by reference to Riddell Sports Inc.'s Form 10-K for the
         year ended December 31, 1996.

(13)     Incorporated by reference to Riddell Sports Inc.'s Proxy Statement
         filed June 6, 1997.

(14)     Incorporated by reference to Riddell Sports Inc..'s Form 8-K dated June
         19, 1997.

(15)     Incorporated by reference to Riddell Sports Inc.'s Report on Form 8-K
         filed May 8, 1996.

(16)     Incorporated by reference to Varsity Spirit Corporation Schedule 13D
         filed June 25, 1997.



                                     - 35 -

<PAGE>

(17)     Incorporated by reference to Riddell Sports Inc.'s Registration
         Statement on Form S-4 (Registration No. 333-31525) filed July 18, 1997.

(18)     Incorporated by reference to Riddell Sports Inc.'s Form 10-K Report for
         the year ended 1997 (file No. 0-19298).

(19)     Incorporated by referenced to Riddell Sports Inc.'s Form 10-K Report
         for the year ended 1998 (File No. 0-19298).

                                     - 36 -


<PAGE>

                         INDEX TO FINANCIAL STATEMENTS

                                                                            Page

Report of Independent Certified Public Accountants .......................   F-2

Consolidated Balance Sheets at December 31, 1999 and 1998 ................   F-3

Consolidated Statements of Operations for the years ended
    December 31, 1999, 1998 and 1997 .....................................   F-4

Consolidated Statements of Shareholders' Equity for the years
    ended December 31, 1999, 1998 and 1997 ...............................   F-5

Consolidated Statements of Cash Flows for the years ended
    December 31, 1999, 1998 and 1997 .....................................   F-6

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

Financial Statement Schedules

    Report of Independent Certified Public Accountants on Schedule .......   S-1

    Schedule II --Valuation and Qualifying Accounts ......................   S-2

    All other financial statement schedules are omitted as the required
    information is presented in the financial statements or the notes thereto or
    is not necessary.

                                       F-1

<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Riddell Sports Inc.

         We have audited the accompanying consolidated balance sheets of Riddell
Sports Inc. (a Delaware corporation) and Subsidiaries as of December 31, 1999
and 1998, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1999. These financial statements are the responsibility of the management of
Riddell Sports Inc. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Riddell
Sports Inc. and Subsidiaries as of December 31, 1999 and 1998, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States.

                               GRANT THORNTON LLP

Chicago, Illinois
February 21, 2000

                                       F-2

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                             December 31,
                                                                        ----------------------
                                                                          1999           1998
                                                                        ---------    ---------
<S>                                                                     <C>          <C>
                                     ASSETS
Current assets:
  Cash ..............................................................   $     513    $   1,752
  Accounts receivable, trade, less allowance for doubtful
    accounts ($1,863 and $1,302 respectively) (Note 4) ..............      32,524       28,016
  Inventories (Note 5) ..............................................      33,388       28,763
  Prepaid expenses ..................................................       7,578        6,493
  Other receivables .................................................       2,020        1,644
  Deferred taxes (Note 12 ) .........................................       2,076        1,253
                                                                        ---------    ---------
           Total current assets .....................................      78,099       67,921
Property and equipment, less accumulated depreciation (Note 6) ......       7,771        7,871
Intangible assets and deferred charges, less accumulated
  amortization (Note 7) .............................................     105,952      108,735
Other assets ........................................................       2,514        1,684
                                                                        ---------    ---------
               Total assets .........................................   $ 194,336    $ 186,211
                                                                        =========    =========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable ..................................................   $  10,318    $  12,744
  Accrued liabilities (Note 11) .....................................      11,783       11,253
  Customer deposits .................................................       6,090        5,961
                                                                        ---------    ---------
           Total current liabilities ................................      28,191       29,958
Long-term debt, less current portion (Note 8) .......................     136,097      126,900
Deferred taxes (Note 12) ............................................       2,076          348
Other liabilities (Note 11) .........................................       3,107        3,554
Commitments and contingent liabilities (Notes 10 and 11) ............        --           --

Shareholders' equity (Note 9):
  Preferred stock, $.01 par; authorized 5,000,000 shares; none issued        --           --
  Common stock, $.01 par; authorized 40,000,000 shares; issued
    and outstanding 9,263,957 and 9,258,957 shares, respectively ....          93           93
  Capital in excess of par ..........................................      36,862       36,849
  Accumulated deficit ...............................................     (12,090)     (11,491)
                                                                        ---------    ---------
           Total shareholders' equity ...............................      24,865       25,451
                                                                        ---------    ---------
               Total liabilities and shareholders' equity ...........   $ 194,336    $ 186,211
                                                                        =========    =========
</TABLE>

                 See notes to consolidated financial statements

                                       F-3

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                           Years ended December 31,
                                                     -----------------------------------
                                                         1999        1998        1997
                                                     ---------    ---------    ---------
<S>                                                  <C>          <C>          <C>
Net revenues:
  Net sales, products and reconditioning .........   $ 156,411    $ 136,283    $ 103,583
  Camps and events ...............................      51,130       48,704       32,302
  Royalty income .................................       1,056        1,613        2,388
                                                     ---------    ---------    ---------
                                                       208,597      186,600      138,273
                                                     ---------    ---------    ---------
Costs of revenues:
  Products and reconditioning ....................      89,166       79,611       58,718
  Camps and events ...............................      34,596       33,930       21,957
                                                     ---------    ---------    ---------
                                                       123,762      113,541       80,675
                                                     ---------    ---------    ---------
Gross profit .....................................      84,835       73,059       57,598
Selling, general and administrative expenses .....      69,210       64,617       46,278
Other charges (credits) ..........................         (60)         925         --
                                                     ---------    ---------    ---------
Income from operations ...........................      15,685        7,517       11,320
Interest expense (Note 8) ........................      15,379       14,656       11,879
--------------------------------------------------   ---------    ---------    ---------
Income (loss) before taxes .......................         306       (7,139)        (559)
Income taxes .....................................         905         --           --
--------------------------------------------------   ---------    ---------    ---------
Net (loss) .......................................       ($599)     ($7,139)       ($559)
                                                     =========    =========    =========

Net (loss) per share, basic and diluted ..........      ($0.06)      ($0.78)      ($0.07)

Weighted average number of common and common
  equivalent shares outstanding, basic and diluted       9,260        9,134        8,585
</TABLE>

