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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 1999
Commission File Number: 0-29014

                              TEARDROP GOLF COMPANY
                 (Name of Small Business Issuer in its Charter)

          Delaware                                               57-1056600
          --------                                               ----------
(State or Other Jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)

1080 Lousons Road Union, New Jersey                                07083
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(Address of principal executive offices)                         (Zip Code)

       Registrant's telephone number, including area code: (908) 688-4445

               Securities registered pursuant to Section 12(b) of
                           the Exchange Act of 1934:

   Title of 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)

                          ----------------------------
                                (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 Exchange Act 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 Regulations S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in a definitive proxy or
information statement incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

The Registrant's revenues for its most recent fiscal year were $59,769,000

State the aggregate market value of the voting stock held by non-affiliates of
the registrant. (The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock as of a specified date within 60 days prior to the date of filing.)

                         $7,406,888 as of March 27, 2000

Number of shares of common stock outstanding as of March 27, 2000: 5,262,565

Transitional Small Business Disclosure Format: Yes |_| No |X|

PORTIONS OF THE FOLLOWING DOCUMENTS HAVE BEEN INCORPORATED BY REFERENCE INTO
THIS ANNUAL REPORT ON FORM 10-KSB: Portions of the Proxy Statement for the
Registrant's 2000 Annual Meeting of Stockholders to be filed prior to April 29,
2000 are incorporated by reference in Part III
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<PAGE>

                                     PART I

Item 1. Description of Business.

General

      We (the "Company" or "TearDrop") design, develop and market throughout the
world high-quality, premium price golf clubs including (a) the TearDrop putters
with Roll-Face(TM) Technology; (b) the Tommy Armour ("Tommy Armour" or "Armour")
845 irons and woods; (c) the Ram ("Ram" or "RAM") line of irons, woods, and
wedges; and (d) the Zebra putters with Roll-Face(TM) Technology. The TearDrop,
Tommy Armour and Ram products are used by professional golfers on the
Professional Golf Association ("PGA") Tour, the Senior PGA Tour, the Ladies PGA
Tour and the BUY.COM Tour (formerly the Nike Tour). We also hold the exclusive
North America distribution rights to Walter Genuin golf shoes, an upscale
high-quality Italian-made golf shoe. In addition, we operate the TearDrop Tour,
a developmental golf tour for aspiring PGA Tour players.

      We have enlisted over 30 golf professionals, including 13 players on the
PGA tour, to promotional agreements including Fred Couples, Steve Jones, Tommy
Tolles, Omar Uresti, Paul Goydos and Joey Sindelar.

Products

      TearDrop Products

      The TearDrop putter was first introduced in 1993 and has been redesigned
since then. Today, TearDrop putters are designed, manufactured and marketed
featuring ROLL-FACE(TM) Technology. We believe that the precision radius that is
applied to the face results in a consistent impact zone just below the equator
of the ball, producing a truer roll, regardless of the player's hand position.

      TD Milled Putters

      We currently manufacture and market, as our premium line of putters, the
TD Milled line. This series consists of twenty four different models, all of
which feature ROLL-FACE(TM) Technology. The TD Milled putters are all 100%
precision milled from cold-rolled steel, and are designed to deliver the highest
level of feel and performance.

      TD Zebra Putters

      We currently manufacture and market, as our mallet line of putters, the TD
Zebra line. This series consists of six different models, all of which feature
ROLL-FACE(TM) Technology. The TD Zebra putters are modeled after the original
"Zebra Classic," which was a popular putter. The redesign incorporates the
feature of the classic stripes of the Zebra putter into a unique 3-D cavity
design.

      Armour Products

      Armour golf clubs are designed, manufactured and marketed to be the
highest quality equipment available to the serious golfer, combining traditional
design with modern technology.

      845s(R) Irons Introduction

      The 845s model was first introduced in 1987 with the 845s Silver Scot
irons. The Silver Scot irons have become an established brand of irons in the
modern golf industry.


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      In 1999, we continued to develop the 845s brand with the introduction of
two new Tommy Armour irons - the 845 evo(TM) v-25 and 845 evo v-31 irons. These
two new introductions complement Armour's other products - 845s Oversize, 845s
Reduced Offset Oversize, 845s Titanium and 845s Women's Titanium.

      Evolving (evo) Cavity(TM) Technology

      The Tommy Armour 845 evo irons were designed to be a replacement for the
845s Silver Scot irons. The Tommy Armour evolving cavity technology provides a
variable combination of stability, control and workability within the set
depending on the desired performance of each iron.

      845 evo v-25

      The 845 v-25 traditional blade profile irons are forged from cold-rolled
steel. The v-25 irons, unlike other forgings, utilize a near net, triple forging
process, which involves a final coining operation for added molecular
compaction, and is intended to provide a more consistent feeling iron. The v-25
has been designed using a constant moment of inertia, allowing increased
workability in the short irons with added stability and control in the long
irons.

      845 evo v-31

      The 845 v-31 traditional blade profile irons are cast from stainless
steel. The profile remains the same as the forged v-25 irons, however, more
perimeter weighting is featured in the v-31 because of a lower center step in
the cavity. The cavity pushes weight to perimeter pads in order to provide more
stability (higher overall constant moment of inertia). The v-31 irons feature
progressive offset because it is believed that more offset in the long irons
promotes a higher ball trajectory. Reduced offset in the short irons provides a
traditional appearance and improved shot workability. Tommy Armour 845 evo v-31
irons also feature the new True Temper(R) Tri-Gold(TM) shaft technology.
Tri-Gold shafts ascend in weight. Lighter-weight long iron shafts are intended
to help generate more clubhead speed for increased distance and power. Heavier
weighted short iron shafts are intended to provide superior stability, feel and
control.

      845s Silver Scot

      During 1999, Armour continued to offer the original 845s Silver Scot. We
believe that the clean, traditional and simple shape of the Silver Scot iron is
attractive to players. The 845s are cavity balanced, in which the center of
gravity is located in the middle of each clubface throughout the set. With both
perimeter weighting and progressive offset, the 845s Silver Scot is believed to
create increased stability.

      845s Oversize

      The 845s Oversize product line features the original 845s classic shape
combined with oversize technology for irons. Oversize technology is designed to
offer golfers an enlarged sweetspot and improved clubhead stability on
off-center hits. The 845s Oversize maintains the traditional blade shaping and
lines inspired by the original 845s Silver Scot. Along with cavity balancing and
perimeter weighting, the 845s Oversize irons are designed to help golfers
realize increased forgiveness and stability on their golf shots.

      845s Oversize Reduced Offset

      The 845s Oversize Reduced Offset provides all of the features of the 845s
Oversize iron, but with less offset. The Reduced Offset iron offers a more
traditional appearance in the playing position and improved shot workability for
better golfers.


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      845s Titanium Face

      To capitalize on the superior benefits of titanium, Armour has developed
the 845s Titanium Face Insert irons, an oversized stainless steel clubhead with
a titanium face insert. Armour's 845s Titanium Face irons have a complete
stainless steel body and a titanium insert in the face. The 845s Titanium is
designed to take advantage of the lightweight properties of titanium in the face
insert, coupled with the denser stainless steel in the perimeter of the iron so
that forgiveness and stability of the club may be increased. Other titanium face
insert irons have only a stainless steel frame with a titanium insert. This may
create a negative vibration and an imprecise insert fit. In addition, the 845s
Titanium Face Insert is only as long as the scorelines of the club, enabling
denser stainless steel in the perimeter of the iron intended to provide
forgiveness.

      845s Women's Titanium

      The 845s Women's Titanium irons have been specially designed to fit the
physiology and swing characteristics of women golfers, incorporating, among
other attributes, forgiveness, lighter weight and increased playability. The
contoured sole has been cut away for easier shots from the rough. The irons are
cavity balanced to provide a large and consistent sweetspot located in the
center of each iron. The titanium face allows maximum perimeter weighting,
increasing forgiveness and distance on off-center toe and heel shots.

      845s Junior Set

      To appeal to the growing junior market, Armour offers an 845s Junior Set.
Targeted to the 10-14 year old age group, the set features four irons, a putter
and a driver. The package includes a nylon carry bag and a fur headcover.

      845s Titanium Face Woods

      To complement the 845s iron sets, Armour offers the 845s Titanium Face
Woods. The oversize wood has been designed with a lighter weight titanium face
insert to accentuate perimeter weighting and stability. The 845s woods are
available in a driver, 3-wood, 5-wood and 7-wood with G Force(R) 3.3 Tour Series
graphite shafts.