                 See notes to consolidated financial statements

                                       F-4

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                            Retained
                                              Common Stock      Additional   earnings       Total
                                           -------------------   paid in   (Accumulated  Shareholders'
                                            Shares     Amount    capital     deficit)       equity
                                           --------   --------  ---------- ------------  -------------
<S>                                           <C>     <C>       <C>        <C>           <C>
Balance, January 1, 1997 ...............      8,068   $     81   $ 31,457      ($3,793)   $   27,745
  Compensation in connection
    with option grants .................       --         --          559         --             559
  Issuance of common stock upon
    exercise of stock options ..........         25       --           60         --              60
  Sale of common stock,
    net of costs .......................        986         10      4,310         --           4,320
  Net (loss) for the year ..............       --         --         --           (559)         (559)
                                           --------   --------   --------   ----------    ----------
Balance, December 31, 1997 .............      9,079         91     36,386       (4,352)       32,125
  Issuance of common stock
    upon exercise of stock
    options and warrants ...............         99          1        136         --             137
  Stock issued to employees ............         81          1        327          328
  Net (loss) for the year ..............       --         --         --         (7,139)       (7,139)
                                           --------   --------   --------   ----------    ----------
Balance, December 31, 1998 .............      9,259         93     36,849      (11,491)       25,451
  Issuance of common stock
    upon exercise of stock options .....          4       --           13         --              13
  Net (loss) for the year ..............       --         --         --           (599)         (599)
                                           --------   --------   --------   ----------    ----------
Balance, December 31, 1999 .............      9,263   $     93   $ 36,862     ($12,090)   $   24,865
                                           ========   ========   ========   ==========    ==========
</TABLE>

                 See notes to consolidated financial statements

                                       F-5

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                     Years ended December 31,
                                                                 -----------------------------------
                                                                   1999         1998         1997
                                                                 ---------    ---------    ---------
<S>                                                              <C>          <C>          <C>
Cash flows from operating activities:
  Net (loss) .................................................   ($    599)   ($  7,139)   ($    559)
  Adjustments to reconcile net income to net
   cash provided by (used in) operating activities:
    Depreciation and amortization:
      Amortization of debt issue costs .......................         843          803          502
      Other depreciation and amortization ....................       5,834        5,713        4,010
    Stock options issued .....................................        --           --            559
    Compensation expense for stock issued to employees .......        --            199         --
    Provision for losses on accounts receivable ..............       1,196          929          365
    Deferred taxes ...........................................         905         --           --
    Change in assets and liabilities (net
     of effects from acquisitions):
      (Increase) decrease in:
        Accounts receivable, trade ...........................      (5,704)      (2,520)       6,426
        Inventories ..........................................      (4,625)      (4,697)       1,400
        Prepaid expenses .....................................      (1,085)         307        2,304
        Other receivables ....................................        (376)         (82)         975
        Other assets .........................................        (830)         212           45
      Increase (decrease) in:
        Accounts payable .....................................      (2,426)       4,367       (4,010)
        Accrued liabilities ..................................         530          664         (502)
        Customer deposits ....................................         129        1,432       (6,167)
        Other liabilities ....................................        (447)         494         (987)
                                                                 ---------    ---------    ---------
           Net cash provided by (used in) operating activities      (6,655)         682        4,361
                                                                 ---------    ---------    ---------
Cash flows from investment activities:
  Capital expenditures .......................................      (2,542)      (2,494)      (1,814)
  Acquisitions ...............................................        --           --        (91,245)
  Umbro license acquisition fee ..............................        --           (500)        --
  Other investments ..........................................        (686)      (1,485)        (166)
                                                                 ---------    ---------    ---------
           Net cash used in investing activities .............      (3,228)      (4,479)     (93,225)
                                                                 ---------    ---------    ---------
Cash flows from financing activities:
  Net borrowings under line-of-credit agreement ..............       9,197        4,400      (17,890)
  Proceeds from issuance of long-term debt ...................        --           --        115,000
  Debt issue costs ...........................................        (566)        --         (6,220)
  Principal payments on long-term debt:
    Shareholders .............................................        --           --           (439)
    Banks and other ..........................................        --           --         (5,313)
  Proceeds from issuance of common stock .....................          13          138        4,380
                                                                 ---------    ---------    ---------
        Net cash provided by financing activities ............       8,644        4,538       89,518
                                                                 ---------    ---------    ---------
Net increase (decrease) in cash ..............................      (1,239)         741          654
Cash, beginning ..............................................       1,752        1,011          357
                                                                 ---------    ---------    ---------
Cash, ending .................................................   $     513    $   1,752    $   1,011
                                                                 ---------    ---------    ---------
</TABLE>

                 See notes to consolidated financial statements

                                       F-6

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Summary of significant accounting policies:

         Principles of consolidation: The consolidated financial statements
include the accounts of Riddell Sports Inc. and its wholly-owned subsidiaries.
All significant intercompany accounts and transactions have been eliminated.

         Business: Riddell markets and manufactures products and services for
the extracurricular portion of the educational market. The Company owns or
licenses leading brands, such as Riddell(R), Varsity Spirit(R), Umbro(R) and
MacGregor(R) for products and services for team sports and school spirit
activities. Riddell markets its products and services to schools and
recreational organizations and the coaches and participants in the
extracurricular market through its own nationwide sales force, a web site
targeted to specific activities and a year-round marketing cycle of special
events, competitions and instruction.

         Inventories: Inventories are stated at the lower of cost (determined on
a first-in, first-out basis) or market and include material, labor and factory
overhead.

         Property and equipment: Property and equipment are stated at cost.
Depreciation is being computed using the straight-line method over the estimated
useful lives (principally 30 years for buildings and improvements, except for
leasehold improvements depreciated over the lessor of the lease term or their
useful life, and 3 to 7 years for machinery and equipment) of the related
assets.

         Intangible assets and deferred charges: Debt issue costs are amortized
to interest expense over the term of the related debt. Other intangibles and
deferred charges are being amortized by the straight- line method over their
respective estimated lives.

         Long-lived assets including goodwill and other intangible assets are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. For purposes of
evaluating the recoverability of long-lived assets, the related assets' carrying
value is compared to the undiscounted estimated future cash flows from the
related operations.

         Income taxes: Deferred tax liabilities and assets are recognized for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities (excluding non-deductible goodwill) using enacted tax
rates in effect for the years in which the differences are expected to become
recoverable or payable.

         Revenues: Sales of products and reconditioning are generally recorded
upon shipment to customers. Camp and event revenues are recognized over the term
of the respective activity. Royalty income is generally recorded by Riddell when
earned based upon contracts with licensees. These contracts provide for
royalties based upon the licensee's sales or purchases of covered products,
subject to periodic minimum amounts of royalties.

         Estimates: In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
for the periods reported. Actual results

                                       F-7

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

could differ from those estimates. Estimates relating to contingent liabilities
are further discussed in Note 11.

         Concentration of credit risk: The majority of Riddell's receivables
arise from sales to schools and other institutions. Riddell maintains reserves
for potential losses on receivables from these institutions, as well as
receivables from other customers, and such losses have generally not exceeded
management's expectations.

         Earnings (loss) per share: Net loss per share amounts have been
computed by dividing the net loss by the weighted average number of outstanding
common shares. Diluted earnings per share for the years ended December 31, 1999,
1998 and 1997 is equal to basic earnings per share as all of these periods had a
net loss. Potentially dilutive securities, which include convertible debt,
Common Stock options and warrants, were not dilutive due to the net losses
incurred.

         Capitalized software costs: Effective January 1, 1999, Riddell adopted
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". SOP 98-1 provides guidance on
accounting for the costs of computer software developed or obtained for internal
use.

2.       Acquisition

         On June 19, 1997 Riddell acquired Varsity Spirit Corporation. Varsity
is a leading supplier of cheerleader and dance team uniforms and accessories to
the youth, junior high, high school and college markets. Varsity is also a
leading operator of cheerleader and dance team camps, clinics and special
events. The net purchase price of approximately $91.2 million, including costs
of the acquisition, was paid in cash, and the acquisition has been accounted for
under the purchase method. The purchase price was allocated based on estimated
fair values at the date of acquisition. This resulted in an excess of the
purchase price over the net assets acquired of $74.8 million, which has been
recorded as goodwill and is being amortized on a straight-line basis over 40
years. A summary of the allocation of the purchase price to assets acquired
based on their estimated fair values follows:

                                                           (In thousands)
         Purchase price including costs and
           liabilities paid at closing                        $ 95,548
         Less, cash acquired                                    (4,303)
         Net cash cost                                          91,245
         Current liabilities assumed                            23,068
         Less, acquired assets:
             Current assets, excluding cash                    (35,055)
             Property and Equipment                             (3,926)
             Other assets                                         (577)
         Excess cost over net
           assets acquired (goodwill)                         $ 74,755

                                       F-8

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         The operating results of Varsity have been included in the consolidated
statements of operations from the date of acquisition. The following pro forma
information presents the combined operations of Riddell and Varsity as if the
acquisition, and relating financing transactions discussed in Note 8, had
occurred at the beginning of 1997:

Year Ended December 31, 1997 (In thousands, except per share amounts):

         Net revenues                                         $174,084
         Cost of revenues                                      103,076
                                                              --------
         Gross profit                                           71,008
         Selling, general and administrative expenses           63,048
                                                              --------
         Income from operations                                  7,960
         Interest expense                                       14,230
                                                              --------
         Income (loss) before taxes                             (6,270)
         Income taxes                                               --
                                                              --------
         Net income (loss)                                     ($6,270)
                                                              ========

         Net loss per share, basic and diluted                  ($0.69)

         Depreciation and amortization                          $5,588

         These pro forma results have been presented for comparative purposes
only and include the following pro forma adjustments (amounts shown in thousands
and relate to the years ended December 31, 1997): (1) additional amortization
expense as a result of goodwill arising from the acquisition ($789); (2) salary
increases relating to contracts entered into in conjunction with the
transactions ($75); (3) elimination of costs incurred by Varsity in maintaining
its status as a separate public corporation ($165); (4) adjustments of certain
expenses incurred by Riddell or Varsity based on programs existing within the
other company ($38); (5) elimination of one time charges arising from the
transaction for redeeming Varsity stock options ($4,783), a change in control
payment ($250) and bridge loan commitment fees ($3,000); (6) additional interest
on acquisition debt and related debt changes ($5,401); and (7) the tax effect of
the above ($1,728 credit elimination). The pro forma results are not necessarily
indicative of results that would have occurred had the combination been effected
at the dates indicated nor of future operating results of the combined
operations.

3.       UMBRO license

         In November 1998, Riddell entered into an license agreement with Umbro
International, Inc. pursuant to which Riddell acquired the right to manufacture,
market and sell Umbro brand soccer apparel, footwear, equipment, and accessories
on an exclusive basis to the team channel of distribution throughout the United
States, Puerto Rico and the U.S. Virgin Islands for five years. The Umbro
License is royalty-free for 1999. Riddell is required to begin paying royalties
in the year 2000, at which time it is also required to meet annual minimum sales
figures. In the event that Riddell fails to meet required minimum sales levels
subsequent to 1999 for two consecutive annual periods, Umbro International, Inc.
has the right to terminate the Umbro License. The Umbro License, which expires
in November of 2003, may be extended for an additional five years at Riddell's
option on or before August 15, 2003, provided that Riddell achieves certain
performance levels. Simultaneously with the signing of the license, Riddell
acquired certain inventory, promotional material and a 15% interest in U.S.L.,
Inc., an organization that promotes

                                       F-9

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

soccer in the United States. Riddell incurred costs and expenses in connection
with entering into the license agreement in 1998, approximating $3.4 million,
which were allocated as follows:
                                                               (In thousands)
         Investment in U.S.L.,  Inc.                                  $300
         License Rights                                                500
         Inventories                                                 2,500
         Other                                                         100
                                                                    ------
                                                                    $3,400
                                                                    ======

4.       Receivables

         Accounts receivable include unbilled shipments of approximately $1,315
and $1,678 at December 31, 1999 and 1998. It is Riddell's policy to record
revenues when the related goods have been shipped. Unbilled shipments represent
receivables for shipments that have not yet been invoiced. These amounts relate
principally to partial shipments to customers who are not invoiced until their
order is shipped in its entirety or customers with orders containing other terms
that require a deferral in the issuance of an invoice. Management believes that
substantially all of these unbilled receivables will be invoiced within the
current sales season.

5.       Inventories:

         Inventories consist of the following:

                                               December 31,
                                           -------------------
                                            1999        1998
                                           -------     -------
                                               (In thousands)

                  Finished goods           $20,459     $16,584
                  Work-in-process            3,088       2,769
                  Raw materials              9,841       9,410
                                           -------     -------
                                           $33,388     $28,763
                                           =======     =======

6.       Property and equipment:

         Property and equipment consist of the following:

                                                       December 31,
                                                    -------------------
                                                     1999        1998
                                                    -------     -------
                                                       (In thousands)

         Land                                          $207        $207
         Building and improvements                    1,527       1,527
         Machinery and equipment                     15,760      13,350
                                                    -------     -------
                                                     17,494      15,084
         Less accumulated depreciation                9,723       7,213
                                                    -------     -------
                                                     $7,771      $7,871
                                                    =======     =======

         Depreciation expense relating to all property and equipment amounted to
$2,642,000, $2,446,000 and $1,423,000 for the years ended December 31, 1999,
1998 and 1997, respectively.