      845s Women's Titanium Face Woods

      The 845s Women's Titanium Face woods have been designed especially for
women, featuring a stainless steel body with a titanium insert for lighter
overall weight and increased forgiveness. The progressive offset is designed to
increase loft in the shot and is intended to cure slicing tendencies. The unique
low-profile design and rail technology positions the center of gravity low,
appropriate for playability from any lie or turf conditions. Women's 845s woods
are available in driver, 3-wood, 5-wood, 7-wood and 9-wood.

      RAM Products

      RAM manufactures and markets a complete line of high end, quality golf
clubs, including irons, wedges and woods. In addition, it markets a line of golf
accessories including golf bags, golf gloves, golf towels, headcovers and caps.

      Tour Grind Irons

      The Tour Grind, TG-898's are precision forged in the U.S.A. from carbon
steel designed to produce superior feel, feedback and consistency. The clubs
feature muscle-back blades, thin top-line, minimal offset and square groove
scoring. Tour Grind irons are available in frequency matched Rifle(R) steel
shafts by FM Precision Golf to provide consistent feel from club to club. The
Golf Pride(R) Tour Velvet buffed grip is standard on all Tour Grind irons.


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<PAGE>

      FX Oversize Irons

      FX Oversize irons provide 20% more hitting surface than standard size
irons. The larger sweetspot, precision-balanced head and full cavity-surround
weighting are intended to make these irons extremely forgiving. FX irons come
equipped with either steel or graphite TempoWeight (TM) shafts and Lamkin(R) RAM
Wrap(TM) buffed grips.

      Accubar Irons

      With a history dating back to 1975, Ram launched a completely redesigned
set of Accubar irons in the fall of 1999. The irons feature a Power Bar that has
been strategically positioned across the back cavity intended to enhance feel
and performance. Accubar irons are offered with AccuFlex(TM) Tour graphite and
steel shafts in a wide array of flexes. The Lamkin(R) Perma-Wrap(R) grip
provides both better grip and durability on all Accubar irons. The Accubar irons
are available only through geographically exclusive retailers.

      Tour Grind Wedges

      RAM's Tour Grind wedges are precision forged in the U.S.A. from 1030
carbon steel. Tour Grind wedges are available in a broad range of lofts
(50(Degree) to 64(Degree)) to accommodate different turf conditions and playing
styles. Classic profiles and chrome plating ensure that these wedges look as
good as they feel. Tour Grind wedges are available in frequency matched Rifle(R)
steel shafts by FM Precision Golf. The Golf Pride(R) Tour Velvet(R) buffed grip
is standard on all Tour Grind wedges.

      FX Wedges

      The RAM FX Stainless Steel wedges are designed to combine traditional
profiles with exceptional performance. FX wedges are available in 50(Degree),
55(Degree), 60(Degree) and 64(Degree) lofts. All FX wedges come standard with
the stepless FX Scoring Series steel shaft and RAM X-Grip(R).

      FX Oversize Woods

      The FX Oversize Stainless Steel woods provide 25% more hitting surface
than previous generation Stainless Steel woods. The larger sweetspot and
forgiveness-enhancing weight distribution are designed to maximize accuracy and
distance. FX woods come equipped with graphite TempoWeight (TM) shafts from
UST(R) and Lamkin RAM Wrap buffed grips.

      CONCEPT Woods

      The CONCEPT Low Profile woods feature a shallow-face and low center of
gravity, which are designed to allow the average golfer to hit higher
trajectory, softer landing shots with increased accuracy. The club's four-way
cambered sole facilitates play from almost any lie. CONCEPT woods are available
in 13(Degree), 15(Degree), 18(Degree) and 23(Degree) lofts. RAM X-Grips and
exclusive TempoWeight graphite shafts are standard on all CONCEPT woods.

      Accubar Woods

      The Accubar woods feature a Power Bar sole that accounts for 20% of the
clubhead weight. All drivers incorporate a deep face intended to increase
forgiveness off the tee. The fairway woods are low profile, which is intended to
facilitate playing high-trajectory, soft landing shots off of nearly any lie.
Accubar woods are offered with AccuFlex(TM) Tour graphite shafts in a wide array
of flexes. The Lamkin Perma-Wrap(R) grip provides both better grip and
durability on all Accubar woods. The Accubar woods are available only through
geographically exclusive retailers.


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      Walter Genuin Shoes

      In August 1998, we acquired the exclusive distribution rights to Walter
Genuin Golf Shoes ("Genuin") for the United States and Canada. Genuin
manufactures over 95 different men and ladies' models, which are available in a
wide range of styles, colors and materials, for both playing golf and casual
wear.

      Genuin shoes are all handcrafted in Italy by master shoemakers utilizing
some of the finest materials available. In addition to traditional
craftsmanship, Genuin also strives to add technological edges. For example,
Genuin uses waterproof Gore-Tex(R) lining in certain models of its golf shoes.
The retail prices for Genuin shoes range from $290 to $1,830 per pair, and
Genuin shoes are typically sold in upscale establishments.

TearDrop Professional Golf Tour

      The TearDrop Tour's mission is to provide aspiring PGA Tour players with
an opportunity to prepare their game for the highest levels of competition. The
TearDrop Tour conducts approximately 34 golf events over each twelve-month
period, primarily in the Southeast and Midwest regions of the United States
under the name of The TearDrop Professional Golf Tour. Nearly 1,000 professional
golfers are expected to compete on tour during the 2000 season for prize money
up to $3.0 million. The TearDrop Tour conducts pro-ams for individual companies,
including American Airlines and Robb Report, in conjunction with the
professional events. Tournaments are held mid-week, in three-day and four-day
formats.

      The TearDrop Tour also serves to introduce TearDrop, Armour, and Ram
products to current and future professional golfers. While some TearDrop Tour
players graduate to the BUY.COM Tour and PGA Tour, others return to their home
course pro-shops as golf professionals where they may have influence over
inventory purchases and club members who are considering golf equipment
purchases.

      We have once again teamed with The Golf Channel to air our second season
of the TearDrop Tour show, a half-hour show dedicated to highlights, players,
courses and other interesting stories from The TearDrop Tour. The show is called
"TearDrop Tour 2000." The bi-weekly show airs every other Tuesday and six other
times throughout the following two weeks. Other media venues for the TearDrop
Tour include national television and print, such as CNN, ESPN, HTS, SunShine
Network, USA Today and Golfweek Magazine.

Sales and Marketing

      Advertising and Promotion. During 2000, we will continue our marketing
efforts with The Golf Channel. We anticipate that our equipment lines, including
Tommy Armour, and TearDrop and Zebra putters, will have significant advertising
time on The Golf Channel programming. The "TearDrop Putt of the Week," a regular
feature during "Golf Central," will continue to air throughout the year. We will
also launch a print campaign in golf magazines such as Golf Magazine, Golf
Digest, Golf World, Golfweek and Golf Tips. Although we have reduced our print
advertising during the early part of 2000, we anticipate that we will continue
to devote substantial capital to advertising and marketing during the next year.

      The TearDrop Tour is in its second year of a two-year agreement with The
Golf Channel to produce "TearDrop Tour 2000." The 30-minute feature show will
air over 300 times per year on The Golf Channel. In addition, The Golf Channel
has agreed to air the TearDrop Tour's four major events live or on tape delay.

      In addition, we promote our products through the endorsements by touring
professionals, such as Fred Couples, Steve Jones, and Tommy Tolles. For 2000,
endorsement agreements will require payment of a minimum of $3.2 million. In
addition, we sponsor optional "player pools" to which we have agreed to pay up
to $2.1 million in 2000.


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<PAGE>

      Nationwide Distribution Network. We market our products through our own
sales representatives to on-course golf pro shops, off-course specialty golf
shops and upscale sporting goods stores. We employ approximately 40
representatives in our domestic sales division who are responsible for all
TearDrop Golf Company brands, including Tommy Armour, Ram, TearDrop and Zebra
and Walter Genuin shoes.

      We have operations and sales representatives in Canada and we also utilize
independent distributors in other countries in which golf is popular. Sales of
products to international customers accounted for approximately 13% of our total
sales on a combined basis during 1999 as compared to 10% in 1998.

      Our domestic sales division focuses on building and managing strong
relationships with key customers, as well as managing the field marketing effort
and account merchandizing of our products within the local territory.