                                      F-10

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.       Intangible assets and deferred charges:

         Intangible assets and deferred charges consist of the following:

                                         Estimated       December 31,
                                           Lives     -------------------
                                          in years     1999       1998
                                         ---------   --------   --------
                                                        (In thousands)

         MacGregor trademark rights          40       $18,040    $18,040
         Trademarks                          40         3,250      3,250
         Goodwill                            40        92,110     91,479
         Debt issue costs                     8         7,547      6,981
         Other                             7 to 10      2,898      2,843
                                                     --------   --------
                                                      123,845    122,593
         Less accumulated amortization                 17,893     13,858
                                                     --------   --------
                                                     $105,952   $108,735
                                                     ========   ========

         Amortization expense relating to all intangible assets and deferred
charges amounted to $4,035,000, $4,070,000 and $3,089,000 for the years ended
December 31, 1999, 1998 and 1997, respectively.

8.       Long-Term Debt:

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                        December 31,
                                                                    -------------------
                                                                      1999       1998
                                                                    --------   --------
                                                                      (In thousands)

<S>                                                                 <C>        <C>
Outstanding balance under a credit facility expiring in 2003, the   $ 13,597   $  4,400
  facility was revised in 1999,  terms further described below

Senior notes, 10.5%, due 2007, terms further described below         115,000    115,000

Convertible subordinated note payable, interest at 4.1%, due
  2002 through 2004, terms further described below                     7,500      7,500
                                                                    --------   --------
                                                                     136,097    126,900
Less current portion                                                      --         --
                                                                    --------   --------
                                                                    $136,097   $126,900
                                                                    ========   ========
</TABLE>

                                      F-11

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The aggregate maturities of long-term debt are as follows:

                   Years ending December 31,                (In thousands)

                            2002                                $  1,875
                            2003                                  15,472
                            2004                                   3,750
                            2007                                 115,000
                                                                --------
                                                                $136.097
                                                                ========

         In April 1999, Riddell entered into a revised credit facility with Bank
of America National Trust and Savings Association. The revised credit facility
replaced Riddell's $35 million credit facility with NationsBank (now named Bank
of America ) and NBD Bank which subsequently became a participant in the revised
facility. The revised credit facility consists of a line of credit in a
principal amount not to exceed $48 million, expiring at the end of December
2003. Draws under the line of credit are limited to a percentage of some of
Riddell's receivables and inventory. The outstanding balance of the line accrues
interest at a rate of LIBOR plus a margin of 2.25% on draws so designated by
Riddell, payable at the end of the applicable interest period, but not less
frequently than quarterly, and on other draws at the higher of the bank's prime
rate plus a margin of 0.75% or the Federal Funds rate plus 1.25%, payable
monthly. The credit facility also calls for an unused line fee equal to an
annual rate of 0.375% applied to the amount by which the lesser of $40 million
and the then maximum revolving amount exceeds the average daily balance of
outstanding borrowings under the line. Starting April 29, 2000, the margin of
the interest rate over the related rates is subject to quarterly adjustment
dependent on certain financial ratios. The interest rate margin can vary between
1.75% and 2.75% over LIBOR, 0.25% to 1.25% over the prime rate and 0.75% and
1.75% over the Federal Funds rate. The initial adjustment on April 29, 2000,
will increase the margin to its maximum level. The credit facility agreement
contains covenants which, among other things, require Riddell to meet certain
financial ratio and net worth tests, restrict the level of additional
indebtedness Riddell may incur, limit payments of dividends, restrict the sale
of assets and limit investments Riddell may make. The credit facility also
requires repayment of the principal amount upon the occurrence of a change in
the control, as defined, of Riddell. Riddell has pledged essentially all of its
tangible assets as collateral for the credit facility.

         The 10.5% senior notes contain covenants that, among other things,
restrict the level of other indebtedness Riddell may incur, the amounts of
investments it may make in other businesses, the sale of assets and use of
proceeds therefrom, and the payment of dividends. The senior notes also restrict
payment of junior indebtedness prior to the maturity of the junior indebtedness.
The full face value of the senior notes are due on July 15, 2007. The interest
on the senior notes is payable semiannually on January 15 and July 15. The
holders of the senior notes have the right to require the senior notes to be
redeemed at 101% of the principal amount in the event of a change of control (as
defined in the senior notes). The senior notes contain prepayment restrictions
and have no mandatory redemption provisions. The senior notes are guaranteed by
all of Riddell's subsidiaries. Each of these subsidiaries are wholly-owned
subsidiaries of Riddell and have fully and unconditionally guaranteed the senior
notes on a joint and several basis. Riddell itself is a holding company with no
assets or operations other than those relating to its investments in its
subsidiaries. The separate financial statements of the guaranteeing subsidiaries
are not presented in this report because, considering the facts stated above,
the separate financial statements and other disclosures concerning the
guaranteeing subsidiaries are not deemed material to investors by management.

                                      F-12

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         The 4.1% convertible subordinated note is subordinated in right to
prior payment in full of senior indebtedness, which is generally defined in the
governing agreements to include debt under the senior notes and revolving line
of credit described above and any refinancing, renewal or replacement thereof as
well as certain other debt. Repayments of 25% and 33 1/3% of the then
outstanding principal balance is due on November 1, 2002 and 2003, respectively,
with the remaining balance due November 1, 2004. Interest is payable
semiannually each May 1 and November 1. The note limits Riddell's ability to
grant stock options and requires repayment of 101% of the principal amount in
the event of a change in control (as defined). In connection with obtaining
consents needed for various aspects of the Varsity acquisition, Riddell amended
the note to provide for a reduction from $6.00 to $5.3763 per share in the
conversion price.

         The senior notes were issued and a revolving credit facility (which was
revised in April 1999) was entered into in connection with the 1997 acquisition
of Varsity Spirit Corporation (see Note 2). In connection with these financing
transactions, all other long-term debt of Riddell, except the convertible notes,
was repaid. Riddell incurred debt issue costs of approximately $5.4 million in
connection with the senior notes and approximately $1.4 million of costs in
connection with the credit facility and its 1999 revision. These costs are
included with intangibles and deferred charges (see Note 7) and are being
amortized to interest expense over the life of the related debt. Riddell also
incurred costs of $3.0 million in connection with a bridge loan commitment
needed to support the acquisition. The bridge loan was not drawn-down and the
commitment fee was charged to interest expense in June 1997.

9.       Shareholders' equity and stock option plans:

         In conjunction with the Varsity Acquisition in June 1997, Riddell sold
986,169 shares of its Common Stock to certain key employees of Varsity at $4.50
per share for an aggregate, net of related costs, of approximately $4.3 million
pursuant to Stock Purchase Agreements, dated May 15, 1997.

         Stock option plans: The 1991 Stock Option Plan, as amended, and the
1997 Stock Option Plan provide for the granting of options to key employees,
directors, advisors and independent consultants to Riddell for the purchase of
up to an aggregate of 2,915,500 shares of Riddell's common stock. Under the 1991
Stock Option Plan, options for an aggregate of 1,415,500 shares may be granted
at an option price of no less than 85% of the market price of Riddell's common
stock on the date of grant and may be exercisable between one and ten years from
the date of grant. Under the 1997 Stock Option Plan, options or other
stock-based awards may be granted for an aggregate of 1,500,000 shares. The 1997
Stock Option Plan generally does not restrict the exercise price or terms of
grants.

         During 1998, Riddell issued 81,000 shares of its Common Stock to
certain employees for incentive compensation as a stock award under the terms of
the 1997 Stock Option Plan. These shares were recorded at a value of $328,000
based on quoted market values at the date of grant. The grants include 27,000
shares, valued at $128,000, granted in satisfaction of an accrual for
compensation included in accrued liabilities at December 31, 1997.

         During 1997, in connection with the terms of certain agreements entered
into in connection with the Varsity acquisition, Riddell issued options for the
purchase of approximately 950,000 shares of its Common Stock to Varsity
employees. Included in this amount are 450,000 options to certain key employees
of Varsity which vested immediately with an option price of $3.80. A charge of
approximately $559,000 was recorded in June, 1997, and credited to additional
paid in capital to reflect the intrinsic value of these options based on

                                      F-13

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

their in-the-money position on the measurement date for this grant. The
remaining 500,000 options were issued to a broad group of Varsity employees with
exercise prices at market. Both of these sets of option grants are included in
the information summarized below.

         Options granted through December 31, 1999 generally have been
designated as non-qualified stock options and, except as described above, have
had option prices equal to market values on the date of grant, have had terms of
five or ten years, and have had vesting periods of one or four years.
Information relating to stock option transactions over the past three years is
summarized as follows:

<TABLE>
<CAPTION>
                                                 Options Outstanding         Options Exercisable
                                              -------------------------     -----------------------
                                                               Weighted                    Weighted
                                                               Average                     Average
                                                Number        Price Per       Number      Price per
                                              Outstanding       Share       Exercisable     Share
                                              -----------     ---------     -----------   ---------
<S>                                           <C>             <C>           <C>           <C>
      Balance, December 31, 1996               1,186,050        $3.87         712,913       $3.79
        Granted                                1,085,925        $4.75
        Exercised                                (25,000)       $2.39
        Forfeited                                 (7,000)       $4.46
        Expired                                  (82,000)      $10.75
                                               ---------
      Balance, December 31, 1997               2,157,975        $4.05       1,284,425       $3.37
        Granted                                  461,600        $5.08
        Exercised                                (58,825)       $2.48
        Forfeited                               (291,925)       $3.59
        Expired                                  (16,300)       $4.05
                                               ---------
      Balance, December 31, 1998               2,252,525        $4.36       1,362,106       $3.81
        Granted                                  364,000        $3.27
        Exercised                                 (5,000)       $2.44
        Forfeited                                (64,000)       $2.80
        Expired                                 (101,500)       $2.87
                                               ---------
      Balance, December 31, 1999               2,446,025        $4.30       1,519,513       $4.22
                                               =========
</TABLE>

         Options forfeited in 1999 include options for 60,000 shares surrendered
by four members of the board of directors in exchange for a cash payment. Each
of the four directors received a payment of $16,875 in exchange for the
surrender of stock options granted to them in 1994 for 15,000 shares each, at an
exercise price of $2.625. The payment was computed based on the "in the money"
value of the options at the time of the payments.

         Options granted in 1998 include grants for 56,600 shares, granted in
November 1998, to certain employees (none of which were directors of Riddell) in
exchange for cancellation of options for 69,850 shares which had previously been
granted to these employees. The canceled options, which are included in the
forfeited category above, would have expired in December 1998 and had a weighted
average option price of $2.44 per share. The new grants had a term of ten years
and a weighted average option price of $3.76 per share.

                                      F-14

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Further information about stock options outstanding at December 31, 1999 is
summarized as follows:

<TABLE>
<CAPTION>
                                         Options Outstanding                    Options Exercisable
                             --------------------------------------------     -----------------------
                                                  Weighted       Weighted                     Weighted
                                                  Average        Average                      Average
          Range of             Number            Remaining      Price Per       Number       Price Per
       Exercise Prices       Outstanding      Contractual Life    Share       Exercisable      Share
       ---------------       -----------      ----------------  ---------     -----------    ---------
<S>                          <C>              <C>               <C>           <C>            <C>
        $1.80--$2.99            130,000         2.4  years         $1.99         125,000       $1.97
        $3.00--$4.49          1,206,100         8.9  years         $3.64         810,550       $3.83
        $4.50--$6.50          1,109,925         9.6  years         $5.29         583,963       $5.23
</TABLE>

         At December 31, 1999 there were 299,650 shares available for future
option grants.

         In accordance with the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), Riddell
has elected to continue to account for stock- based compensation under the
intrinsic value based method of accounting prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). Under
APB 25, generally, no cost is recorded for stock options issued to employees
unless the option price is below market at the time options are granted. The
following pro forma net income and earnings per share are presented for
informational purposes and have been computed using the fair value method of
accounting for stock-based compensation as set forth in SFAS 123:

<TABLE>
<CAPTION>
                                                               Years ended December 31,
                                                           ---------------------------------
                                                            1999         1998         1997
                                                           -------      -------      -------
                                                                     (In thousands)

<S>                                                        <C>          <C>          <C>
         Pro forma net (loss)                              ($1,725)     ($7,953)     ($1,973)

         Pro forma (loss) per share, basic and diluted      ($0.19)      ($0.87)      ($0.23)
</TABLE>

         These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense related to
grants made before 1995. The pro forma results include expense related to the
fair value of stock options estimated at the date of grant using the
Black-Scholes option pricing model and the following weighted average
assumptions for the years ended December 31, 1999, 1998 and 1997, respectively:
risk-free interest rates of 5.7%, 5.3% and 6.4%; expected volatility of 50%, 56%
and 50%; expected option life of 7 years and no dividend payments. The weighted
average estimated fair value of options granted during 1999, 1998 and 1997 was
$1.92, $3.16 and $3.28 per share, respectively.

         Warrants: During 1999 warrants held by one of Riddell's bankers
expired. The warrant was for 172,152 shares of Riddell's common stock at $3.72
per share.

         During 1998 certain officers and directors of Riddell exercised
outstanding warrants for shares of Riddell's Common Stock which would have
expired in January 1999. Riddell agreed to a cashless exercise of the warrants,
in effect accepting shares issuable upon exercise as payment for the exercise.
As a result, 42,362 shares of Common Stock were issued in exchange for warrants
for 150,000 shares based on an exercise price of $2.96 per share and an exchange
price of $4.125 per share. The exchange price of $4.125 per share was set on a
date when the quoted market price of a share of Common Stock was $4.00.