      Endorsements. We believe that the endorsement of our products by touring
professional golfers is an important feature of our overall marketing effort. A
group of touring professionals including Fred Couples, a former Masters
Champion, Steve Jones, a former United States Open Champion, Tommy Tolles, Chip
Beck, Omar Uresti, Tom Byrum, Joey Sindelar, Jim Gallagher, Paul Goydos and
other professionals currently use or endorse our products. The agreements with
the professionals who endorse our products generally are for one to three year
terms and provide for certain payments by us to the touring professionals in
consideration for their using our products. In addition, these agreements
generally provide for bonuses to the touring professionals based on the
professional's performance in certain tournaments. We have also granted options
to purchase shares of Common Stock of TearDrop Golf Company and may grant
additional options in lieu of or in addition to such performance bonuses.
Certain of these options can be exchanged for $50,000 on December 31, 2000. Our
obligation under endorsement agreements in place as of March 15, 2000 provides
for the payment of approximately $3.2 million through December 31, 2000. We have
also instituted a "Player Pool" program, under which we will provide rewards on
a weekly basis to professional players who participate in tournaments using our
products. We have agreed to pay up to $2.1 million in connection with this
"Player Pool" program in 2000.

      Product Warranties. We support our golf clubs with a lifetime quality
guaranty, entitling the purchaser to return the clubs for repair or replacement.
We have not experienced a material level of product warranty claims.

Manufacturing and Assembly

      We assemble all of our products at our 95,000 square foot office,
manufacturing and warehouse facility in Morton Grove, Illinois. Clubheads are
cast, forged or milled by outside suppliers utilizing, in some cases,
Company-owned tooling and are inspected on-site by our representatives.
Production personnel receive and review incoming components, such as steel
shafts, graphite shafts and grips, most of which are supplied according to our
own proprietary specifications. All operations, including assembly, painting,
stenciling and the application of trade dress, are completed at our Morton Grove
facility, which include finishing and warehousing facilities from which finished
product is shipped. We perform numerous visual and machine inspections at
various points along the assembly process, which are intended to detect any
non-conforming clubs or subassemblies.

      We rely on a limited number of suppliers for materials and clubheads. Our
putter clubhead manufacturers are located in the United States. Our iron and
wood head manufacturers are located in the Far East. While management believes
that alternative sources of supply either exist or could be developed, in the
event that we should lose our present sources of supply for these materials and
components, or experience delays in receiving delivery from such sources, we
would sustain at least temporary shortages of materials and components, which
could have a material adverse effect on our operating results.


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New Club Development

      Our product development effort is directed by individuals consisting of a
cross-functional selection of marketing, sales, tour and operations. Input is
also obtained from vendors, PGA tour players, and larger key accounts at
strategic times to review possible product introductions. The product
development approach focuses on developing new designs, new technologies, and
new methods of manufacturing. The new product development team strives to
achieve the highest consumer values for our products by optimizing performance
and providing uniqueness through extensive engineering.

Competition

      We compete primarily in the premium-priced segment of the golf club
manufacturing industry. The market for premium-priced golf clubs is highly
competitive and a number of established companies compete in this market, many
of which have substantially greater financial and other resources than we do.
Our competitors are well-known and recognizable names in the marketplace
including Callaway, Ping, Taylor Made, Titleist, Cobra, Mizuno, Cleveland and
others. Several of these competitors, including Callaway and Fortune Brands,
which owns Cobra, Foot-Joy and Titleist, have substantially greater financial
and other resources than we do and have substantially greater market share. We
also compete with numerous smaller, specialized companies that may compete
effectively on a regional basis.

      The golf club industry is generally characterized by rapid and widespread
imitation of popular golf club designs pioneered by new or existing companies.
Occasionally, new market entrants may develop innovative club designs, which
meet with acceptance from golf club purchasers, leading to unanticipated changes
in consumer preferences. Many purchasers of premium-priced, game-improvement
clubs desire golf clubs that feature the latest technological innovations and
cosmetic designs. Their purchasing decisions are often the result of highly
subjective preferences, which can be influenced by many factors, including,
among others, advertising, media and product endorsement. We face competition on
the basis of price, reputation and qualitative distinctions among available
products. In addition, there are several manufacturers that do not currently
compete with us that could pose significant competition if they were to enter
the market of premium-priced high quality clubs.

Regulatory Matters

      The design of new golf clubs is greatly influenced by rules and
interpretations of the United States Golf Association ("USGA"). Although the
golf equipment standards established by the USGA generally apply only to
competitive events sanctioned by that organization, it has become critical for
designers of new clubs to assure compliance with USGA standards. To the extent
that our clubs are ruled ineligible by the USGA standards, professional golfers,
including our paid touring professional golfers, will be unable to use the clubs
and even non-professional golfers will likely be unwilling to purchase them. We
believe that our golf clubs all comply with USGA standards. No assurance can be
given that any new products will receive USGA approval or that existing USGA
standards will not be altered in ways that adversely affect the sales of our
products.

      Our facilities are subject to numerous federal, state and local laws and
regulations designed to protect the environment from waste emissions and
hazardous substances. We are also subject to the Federal Occupational Safety and
Health Act and other laws and regulations affecting the safety and health of
employees in the production areas of our facilities. We believe we are in
compliance in all material respects with all applicable environmental and
occupational safety regulations.


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Employees

      At December 31, 1999, we had approximately 240 full-time employees engaged
in manufacturing and assembly, sales support and in management and
administration.

Proprietary Rights

      We rely on a combination of patents, trademark and trade secret protection
to establish and protect the proprietary rights we have in our products. We own
a variety of trademarks protecting our rights to the TearDrop, Tommy Armour, Ram
and Zebra names and marks. No assurances can be given that any of such
proprietary rights will protect us from competitive practices of others.

Risk Factors

      An investment in shares of Common Stock involves a high degree of risk and
should not be made by persons who cannot afford the loss of their entire
investment. Prospective investors and stockholders, prior to making an
investment decision, should consider carefully, in addition to the other
information contained in this Report on Form 10-KSB and the documents and
filings included in or incorporated by reference into this Report (including the
financial statements and notes thereto), the following factors. This Report
contains, in addition to historical information, forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially.
Factors that could cause or contribute to such differences include but are not
limited to, those discussed below, as well as those discussed elsewhere in this
Report.

      Limited Operating History; History of Losses; Accumulated Deficit.
Although the businesses of Tommy Armour and Ram have established names and
reputations, we have a relatively short operating history. We commenced
operations in August 1992, shipped our first products in 1993 and commenced
substantial sales activities in 1994. We only acquired the Armour and Ram
businesses at the end of 1997. Although we had net sales of approximately $59.8
million during the year ended December 31, 1999, we had losses of approximately
$4.5 million. We have incurred losses in each year of our existence. At December
31, 1999, we had an accumulated deficit of approximately $22.0 million. No
assurance can be given that we will not continue to incur losses in the future.
See Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

      Working Capital Shortfalls; Need for Additional Capital. Since our
inception, our internally generated cash flow has not been sufficient to finance
our operations. We have experienced severe working capital shortfalls in the
past, which have restricted our ability to conduct our business. We have been
primarily dependent upon bank debt and sales of our equity securities and other
financings in order to maintain our operations. In January 2000, we refinanced
our long-term debt by obtaining a $28 million credit facility from Congress
Financial Corporation ("Congress"), due in January 2002. The $28 million credit
facility includes term loans totaling $6.675 million. Our expenditures and
commitments for advertising and marketing have been and continue to be
substantial and we must continue to incur such costs in order to continue to
increase consumer awareness of our products. If our sales do not increase
substantially to cover our expenditures, we will be required to limit our
advertising expenditures and expansion plans or seek additional financing in
order to continue operations. The inability to obtain additional financing when
needed would have a material adverse effect on our liquidity, and, as a result,
we could be required to significantly reduce or suspend our operations, seek a
merger partner or sell some or all of our assets. There can be no assurance that
any additional financing will be available to us on acceptable terms, if at all,
when required by us. See Financial Statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

      Substantial Indebtedness and Repayment Obligations, Subordination. We have
borrowed substantial amounts of money to finance the acquisitions of Tommy
Armour and Ram and to fund our continuing operations. We had total liabilities
of approximately $31.2 million at December 31, 1999, of which $15.5