                                      F-15

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10.      Commitments:

         Leases: Riddell leases various facilities and equipment under operating
leases. Rent expense amounted to approximately $3,105,000, $2,792,000 and
$1,958,000 for the years ended December 31, 1999, 1998 and 1997, respectively.

         Future minimum rental payments for all non-cancelable lease agreements
for periods after December 31, 1999 are as follows:

            Years ending December 31,                       (In thousands)
                         2000                                          $ 2,937
                         2001                                            1,537
                         2002                                            1,207
                         2003                                            1,002
                         2004                                              577
                         Later years                                     4,326
                                                                       -------
             Total minimum payments required                           $11,586
                                                                       =======

         Employee benefits: Riddell has three noncontributory defined benefit
pension plans that cover, or have covered, certain employee groups. These plans
consist of two plans covering certain unionized employees and a plan that
covered non-union employees of one subsidiary. The non-union plan was amended in
1994 to provide that no benefits would accrue under the plan on or after
December 31, 1994. Expense for these plans was approximately $60,000, $200,000
and $50,000 for the years ended December 31, 1999, 1998 and 1997. Expenses for
1998 included a provision for costs relating to an anticipated termination of
the non-union plan.

         Riddell maintains defined contribution (401-k) plans covering
substantially all of its employees, other than those covered by the union plans.
Company contributions to these plans are based on a percentage of employee
contributions and are funded and charged to expense as incurred. Expenses
related to the plans amounted to $122,000, $95,000 and $342,000 for the years
ended December 31, 1999, 1998 and 1997, respectively.

                                      F-16

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.      Accrued liabilities and contingencies:

         Recorded liabilities: In regards to the product liability contingencies
discussed below, Riddell has recorded certain liabilities. While these amounts
are discussed in the remaining sections of this note, a summary of these amounts
together with other items comprising the balance sheet line items "accrued
liabilities" and "other liabilities" follows:

                                              Accrued
                                            liabilities   Other liabilities
                                             (Current)       (Non-Current)
                                            -----------   ------------------
December 31, 1999:                                   (In thousands)
  Product liability matters, reserves for
    pending and other contingencies                $700               $3,000
  Accrued interest                                5,648                   --
  Other accrued liabilities                       5,435                  107
                                            -----------   ------------------
         Total of balance sheet category        $11,783               $3,107
                                            ===========   ==================

December 31, 1998:
  Product liability matters, reserves for
    pending and other contingencies                $700               $3,300
  Accrued interest                                5,690                   --
  Other accrued liabilities                       4,863                  254
                                            -----------   ------------------
         Total of balance sheet category        $11,253               $3,554
                                            ===========   ==================

         Product liability litigation matters and contingencies:

         At December 31, 1999, Riddell was a defendant in 4 product liability
suits relating to personal injuries allegedly related to the use of helmets
manufactured or reconditioned by subsidiaries of Riddell. The ultimate outcome
of these claims, or potential future claims, cannot presently be determined.
Riddell estimates that the uninsured portion of future costs and expenses
related to these claims, and incurred but not reported claims, will amount to at
least $3,700,000 and, accordingly, a reserve in this amount is included in the
Consolidated Balance Sheet at December 31, 1999 as part of accrued liabilities
and other liabilities. These reserves are based on estimates of losses and
defense costs anticipated to result from such claims, from within a range of
potential outcomes, based on available information, including an analysis of
historical data such as the rate of occurrence and the settlement amounts of
past cases. However, due to the uncertainty involved with estimates actual
results have at times varied substantially from earlier estimates and could do
so in the future. Accordingly there can be no assurance that the ultimate costs
of such claims will fall within the established reserves.

         Riddell maintains product liability insurance under a policy expiring
in January 2005. The policy is an occurrence-based policy providing coverage
against claims currently pending against Riddell and future claims relating to
all injuries occurring prior to January 2005 even if such claims are filed after
the end of the policy period. The insurance program provides certain basic and
excess coverage on product liability claims with a combined aggregate coverage
of over $40,000,000 subject to the limitations described below.

                                      F-17

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         The first level of insurance coverage under the policy ("Basic
Coverage") provides coverage of up to $2,250,000 per claim in excess of an
uninsured retention (deductible) of $750,000 per occurrence. The Basic Coverage
is subject to an aggregate program limit and certain annual aggregate sub
limits. The Basic Coverage, which does not affect the availability of the excess
coverage described below, has an aggregate limit which is currently $5.6
million, but the policy allows Riddell to increase this maximum limit to $7.7
million at any time by prepaying the required premium, which counts at 120% of
the amount paid toward the limit. The Basic Coverage, to the extent available,
covers the insured portion of the first $3,000,000 of a claim. The insurance
program also provides for additional coverage ("Excess Coverage") of up to
$20,000,000 per occurrence, in excess of the first $3,000,000 of each claim.
Claims covered by the Excess Coverage are subject to one of two separate
$20,000,000 aggregate policy limits, depending on the date of the related
injury. The first $20,000,000 aggregate limit applies to claims for injuries
occurring prior to January 31, 1998, and claims occurring after January 1998 are
covered by the second separate $20,000,000 aggregate limit.

         In March 1999, a jury rendered a verdict against Riddell in a Texas
product liability lawsuit for approximately $11.4 million plus interest from
February 1996. Riddell has filed an appeal of the verdict. If the verdict was
paid in full it would be covered by the insurance described above. Any such
payment by the insurance company would reduce the amount of the aggregate limits
of Riddell's product liability insurance coverage described above.

         Other contingencies and litigation matters:

         In addition to the matters discussed in the preceding paragraphs,
Riddell has certain other claims or potential claims against it that may arise
in the normal course of business, including without limitation, claims relating
to personal injury as well as employment related matters. Management believes
that the probable resolution of such matters will not materially affect the
financial position or results of operations of Riddell.

                                      F-18

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.      Income taxes:

         Income tax expense for 1999 was $905,000 which reflects an adjustment
relating to the valuation of deferred taxes. There was no current income tax
expense for the years ended December 31, 1999, 1998 and 1997 due to net
operating losses generated, or carried forward to, these periods. There was no
other deferred tax expense during the years ended December 31, 1999, 1998 and
1997 since there was generally a full valuation allowance applied to net
deferred tax assets. Changes in the valuation allowance were a decrease of
$354,000 (net of the increase of $905,000 relating to the adjustment described
above) for 1999, an increase of $2,184,000 for 1998 and a decrease of $355,000
for 1997.