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<PAGE>

million is classified as current. At December 31, 1999, approximately $17.1
million was payable to First Union National Bank, successor by merger to
CoreStates Bank, N.A. ("First Union" or the "Bank") pursuant to our revolving
line of credit which terminated on November 10, 1999, and was extended until
January 2000 when the debt was refinanced with Congress Financial Corporation
("Congress"). Interest expense under our Credit Facility could continue to be
substantial in the future. The line of credit with Congress is secured by
substantially all of our assets and our facility in Morton Grove, Illinois. The
Loan Agreement with Congress also contains provisions that restrict certain of
our activities, including the sale of assets and the declaration of dividends.
The Loan Agreement also provides for various other restrictive covenants,
including the continuing participation of Rudy A. Slucker, the Chairman of the
Board of Directors, in his current management position. See Financial Statements
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

      Dependence on Key Personnel; Limited Industry Experience. We believe our
success will depend to a significant extent on the efforts and abilities of
certain of our senior management, particularly those of our President, Chief
Executive Officer and Chairman of the Board, Rudy A. Slucker. We maintain "key
person" life insurance in the amount of $1,000,000 on the life of Mr. Slucker,
under which TearDrop Golf Company is the sole beneficiary. Although we have
entered into an employment agreement with Mr. Slucker, which expires on June 24,
2002, the loss of Mr. Slucker or other key management, marketing or technical
employees could have a material adverse effect on our operating results and
financial condition. Management has only a limited history in the golf club
industry. There is strong competition for qualified personnel in the golf club
industry, and the loss of key personnel or an inability on our part to attract,
retain and motivate key personnel could adversely affect our business, operating
results and financial condition. There can be no assurance that we will be able
to retain our existing key personnel or attract additional qualified personnel.

      Dependence upon Endorsements. As an integral part of our marketing
strategy, we seek to obtain endorsements of our clubs from touring
professionals. Typically, our agreements with our endorsing professionals
provide for the use of the professionals' names in connection with the marketing
of our clubs and the use of the clubs by such professionals in tournament play.
The effect of a particular professional's endorsement on the successful
marketing of our clubs, and the heightening of awareness of our brand name, is
directly related to the success of such professional in tournament play.
However, the amount of remuneration required to be paid or provided by us under
a typical endorsement agreement is not substantially dependent on the tournament
success of such professional. Accordingly, if our endorsing professionals do not
have substantial tour victories, we will likely receive less exposure, yet would
still be required to pay endorsement fees. We have entered into endorsement
agreements with over 20 touring professionals that generally are for one to
three year terms and provide for certain payments by us to the touring
professionals in consideration for their using our equipment and bonuses based
on tournament performance. Our obligation under endorsement agreements in place
at March 15, 2000 provides for the payment of a minimum of approximately $3.2
million and up to an additional $2.1 million through December 31, 2000. In order
to succeed with our marketing strategy, we intend to continue to enter into
endorsement agreements with additional professional golfers. An inability to
maintain our relationships with our existing endorsing professionals, to enter
into endorsement agreements with additional professional golfers, or the failure
of our endorsing professionals to achieve tournament success, would diminish the
effectiveness of our marketing strategy and may result in declining sales.

      Risks Associated with Management of Growth, Implementation of Growth
Strategy and Potential Inability To Successfully Integrate Acquisitions. The
successful implementation of our expansion strategy will be dependent on, among
other things, consumer acceptance of our new lines of golf products; the
reduction of our costs; our ability to develop and introduce new products to
consumers and the marketplace; our ability to enter into endorsement agreements
with successful professional golfers; our ability to identify potential
acquisition prospects; the establishment of additional distribution
arrangements; the hiring and retaining of additional marketing, creative and
other personnel; and the successful management of such growth (including
monitoring operations, controlling costs and maintaining effective quality,
inventory and service controls). As we continue to grow, there will be
additional demands on our financial, technical and administrative resources. The
failure to maintain and improve such resources or the occurrence of unexpected
difficulties relating to our


                                     - 9 -
<PAGE>

expansion strategy could have a material adverse effect on our business,
prospects, results of operations or financial condition. There can be no
assurance that we will be able to implement successfully our business strategy
or otherwise expand our operations. The complete integration and consolidation
into TearDrop Golf Company of the product lines acquired upon future corporate
acquisitions and new product licensing arrangements will require substantial
management, financial and other resources, and could pose significant pressure
on our financial condition and operating results. There can be no assurance that
our resources will be sufficient to accomplish such integration, or that we will
not experience difficulties with customers, personnel or others. In addition,
although we believe that our acquisition and licensing arrangements will enhance
our competitive position and business prospects, there can be no assurance that
such benefits will be realized or that the combination of other companies with
us will be successful. Although we regularly evaluate possible acquisition
opportunities, we are not a party to any agreements, commitments, arrangements
or understanding with respect to any such acquisition and there can be no
assurance that any such acquisitions will be effected.

      Dependence on Major Customers. Sales to our five largest customers
represented approximately 35% of our sales in fiscal 1999. Sales to our top
customer, Sam's Clubs, accounted for approximately 22% of our sales in fiscal
1999. We expect that sales to Sam's Club will decline during 2000, although we
anticipate that sales to our top five customers will continue to account for a
significant percentage of our sales. We have no long-term commitments or
contracts with any of our customers. The loss or decreased sales from one or
more of these customers would have a material adverse effect on our business,
prospects, results of operations and financial condition. Furthermore, the
inability of any of our customers to satisfy any of their obligations to us at
any time or on a timely basis could have a material adverse effect on our
business, prospects, results of operations or financial condition.

      Dependence on Limited Number of Component Suppliers. We assemble all of
our clubs at our Morton Grove, Illinois facility. We do not manufacture the
components required to assemble our golf clubs. We rely on a limited number of
suppliers for club heads, shafts and grips. We do not have written supply
agreements with any of our current suppliers. Therefore, our success will be
dependent on maintaining our relationships with existing suppliers and
developing relationships with new suppliers. Any significant delay or disruption
in the supply of components from our suppliers or any diminution of quality
resulting from such supplier's insufficient controls or inadequate component
testing, would have a material adverse effect on our business, operating results
and financial condition. Further, given the highly seasonal nature of the golf
equipment industry, such adverse effect would be exacerbated should any supply
delay or quality problem occur immediately prior to or during any six-month
period ending June 30 (the period during which sales of golf equipment generally
are expected to be the highest). See Financial Statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

      Consumer Preferences and Industry Trends. The golf industry is
characterized by the frequent introduction of new products and services, and is
subject to changing consumer preferences and industry trends, which may
adversely affect our ability to plan for future design, development and
marketing of our products and services. Our success will depend on our ability
to anticipate and respond to these and other factors affecting the industry.
Moreover, if a downturn occurs in the economy, the leisure industry, including
the golf industry, may be particularly vulnerable. There can be no assurance
that we will be able to anticipate and respond quickly and effectively to
changing consumer preferences and industry trends or that competitors will not
develop and commercialize new products that render our products and services
obsolete or less marketable.

      International Sales; Reliance on Limited Number of Foreign Distributors.
During the year ended December 31, 1999 sales to international customers
accounted for approximately 13% of our net sales. We have a sales office in
Canada from which sales in that country are conducted. We also engage foreign
distributors to market and sell our products in other countries. Although we
work closely with our foreign distributors, we cannot directly control such
distributors' sales and marketing activities and, accordingly, cannot manage our
product sales in these foreign markets in which such distributors operate. Our
foreign distributors may also distribute, either on behalf of themselves or
other golf club manufacturers, other product lines, including product lines that
may be competitive with ours. There can be no assurance that these distributors
will effectively


                                     - 10 -
<PAGE>

manage the sale of our products worldwide or that their marketing efforts will
prove effective. Additionally, our international sales may be disrupted or
adversely affected by events beyond our control, including currency fluctuations
and political or regulatory changes.

      New Products; USGA Regulation. We believe that the introduction of
innovative technologies and club designs will be crucial to our future success.
New models and basic design changes are frequently introduced into the golf club
market but are often met with consumer rejection. Although we have achieved
certain successes in the introduction of our golf putters and irons, no
assurance can be given that we will be able to continue to design and
manufacture golf clubs that meet with market acceptance. In addition, prior
successful designs may be rendered obsolete within a relatively short period of
time as new products are introduced into the market. There can be no assurance
that we will be able to continue to design innovative products that can achieve
market acceptance.

      The design of new golf clubs is also greatly influenced by rules and
interpretations of the USGA. Although the golf equipment standards established
by the USGA generally apply only to competitive events sanctioned by that
organization, it has become critical for designers of new clubs to assure
compliance with USGA standards. To the extent that our clubs are ruled
ineligible under USGA standards, even non-professional golfers will likely be
unwilling to purchase them. No assurance can be given that any new products will
receive USGA approval or that existing USGA standards will not be revised in
ways that adversely affect the sales of our products.