         Deferred tax assets and liabilities are determined based on the
differences between the financial reporting and tax bases of assets and
liabilities. The significant components of deferred income tax assets and
liabilities at December 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                  December 31,
                                                              --------------------
                                                                1999        1998
                                                              --------    --------
                                                                 (In thousands)
<S>                                                           <C>         <C>
        Deferred income tax assets:
              Accrued expenses and reserves                   $  3,190    $  2,843
              Inventory                                            983         711
              Net operating loss, and credit, carryforwards      4,812       6,551
              Other                                                379         308
                                                              --------    --------
                                                                 9,364      10,413
              Valuation allowances                              (2,861)     (3,215)
                                                              --------    --------
              Total deferred income tax assets                   6,503       7,198
                                                              --------    --------
         Deferred income tax liabilities:
              Intangible assets and deductible goodwill          5,900       5,648
              Property and equipment                               380         442
              Prepaid expenses                                     223         203
                                                              --------    --------
              Total deferred income tax liabilities              6,503       6,293
                                                              --------    --------
         Total net deferred income tax asset                  $    -0-    $    905
                                                              ========    ========
</TABLE>

         The net current and non-current components of the deferred income taxes
were recognized in the balance sheet at December 31, 1999 and 1998 as follows:

                                                           December 31,
                                                         ---------------
                                                          1999     1998
                                                         ------   ------
                                                          (In thousands)

         Net current deferred tax assets                 $2,076   $1,253
         Net non-current deferred tax liabilities         2,076      348
                                                         ------   ------
                                                         $  -0-   $  905
                                                         ======   ======

                                      F-19

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         Reconciliations between the actual provision for income taxes and that
computed by applying the U.S. statutory rate to income (loss) before taxes are
as follows:

<TABLE>
<CAPTION>
                                                                Years ended December 31,
                                                             -----------------------------
                                                               1999       1998      1997
                                                             -------    -------    -------
                                                                    (In thousands)

<S>                                                          <C>        <C>        <C>
         Tax expense (benefit) at U.S. statutory rate        $   104    ($2,427)   ($  190)
         Differences resulting from:
              Amortization not deductible
                for tax purposes                                 721        727        487
              Travel & entertainment expenses
                not deductible for tax purposes                  269        276        189
              Increase in deferred tax valuation
                allowance from non-recognition of net
                operating loss tax benefit                        --      1,447         --
              Benefit of prior periods net operating
                losses not previously recognized resulting
                in decrease in valuation allowance            (1,095)        --       (483)
              Valuation allowance adjustment                     905
              Other differences                                    1        (23)        (3)
                                                             -------    -------    -------
         Income tax expense                                  $   905     $  -0-     $  -0-
                                                             =======    =======    =======
</TABLE>

         At December 31, 1999 Riddell had estimated net operating loss
carryforwards for federal income tax purposes of approximately $13,000,000
expiring between 2008 to 2014. While this loss carryforward is available to
reduce the payment of taxes that might otherwise be payable in future years, the
benefit of most of the net operating losses have been recognized in the
computation of income tax expense reflected in Riddell's consolidated financial
statements in prior years. Benefits relating to approximately $5.0 million of
net operating loss carryforwards have not yet been recognized in the computation
of income tax expense for financial reporting purposes and have been reserved
for as part of the deferred income tax asset valuation allowance. These
unrecognized carryforwards would be recognized through a reduction of income tax
expense in future periods upon the generation of an offsetting amount of taxable
earnings.

13.      Related party transactions:

         In 1997, in connection with certain financing transactions occurring in
connection with the Varsity acquisition, notes payable to shareholders of
$439,000 plus accrued interest were repaid in advance of maturity. Interest of
$17,000 on the note was included in interest expense for the year ended December
31, 1997.

         Subsequent to December 31, 1999, Riddell entered into a sublease for
office space from an entity controlled by a shareholder who is the Chairman of
Riddell's Board of Directors, on substantially the same terms as the over lease.
The term of the sublease commences on the later of the date the sublease is
consented to by the sub-lessor's landlord or the date certain improvements are
completed and expires in September 2009. The sublease provides for fixed rent
which begins at an annualized rate of $116,970 and increase to an annualized
rate of $137,826 at the end of the lease term and additional rent based on a

                                      F-20

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

percentage of tax and operating expense escalation payments made by the
sub-lessor to its landlord. The sublease also provides for a one time payment of
$175,000 for improvements being constructed for Riddell.

14.      Supplemental cash flow information:

         Cash payments for interest were $14,600,000, $14,700,000 and
$5,260,000for the years ended December 31, 1999, 1998 and 1997, respectively.
Interest payments for 1997 included $3,000,000 relating to bridge financing
commitment fees as discussed in Note 8 above. Income tax payments, or refunds,
were not significant for 1999, 1998 or 1997.

         In 1998, Riddell issued shares of its common stock, valued at $128,000
based on quoted market values at the time of grant, to certain employees in
satisfaction of an accrual for compensation included in accrued liabilities at
December 31, 1997.

         In June 1997, in connection with the Varsity acquisition, Riddell
assumed liabilities of $23,068,000.

15.      Fair values of financial instruments:

         Riddell's financial instruments include cash, accounts receivable,
accounts payable and long-term debt. The carrying values of cash, accounts
receivable and accounts payable approximate their fair values. Riddell's
long-term debt include the senior notes which at December 31, 1999 had a
carrying value of $115,000,000 and a fair value, based on quoted market values,
of $98,037,500. Riddell's remaining long-term debt is not traded and has no
quoted market value, however management believes any difference between its
carrying value and fair value would not be material in relation to these
Consolidated Financial Statements.

16.      Segment and product line information:

         Riddell has three reportable segments: extracurricular products and
services, retail products and trademark licensing:

         Extracurricular products and services: This segment markets products
and services primarily through Riddell's direct sales force for extracurricular
customers such as schools, leagues, recreational groups and other organizations
for competitive and recreational sport and school spirit activities. Operations
include the manufacture and sale of team sports products (including football
protective products and team uniforms), school spirit products (including
cheerleading and dance uniforms and accessories), and athletic equipment
reconditioning. The segment also operates cheerleader and dance team camps,
clinics and special events. The extracurricular segment includes Riddell's line
of Umbro branded soccer uniforms, footwear and equipment sold to soccer
specialty stores.

         Retail products: This segment markets products through retailers. Most
of the products sold by this segment are sports collectible products, such as
authentic and replica football helmets, which bear licensed

                                      F-21

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

sports team logos. The segment's operations also include sales of certain
recreational football and other athletic products sold through consumer product
retailers and distributors.

         Trademark licensing: This segment consists of the licensing of the
Riddell and MacGregor trademark rights to other entities for use in marketing
products such as athletic footwear and apparel.

         Riddell's reportable segments are strategic business units that differ
and are managed separately because of the nature of their markets and channels
of distribution. Riddell has determined these reportable segments in accordance
with the management approach specified in Statement of Financial Accounting
Standards (SFAS) No. 131, "Disclosure About Segments of an Enterprise and
Related Information." The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the basis for determination of the Company's reportable
segments.

        The accounting policies of the segments are the same as those described
in the summary of significant accounting policies except for the inclusion of
operating results for Varsity Spirit Corporation, and related pro forma
adjustments, for the period prior to its acquisition in June 1997 (see Note 2).
Riddell evaluates performance of the extracurricular products and services
segment based on these pro forma results. Total assets are as reported and do
not include pro forma amounts or adjustments.

<TABLE>
<CAPTION>
                                                            (In thousands)
                                                     Years ended December 31,
                                               -----------------------------------
                                                  1999         1998         1997
                                               ---------    ---------    ---------
<S>                                            <C>          <C>          <C>
Net revenues:
    Extracurricular products and services       $189,430     $166,845     $153,641
    Retail products                               18,111       18,142       18,055
    Trademark licensing                            1,056        1,613        2,388
                                               ---------    ---------    ---------
                                                 208,597      186,600      174,084
    Less,  preacquisition results of Varsity
      Spirit Corporation included above               --           --       35,811
                                               ---------    ---------    ---------
    Consolidated total                          $208,597     $186,600     $138,273
                                               =========    =========    =========

Income from Operations:
    Extracurricular products and services        $18,487      $11,416      $10,841
    Retail products                                1,176           56        1,742
    Trademark licensing                              282          841        1,476
    Corporate and unallocated expenses            (4,260)      (4,796)      (6,099)
                                               ---------    ---------    ---------
                                                  15,685        7,517        7,960
    Less,  preacquisition results of Varsity
      Spirit Corporation included above               --           --       (3,360)
                                               ---------    ---------    ---------
    Consolidated total                           $15,685       $7,517      $11,320
                                               =========    =========    =========
</TABLE>

                                      F-22

<PAGE>
                      RIDDELL SPORTS INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.      Segment and product line information (continued):

<TABLE>
<CAPTION>
                                                       (In thousands)
                                                  Years ended December 31,
                                               ------------------------------
                                                 1999       1998       1997
                                               --------   --------   --------
<S>                                            <C>        <C>        <C>
Depreciation and amortization, exclusive of
debt issue costs:
    Extracurricular products and services        $4,678     $4,497     $4,253
    Retail products                                 582        557        595
    Trademark licensing                             531        614        696
    Corporate and unallocated                        43         45         44
                                                  5,834      5,713      5,588
    Less,  preacquisition results of Varsity
      Spirit Corporation included above              --         --      1,578
                                               --------   --------   --------
    Consolidated total                           $5,834     $5,713     $4,010
                                               ========   ========   ========

Capital expenditures:
    Extracurricular products and services        $2,079     $2,265     $2,562
    Retail products                                 463        229        139
                                               --------   --------   --------
                                                  2,542      2,494      2,701
    Less,  preacquisition results of Varsity
      Spirit Corporation included above              --         --        887
                                               --------   --------   --------
    Consolidated total                           $2,542     $2,494     $1,814
                                               ========   ========   ========

Total assets:
    Extracurricular products and services      $155,202   $150,163   $143,414
    Retail products                              14,285     10,253     11,497
    Trademark licensing                          15,880     16,898     17,835
    Corporate and unallocated                     8,969      8,897      9,015
                                               --------   --------   --------
    Consolidated total                         $194,336   $186,211   $181,761
                                               ========   ========   ========

Revenues by product line for all reportable
segments in the aggregate were as follows:

    Cheerleader and dance products              $69,155    $63,491    $56,453
    Camps and events                             51,130     48,704     44,966
    Team sports products                         46,733     34,276     30,177
    Athletic product reconditioning              24,564     23,415     22,892
    Sports collectibles                          15,959     15,101     17,208
    Trademark licensing                           1,056      1,613      2,388
                                               --------   --------   --------
                                                208,597    186,600    174,084
                                               ========   ========   ========
    Less,  preacquisition results of Varsity
      Spirit Corporation included above              --         --     35,811
                                               --------   --------   --------
    Consolidated revenues                      $208,597   $186,600   $138,273
                                               ========   ========   ========
</TABLE>

                                      F-23

<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                                   ON SCHEDULE

Board of Directors
Riddell Sports Inc.

         In connection with our audit of the consolidated financial statements
of Riddell Sports Inc. and Subsidiaries referred to in our report dated February
21, 2000, which is included on page F-2 of this Form 10-K, we have also audited
Schedule II for each of the three years in the period ended December 31, 1999.
In our opinion, this schedule presents fairly, in all material respects, the
information required to be set forth therein.

                                                              GRANT THORNTON LLP

Chicago, Illinois
February 21, 2000

                                       S-1

<PAGE>
SCHEDULE II

                             RIDDELL SPORTS INC. AND SUBSIDIARIES
                             VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
             Col.  A                          Col.  B              Col.  C                Col.  D      Col.  E
-----------------------------------------    ----------    ------------------------      ----------   ----------
                                                                  Additions
                                                           ------------------------
                                                              (1)           (2)
                                                           Charged to    Charged to
                                             Balance at      Costs         Other                      Balance at
                                             Beginning        and         Accounts-                     End of
          Description                        of Period      Expenses      Describe       Deductions     Period
-----------------------------------------    ----------    ----------    ----------      ----------   ----------
                                                                                             (a)
<S>                                          <C>           <C>           <C>             <C>          <C>
Year ended December 31, 1997
  Allowance for doubtful accounts                $513         $365          $325             $379         $824
                                                                              (c)
  Accrued product liability reserves (b)
    Current portion                              $453         $865          $500           $1,153         $665
    Long-term portion                           3,500                       (500)                        3,000

Year ended December 31, 1998
  Allowance for doubtful accounts                $824         $929            --             $451       $1,302

  Accrued product liability reserves (b)
    Current portion                              $665       $1,178         ($300)            $834         $709
    Long-term portion                           3,300                        300                         3,300

Year ended December 31, 1999
  Allowance for doubtful accounts              $1,302       $1,196            --             $635       $1,863

  Accrued product liability reserves (b)
    Current portion                              $709         $853          $300           $1,162         $700
    Long-term portion                           3,300                       (300)                        3,000
</TABLE>


Notes:   (a)      Deductions for the allowance for doubtful accounts consist of
                  accounts written off net of recoveries; deductions for accrued
                  product liability reserves consist of payments of claims and
                  related expenses.

         (b)      The current portion of accrued product liability reserves is
                  included within the line item accrued liabilities in the
                  consolidated balance sheet. The long-term portion of accrued
                  product liability reserves is included within the line item
                  other liabilities in the consolidated balance sheet.

         (c)      Addition charged to other accounts for 1997 is the initial
                  balance from the Varsity acquisition.

                                       S-2