      Seasonal Business; Quarterly Fluctuations. Golf is primarily a warm
weather sport. The purchasing decisions of most customers are typically made in
the fall and a vast majority of sales are expected to occur during the first six
months of the year. In addition, quarterly results may vary from year to year
due to the timing of new product introductions, orders and sales, advertising
expenditures, promotional periods and shipments. Accordingly, comparisons of
quarterly information of our results of operations may not be indicative of our
overall annual performance. See Financial Statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

      Susceptibility to General Economic Conditions. Sales of golf equipment
have historically been dependent on discretionary consumer spending. As a
result, our revenues will be subject to fluctuations based upon general economic
conditions in the United States and in the foreign countries where we sell our
products. If there is a general economic downturn or recession in the United
States or in foreign countries in which we market our clubs, general consumer
spending on golf equipment could be expected to decline, which would have a
material adverse effect on our business, operating results and financial
condition.

      Uncertainty of Proprietary Rights; Expense of Intellectual Property
Litigation. We rely on a combination of patents, trademarks and trade secret
protection to establish and protect the proprietary rights we have in our
products. The ability of our competitors to acquire technologies or other
proprietary rights equivalent or superior to ours or our inability to enforce
our proprietary rights would have a material adverse effect on our operating
results and financial condition. There can be no assurance that our competitors
will not independently develop or acquire patented or other proprietary
technologies that are substantially equivalent or superior to ours. There also
can be no assurance that the measures we adopted to protect our proprietary
rights will be adequate to do so or that our products do not infringe on third
party intellectual property rights, including patents. Intellectual property
matters are frequently litigated on allegations that third-party proprietary
rights have been infringed. We may have to defend against such lawsuits, which
could be expensive and time-consuming.

      Extremely Competitive Industry. The market for high quality,
premium-priced golf clubs is highly competitive and includes a number of
well-established companies that have more readily recognizable brand names and a
larger, more widely known corps of endorsing golf professionals, as well as
greater market access and financial resources than we do. Many purchasers of
premium clubs desire golf clubs that feature the most


                                     - 11 -
<PAGE>

recent technology, innovative designs and recognized brand names. Additionally,
purchases are often made based upon highly subjective decisions that may be
influenced by numerous factors, many of which are out of our control. Golfers'
subjective preferences are subject to rapid and unanticipated changes. As a
result, we will face substantial competition from existing and new companies
that market golf clubs, which are perceived to enhance performance, are visually
appealing or appeal to other consumer preferences. In addition, the golf club
industry is dominated by a small number of very large corporations such as
Callaway, Fortune Brands, which owns Titleist and Cobra, and Taylor Made. These
companies have substantial shares of the market and substantially greater
financial and other resources than we do. Further, the golf club industry is
subject to rapid and widespread imitation of golf club designs, which,
notwithstanding the existence of any proprietary rights, could further hamper
our ability to compete. We face competition on the basis of price, reputation
and qualitative distinctions among available products. There can be no assurance
as to the market acceptance of our golf clubs in relation to our competition.

      Control of the Company by Officers and Directors. Our officers and
directors beneficially own in excess of approximately 46.8% of the outstanding
shares of our Common Stock on a fully diluted basis. As a result, such persons,
acting together, have the ability to exercise significant influence over all
matters requiring stockholder approval. The concentration of ownership could
delay or prevent a change in control of TearDrop Golf Company.

      Potential Delisting from Nasdaq; Potential Limited Trading Market;
Possible Volatility of Stock Price; Potential Effects of "Penny Stock" Rules.
Although the Common Stock is quoted on the Nasdaq SmallCap Market ("Nasdaq"), in
order to continue such quotation, we must satisfy certain maintenance criteria.
One of the continued listing requirements provides that we must maintain net
tangible assets of not less than $2 million. At December 31, 1999, we had net
tangible assets of $2,749,000. If we incur losses during 2000 such that our net
tangible assets fall below $2 million, our Common Stock will be subject to
delisting from the Nasdaq SmallCap Market. If the failure to meet these
maintenance criteria results in our Common Stock no longer being eligible for
quotation on Nasdaq, trading, if any, of the Common Stock would thereafter be
conducted in the non-Nasdaq over-the-counter market. As a result of such
delisting, an investor may find it more difficult to dispose of or to obtain
accurate quotations as to the market value of our Common Stock. In addition, if
the Common Stock was to become delisted from trading on Nasdaq and the trading
price of the Common Stock was less than $5.00 per share, trading in the Common
Stock would also be subject to the requirements of certain rules promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which require additional disclosure by broker-dealers in connection with any
trades involving a stock defined as a penny stock (generally, any non-Nasdaq
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and must have received the purchaser's written consent to the
transaction prior to sale. The additional burdens imposed upon broker-dealers by
such requirements may discourage them from effecting transactions in the Common
Stock, which could severely limit the liquidity of the Common Stock and the
ability to sell the Common Stock in the secondary market.

      In the absence of an active trading market, purchasers of the Common Stock
may experience substantial difficulty in selling their shares. The trading price
of our Common Stock is expected to be subject to significant fluctuations in
response to variations in quarterly operating results, changes in analysts'
earnings estimates, announcements of technological innovations by our
competitors, general conditions in the golf club industry and other factors. In
addition, the stock market is subject to price and volume fluctuations that
affect the market prices for companies and that are often unrelated to operating
performance.

      Shares Eligible for Future Sale; Effect of Outstanding Options and
Potential Issuances of Bonus Shares. Sales of our Common Stock in the public
market could adversely affect the market price of the Common Stock. As of the
date hereof, there are outstanding options to purchase an aggregate of 4,387,781
shares of Common Stock at per share exercise prices ranging from $1.38 to
$11.81, including 1,500,000 options granted to Rudy A. Slucker, our Chairman and
Chief Executive Officer, that are subject to stockholder approval at the 2000
Annual Meeting of Stockholders. We have reserved 1,300,000 shares for issuance
under the 1996 Employee Stock Option Plan, have granted options to acquire
1,750,000 shares of Common Stock (and an additional 1,500,000 shares, subject to
shareholder approval) to Rudy A. Slucker, our Chairman of


                                     - 12 -
<PAGE>

the Board and Chief Executive Officer, and have granted options to purchase up
to an aggregate of 73,748 shares of Common Stock to touring golf professionals
who perform consulting and promotional services for us. Under the promotional
agreements with our golf professionals, we may be required to grant additional
stock options if the professional satisfies certain conditions such as winning a
golf tournament. If our professionals win a large number of tournaments, the
number of additional options granted could be substantial. The exercise of such
outstanding options would dilute the then-existing stockholders' percentage
ownership of our Common Stock, and any sales in the public market of Common
Stock underlying such stock options could adversely affect prevailing market
prices for the Common Stock. Moreover, the terms upon which we would be able to
obtain additional equity capital could be adversely affected since the holders
of such securities can be expected to exercise them at a time when we would, in
all likelihood, be able to obtain any needed capital on terms more favorable to
us than those provided in such stock options.

      Bonus Shares and Bonus Payments to the Company's Chairman. Our employment
agreement with Rudy A. Slucker, our Chairman and Chief Executive Officer,
provides that Mr. Slucker is entitled to receive a bonus equal to 10% of our
pre-tax net income starting with the year ending December 31, 1998. The bonus
was payable to the extent of 50% of such amount in cash and the remaining 50% in
the form of Common Stock of TearDrop Golf Company. The issuance of these
additional shares could also have an adverse effect on the liquidity of the
Common Stock.

      Potential Adverse Effects of Preferred Stock Issuance. The Board of
Directors has the authority, without further stockholder approval, to issue up
to 1,000,000 shares of preferred stock, in one or more series, and to fix the
number of shares and the rights, preferences and privileges of any such series.
The issuance of preferred stock by the Board of Directors could affect the
rights of the holders of the Common Stock. For example, such an issuance could
result in a class of securities outstanding that would have dividend,
liquidation, or other rights superior to those of the Common Stock or could make
a takeover of the Company or the removal of management more difficult. The Board
of Directors does not currently intend to issue any shares of preferred stock in
the foreseeable future.

      No Dividends. We have never declared or paid dividends on our Common Stock
and currently do not intend to pay dividends in the foreseeable future. The
payment of dividends in the future will be at the discretion of the Board of
Directors. The Company, Tommy Armour, Ram and Congress are parties to an
Agreement whereby the payment of dividends and redemption payment are restricted
under certain circumstances including (i) where we have failed to make payments
or otherwise failed to comply with covenants in, or an Event of Default has
occurred under, the loan agreement (except where such breach, failure or Event
of Default is cured by the Company or waived by Congress, (ii) where the
Congress accelerates the indebtedness, or (iii) where there occurs an insolvency
event.

      Potential Adverse Effects of Convertible Subordinated Debt and Stock
Options Issued to Chairman and Chief Executive Officer. We have issued, subject
to shareholder approval, a one million dollar convertible subordinated note and
granted options to purchase 1,500,000 shares of common stock to our Chairman and
Chief Executive Officer, Rudy A. Slucker. The note is convertible into our
common stock at the rate of one dollar per share. The options are exercisable at
$1.38 per share. Under the rules of the Nasdaq SmallCap Market, the issuance of
Common Stock under the Note and the stock option are subject to the approval of
our shareholders. To the extent that the fair market value of the common stock
on the date of shareholder approval exceeds one dollar, we will be required to
recognize a charge against earnings related to the issuance of the convertible
subordinated note, equal to the difference between the market price of our
common stock on that date and one dollar multiplied by 1,000,000. To the extent
the fair market value of the common stock on the date of shareholder approval
exceeds $1.38, the exercise price of the option, a charge against our earnings
would result, related to the stock option, equal to the difference between the
fair market value of the common stock on that date and $1.38 multiplied by
1,500,000.


                                     - 13 -
<PAGE>

Item 2. Description of Property.

      We own 95,000 square feet of office, manufacturing and warehouse and
distribution space in Morton Grove, Illinois. We conduct our assembly, warehouse
and distribution activities from these facilities. We occupy 20,000 square feet
of office and warehouse space in Union, NJ, under a five-year lease agreement
between the Company and Dolo Realty, which terminates in August 2002. The
aggregate minimum rental payments under the lease are approximately $80,000 per
year. During the latter part of 1997 and the first quarter of 1998, we conducted
our TearDrop putter assembly, warehouse and distribution activities from the
Union, New Jersey location as well as our corporate headquarters activities.
Upon the acquisition of Tommy Armour in November 1997, we transferred our putter
assembly, warehouse and distribution activities to the Morton Grove, Illinois
location. As a result, the Union, New Jersey location is used solely for
corporate activities. We have subleased a portion of the Union, New Jersey
location and continue to maintain our corporate headquarters at that location.

      We also use an outside warehouse for storage of larger, bulk inventory
items such as golf bags. The arrangement with the warehouse is month-to-month
and the rental and storage charges are directly related to the amount of
inventory being stored each month.

Item 3. Legal Proceedings.

      We have been named as a defendant in a lawsuit entitled Express Personnel
Service, Inc. v. TearDrop Golf Company, case number CIV 99 1042 L, in the United
States District Court of Oklahoma, Western Division, in which the plaintiff is
seeking damages of $77,000 for an alleged breach of contract. As of March 15,
2000, both parties are in discussions and the lawsuit has not been settled.

      We have also been named as a defendant in a lawsuit entitled Cybertel
Marketing, Inc. v. TearDrop Golf Company in the State Court of Wisconsin. We did
not deny that we are obligated to pay $41,312 owed to Cybertel Marketing, Inc. A
default judgment was filed and both parties are discussing a mutually agreeable
arrangement.

      In March 1999, we received a formal notice demanding arbitration from Pro
Golf Promotions, LLC, Cal Rogers and Dara O'Neill in connection with certain
disputes between such parties and us relating to our purchase of the TearDrop
Professional Golf Tour from such parties. Such parties are seeking certain money
damages and the issuance of up to 65,000 shares of Common Stock related to
alleged incentive obligations for 1998 and up to 65,000 shares of Common Stock
related to such obligations for 1999. We believe that such parties are not
entitled to the issuance of such shares or to money damages and we intend to
vigorously defend such claim. In addition, we have instituted a counterclaim
against the plaintiffs. An arbitration proceeding commenced on January 2000,
which is currently underway.

Item 4. Submission of Matters to a Vote of Security Holders.

      None.

                                     PART II

Item 5. Market for Common Equity and Related Shareholder Matters.

      Market Information: Since the effective date of our registration statement
on December 19, 1996, our Common Stock has been traded on the Nasdaq SmallCap
Market under the symbol "TDRP." Our Redeemable Common Stock Purchase Warrants
were traded on the Nasdaq SmallCap Market under the symbol "TDRPW" from the
effective date of our registration statement on December 19, 1996 to May 1998.
In May 1998, we notified all registered holders of our Warrants of our intention
to redeem such warrants in June 1998 for $.01.


                                     - 14 -
<PAGE>

Each Warrant entitled the holder thereof to purchase one share of our Common
Stock at a price of $5.50 per share. Pursuant to that notification,
substantially 100% of the Warrants were exercised by the holders and we issued
1,541,700 shares of our Common Stock in exchange for $8.3 million.

      The following table shows the range of closing prices for our Common
Stock. These amounts, which have rounded to the nearest eighth, represent
quotations between dealers and do not include retail mark-ups, markdowns or
commissions, and may not represent actual transactions.

             Common Stock
             Quarter Ended                     High              Low
             --------------                    ----              ----
             March 31, 1998                   $6.875            $5.625
             June 30, 1998                    $14.063           $6.750
             September 30, 1998               $10.063           $4.938
             December 31, 1998                $6.938            $4.125

             March 31, 1999                   $5.625            $4.000
             June 30, 1999                    $4.875            $2.313
             September 30, 1999               $2.750            $1.281
             December 31, 1999                $2.969            $1.375

      Holders: As of March 15, 2000, we believe that there were in excess of
1,800 beneficial holders of our Common Stock.

      Dividends: We have never declared or paid dividends on our Common Stock
and do not intend to pay dividends in the foreseeable future. Our ability to pay
dividends by the Company is restricted pursuant to the Loan Agreement with
Congress. See "Management's Discussion and Analysis of Financial Condition and
Results of Operation-Liquidity and Capital Resources."

Item 6. Management's Discussion and Analysis of Financial Condition and Results
        of Operation.

Overview

      We design, develop, manufacture and market throughout the world
high-quality, premium priced golf clubs based on our proprietary technologies,
including (a) our TearDrop line of putters; (b) our Tommy Armour line of irons
and woods; (c) our Ram line of irons, woods and wedges; and (d) our Zebra
putters. Our product lines are used by golfers throughout the world, including
professional golfers on the PGA Tour, the Senior PGA Tour, the Ladies PGA Tour
and the BUY.COM Tour. In addition, we operate a professional developmental golf
tour for aspiring PGA Tour players and we are the sole United States distributor
for Walter Genuin golf shoes.

      We introduced our first product, the TearDrop putter, in 1993 and
commenced significant marketing and sales activities in 1994. We completed an
initial public offering of our Common Stock in December 1996.

      In the fourth quarter of 1997, we completed three acquisitions. In October
1997, we acquired the assets of Pro Golf Promotions, LLC, a professional
developmental tour for aspiring PGA Tour players, which we immediately renamed
"The TearDrop Professional Golf Tour." In November 1997, we acquired
substantially all of the assets of the Tommy Armour Golf Company ("Armour"). In
December 1997, we acquired certain assets and assumed certain liabilities of the
Ram Golf Corporation ("Ram").

      Neither Armour nor Ram was profitable in 1997 and both businesses had
substantial declines in sales from 1996 to 1997. Armour incurred losses of $19.1
million on sales of $32.0 million for the fiscal year ended September 30, 1997
and Ram incurred losses of $4.1 million on sales of $14.0 million for year ended
December 31, 1997. We have incurred losses in each year of our existence.


                                     - 15 -
<PAGE>

      Since the acquisitions were completed, we have devoted substantial efforts
to reduce costs, eliminate unprofitable product lines and focus on developing
and marketing high quality products. However, no assurance can be given that we
will be able to operate the combined enterprises successfully or reverse the
history of losses that each of TearDrop, Ram and Armour has incurred in the
past.

      We believe that an important element for increasing awareness and demand
for our golf clubs is the building of a corps of touring professional golfers
that will endorse, use and win with our clubs. Accordingly, as an integral part
of our marketing strategy, we are continually seeking to obtain professional
endorsements of our clubs. We have entered into endorsement agreements, of up to
three years, with professional players principally on the PGA Tour, which
provide for base payments in consideration of the use of the professionals'
names in connection with the marketing of our clubs and the use of the clubs by
such professionals in tournament play. In addition, bonus payments that could be
substantial may be made based upon tournament performance, standings on the
official money list, and being named to the Ryder Cup or President Cub teams. We
have granted stock options to certain of endorsing professionals and we intend
to continue to do so in the future. The effect of a particular professional's
endorsement on the successful marketing of our clubs, and the heightening of
awareness of our name, may be directly related to the success of such
professional in tournament play. We will be required to compensate a
professional whether or not he or she is successful. For 2000, we have entered
into endorsement agreements which will require the payment of a minimum of
approximately $3.2 million and up to an additional $2.1 millioin should each of
the professionals use and endorse our products as provided in the agreements. In
addition, we anticipate that we will devote substantial capital to advertising
and marketing during the next year.

      We have made substantial expenditures and commitments for advertising and
marketing and must continue to incur such costs in order to continue to increase
consumer awareness of our products. During 2000, we will incur substantial
expenses for print advertising and for our program with The Golf Channel, among
other things. No assurance can be given that the expansive advertising and
marketing will result in increased sales.

      We have incurred substantial indebtedness in financing the acquisition of
Armour and Ram and in financing our expansion and operations. As of December 31,
1999, we had $31.2 million in liabilities, approximately $17.1 million of which
was payable to First Union National Bank ("First Union"). The credit facility
with First Union terminated on November 10, 1999. Since we were in the process
of negotiating alternative financing, we operated under a forbearance agreement
from First Union. We signed a new credit agreement with Congress on January 27,
2000. Under the new credit agreement, we were extended credit of $28 million, of
which $6.675 million is represented by term loans.

      We maintain an in-house research and development and design department. In
addition, we work closely with component manufacturers, independent design
consultants and our endorsing golf professionals in the design and development
of new products and product improvements. Our ability to introduce new products
or product improvements is directly related to the efforts and success of this
research and development effort.

      We do not manufacture the components required to assemble our golf clubs,
as we rely instead on a number of component suppliers, both domestic and
foreign. Our success in assembling our products will be dependent, in part, on
maintaining our relationships with these existing suppliers and developing
relationships with new suppliers.

      We believe that there are readily available alternative sources for each
of the components comprising our clubs, although there can be no assurance of
this. Any significant delay or disruption in the supply of components from our
suppliers or any quality problems with the supplier's components would delay the
delivery of finished products and adversely affect current sales. These
circumstances could also adversely affect future sales potential if customers
lose faith in our ability to deliver a high-quality product on a timely basis.
Further, given the highly seasonal nature of the golf equipment industry, such
adverse effect would be exacerbated


                                     - 16 -
<PAGE>

should any such supply delay or quality problem occur immediately prior to or
during the six-month period ending June 30 (the period during which sales of
golf equipment have historically been the highest).

Results of Operations

      Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

      Sales for 1999 were $59,769,000 compared to sales for 1998 of $60,715,000,
a decrease of $946,000 or 1.6%. Included in 1998 are sales of $13,000,000 of
discontinued products. Therefore, sales of continuing product lines actually
increased $12,054,000 or 25.3% in 1999 from 1998. We attribute this increase to
an increase in advertising and marketing of the TearDrop, Armour and Ram lines,
all of which had increases in continuing product lines in 1999 over 1998.

      Gross profit on sales in 1999 was $26,904,000 or 45.0% of sales, compared
to $24,287,000 or 40.0% of sales in 1998. The sales of discontinued product
lines in 1998 were made at lower than normal gross profit levels, which had the
effect of decreasing our overall gross profit percentage in 1998.

      Selling, general and administrative expenses in 1999 were $29,837,000 or
49.9% of sales compared to $28,836,000 or 47.5% of sales in 1998. The increase
in selling, general and administrative expenses from 1998 to 1999 is due
principally to increased advertising and an increase in the number of
endorsement contracts signed with touring PGA professional golfers.

      Interest expense, net of interest and other income, amounted to $1,805,000
in 1999 compared to $1,595,000 in 1998. Debt levels and interest rates in 1999
were higher than in 1998, leading to an increase in interest expense of
$210,000, but were offset by other income from royalties and licensing of
approximately $267,000.

      As a result of all of the above, loss before and after taxes in 1999
decreased to $4,471,000 from a loss in 1998 of $6,144,000.

Liquidity and Capital Resources

      At December 31, 1999, we had working capital of approximately $7.8
million. At December 31, 1998, we had a working capital deficiency of
approximately $4.4 million, primarily as a result of the classification of our
$20.9 million credit facility with First Union National Bank ("First Union") as
a current liability since it was repayable in November 1999. In January 2000, we
completed a new revolving loan and credit agreement with Congress Financial
Corporation ("Congress") for $28 million, which included term loans of $6.675
million. This new revolving loan replaced and repaid the outstanding amounts due
to First Union. The Congress facility bears interest at First Union's prime
lending rate plus 1% as to the revolving portion and $2.175 million portion of
the term loans, and First Union's prime lending rate plus 1.5% as to $4.5
million portion of the term loan. The revolving portion has a two-year term, the
$2.175 million term is due in 60 equal monthly installments of $36,250
commencing February 2000, and the $4.5 million term is due in equal quarterly
installments of $500,000 commencing August 2000 with the balance payable at the
termination of the revolving loan. The loans are secured by substantially all of
our assets. In addition, our Chairman and Chief Executive Officer has agreed to
personally guaranty a portion of the term loan.

      Our expenditures and commitments for advertising and marketing have been
and continue to be substantial and we believe that we must continue to incur
such costs in order to continue to increase consumer awareness of our products.
If our sales do not increase substantially to cover our expenditures, we will be
required to limit our advertising expenditures and expansion plans or seek
additional financing in order to continue operations. The inability to obtain
additional financing when needed would have a material adverse effect on our
liquidity, and, as a result, we could be required to significantly reduce or
suspend our operations, seek a merger partner or sell some or all of our assets.
There can be no assurance that any additional financing will be available to us
on acceptable terms, if at all, when we require it.


                                     - 17 -
<PAGE>

      On March 10, 1999, Rudy Slucker, our President and Chief Executive
Officer, loaned us $500,000. On January 20, 2000, he increased the loan to $1
million, repayable on demand once we achieve certain debt levels under the
Congress facility. The loan bears interest at First Union's prime lending rate
plus 1%, and it is convertible into our common stock at the rate of $1 per
share. Additionally, we granted Mr. Slucker options to purchase 1,500,000 shares
of our common stock. The options are exercisable at $1.38 per share. Under the
rules of the Nasdaq SmallCap Market, the issuance of Common Stock under the Note
and the stock option are subject to the approval of our shareholders. To the
extent that the market price of the Common Stock on the date of shareholder
approval exceeds $1, we will be required to recognize a charge against earnings
related to the convertible subordinated note, equal to the difference between
the fair market value of our Common Stock on that date and $1 multiplied by
1,000,000. To the extent the fair market value of the Common Stock on the date
of shareholder approval exceeds $1.38, the exercise price of the option, a
charge against our earnings would result, related to the stock option, equal to
the difference between the fair market value of the Common Stock on that date
and $1.38 multiplied by 1,500,000.

      Our credit terms range from 30 days to 90 days, depending on the type of
account. Cash needs are highest in the first quarter of the year, as inventories
are being purchased and, while product is being shipped to customers, the cash
receipts from those sales may not be received for a period of up to 90 days. In
addition, a significant financial commitment is made for advertising during the
first quarter of the year.

      We have entered into endorsement agreements with golf professionals, which
will require the payment of a minimum of approximately $3.2 million and up to an
additional $2.1 million in 2000.

      We do not have any significant capital expansion plans at the present time
and any capital expenditures will be financed from internally generated funds.
There can be no assurance, however, that the current line of credit is
sufficient to allow us to meet our needs, particularly if sales do not increase
or if we encounter operational difficulties.

      Our statements of cash flows for the years ended December 31, 1999 and
1998 are summarized below:

                                                         1999            1998

Net cash provided (used) by operating activities    $  3,770,000   $ (8,115,000)
Net cash (used) in investing activities                 (481,000)      (190,000)
Net cash provided (used) by financing activities      (3,331,000)     8,625,000

      In connection with the acquisition of assets of Armour, we issued 100,000
shares of Series A Preferred Stock. On June 24, 1998, 70,000 shares of the
Series A Preferred Stock were converted by the holder thereof into 933,333
shares of Common Stock. Simultaneously with such conversion, we redeemed the
remaining 30,000 outstanding shares of Series A Preferred Stock for $3,000,000.

      At December 31, 1999, we had patents and trademarks and goodwill,
primarily related to the acquisition of the assets of Armour and Ram of
approximately $6,302,000 and $ 525,000, respectively. During 1999 and 1998, we
recognized amortization expense of approximately $532,000 and $513,000,
respectively. We will continue to amortize patents and trademarks and goodwill.

      In September 1999, we issued to our 401(k) plan for the benefit of certain
employees who participated in such plan, 80,575 shares of Common Stock, in
satisfaction of a prior repurchase obligation.


                                     - 18 -
<PAGE>

Year 2000 Statement

      We believe that our year 2000 remediation was timely completed and that
our systems are completely Y2K compatible. We are currently unaware of any
events, trends, or conditions regarding this issue that may have a material
effect on our results of operations, financial condition or liquidity.

Seasonality

      The purchasing decisions of most of our customers are typically made in
the autumn and a vast majority of sales are expected to occur during the first
six months of the year. In addition, our quarterly results may vary from year to
year due to the timing of new product introductions, orders and sales,
advertising expenditures, promotional periods and shipments. Accordingly,
comparisons of quarterly information of our results of operations may not be
indicative of our overall annual performance.

Forward Looking Statements

      When used in this and in future filings by us with the Securities and
Exchange Commission ("the Commission"), in our press releases and in oral
statements made with the approval of an authorized executive officer of the
Company, the words or phrases "will likely result," "expects," "plans," "will
continue," "is anticipated," "estimated," "project" or "outlook" or similar
expressions (including confirmations by an authorized executive officer of the
Company of any such expressions made by a third party with respect to us) are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. We have made such forward
looking statements in, among other places, the section of this Report entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." We wish to caution readers not to place undue reliance on any such
forward-looking statements, each of which speak only as of the date made. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. Such risks and other aspects of our business and
operations are described in "Risk Factors" herein. We have no obligation to
publicly release the result of any revisions, which may be made to any
forward-looking statements to reflect anticipated or unanticipated events or
circumstances occurring after the date of such statements.

Item 7. Financial Statements.

      The Financial Statements required by this item appear under the caption
"Index to Financial Statements" and are included elsewhere herein commencing on
page F-1.

Item 8. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure and Control Persons; Compliance.

      Effective February 27, 1998 (the "Effective Date of Dismissal"),
Rothstein, Kass & Company, P.C. ("Rothstein Kass") ceased serving as our
accountants. The report of Rothstein Kass on our financial statements as of
December 31, 1995 was initially qualified as to uncertainty regarding our
ability to continue as a going concern. In reissuing such report in connection
with the December 31, 1996 audit, the qualification was removed and the report
contained no adverse opinion or disclaimer of opinion, nor was it qualified or
modified as to uncertainty, audit scope or accounting principles. The decision
to change accountants was ratified by the Audit Committee of the Company's Board
of Directors. During the two most recent fiscal years prior to the Effective
Date of Dismissal and all subsequent interim periods preceding the date hereof,
there were no disagreements between us and Rothstein Kass on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Rothstein Kass, would have caused Rothstein Kass to make reference to the
subject matter of disagreement in connection with Rothstein Kass's reports.


                                     - 19 -
<PAGE>

      Effective February 27, 1998 (the "Effective Date of Engagement"), we
engaged Ernst & Young LLP ("E&Y") as our principal accountants. During the two
most recent fiscal years prior to the Effective Date of Engagement and all
subsequent interim periods preceding the date hereof, we have not consulted E&Y
regarding any matters or events as set forth in Item 304(a)(2) of Regulation
S-B.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        With Section 16(a) of the Exchange Act.

      Incorporated by reference to our Proxy Statement for Annual Meeting to
Shareholders to be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year ended December 31, 1999.

Item 10. Executive Compensation.

Director Compensation

      Incorporated by reference to our Proxy Statement for Annual Meeting to
Shareholders to be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year ended December 31, 1999.

Executive Compensation

      Incorporated by reference to our Proxy Statement for Annual Meeting to
Shareholders to be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year ended December 31, 1999.

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

      Incorporated by reference to our Proxy Statement for Annual Meeting to
Shareholders to be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year ended December 31, 1999.

Item 12. Certain Relationships and Related Transactions.

      Incorporated by reference to our Proxy Statement for Annual Meeting to
Shareholders to be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year ended December 31, 1999.

Item 13. Exhibits, List and Reports on Form 8-K.

   (a)                   Exhibits.

Exhibit No.              Description
----------               -----------
3.1++                    Certificate of Incorporation
3.2++                    Certificate of Merger
3.3++                    Agreement and Plan of Merger dated October 21, 1996
                         between the Company and TearDrop Putter Corporation, a
                         South Carolina Corporation
3.4++                    By-Laws


                                     - 20 -
<PAGE>

3.6                      Certificate of Ownership and Merger of TearDrop
                         Promotions, Inc., Tommy Armour Golf Company and Ram
                         Golf Corporation into the Company dated October 8,
                         1999.
4.2++                    Specimen Stock Certificate
10.1++                   Employment Agreement with Rudy A. Slucker
10.2++                   Employment Agreement with John Zeravica
10.3+                    1996 Employee Stock Option Plan, as amended
10.4++                   Form of Stock Option Agreement
10.23++                  Form of Lock-up Agreement
10.24*                   Property Lease dated August 10, 1997 between the
                         Company and Dolo Realty Co.
10.40                    Loan and Security Agreement, dated January 20, 2000, by
                         and between Congress Financial Corporation (Central)
                         and the Company
10.41                    Subordination Agreement, dated as of January 20, 2000,
                         by and between Rudy A. Slucker and Congress Financial
                         Corporation (Central)
10.42+                   Amended and Restated Subordinated Convertible Demand
                         Note, dated as of January 20, 2000 to Rudy A. Slucker.
10.43+                   Stock Option Agreement, dated as of December 31, 1999,
                         between the Company and Rudy A. Slucker.
10.44                    Employment Agreement, effective January 27, 2000, by
                         and between the Company and Andrew M. Kairey.
16**                     Letter from Rothstein, Kass & Company, P.C. to the
                         Commission dated March 2, 1998
21                       Subsidiaries
23                       Consent of Ernst & Young LLP
27                       Financial Data Schedule

------------
      ++ Previously filed with the Securities and Exchange Commission as an
Exhibit to our Registration Statement on Form SB-2 (File No.333-14647) and
incorporated herein by reference.

      * Previously filed with the Securities and Exchange Commission as an
Exhibit to Post-Effective Amendment No. 1 to our Registration Statement on Form
SB-2 (File No. 333-14647) and incorporated herein by reference.

      + Previously filed with the Securities and Exchange Commission as an
Exhibit to the Company's Preliminary Proxy Statement for the Annual Meeting of
Stockholders filed on March 17, 2000 and incorporated herein by reference.

      ** Previously filed with the Securities and Exchange Commission as an
Exhibit to our Current Report on Form 8-K filed on March 4, 1998 and
incorporated herein by reference.

      (b) During the last quarter of the period covered by this report and up to
March 30, 2000, we did not file any Current Reports on Form 8-K.


                                     - 21 -
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
TearDrop Golf Company

We have audited the accompanying consolidated balance sheet of TearDrop Golf
Company as of December 31, 1999 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the two years in the
period then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
TearDrop Golf Company at December 31, 1999 and the consolidated results of its
operations and its cash flows for each of the two years in the period then
ended, in conformity with accounting principles generally accepted in the United
States.

                                                       Ernst & Young LLP

Chicago, Illinois
March 17, 2000


                                      F-1
<PAGE>

                              TearDrop Golf Company
                           Consolidated Balance Sheet
                                December 31, 1999
       (All dollar amounts, except share and per share amounts, in $000's)

<TABLE>
<CAPTION>
                                                    ASSETS
CURRENT ASSETS:
<S>                                                                                                     <C>                 <C>
   Cash                                                                                                 $    481
   Accounts receivable less allowance for returns and
       doubtful accounts of $1,793                                                                        11,932
   Inventories                                                                                            10,778
   Other current assets                                                                                      148
                                                                                                        --------
       Total current assets                                                                                                 $ 23,339
PROPERTY AND EQUIPMENT, less accumulated
     depreciation                                                                                                              4,334
PATENTS  and TRADEMARKS, less accumulated amortization                                                                         6,302
GOODWILL, less accumulated amortization                                                                                          525
                                                                                                                            --------

                                                                                                                            $ 34,500
                                                                                                                            ========
                                    LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Accounts payable                                                                                     $ 11,064
   Accrued liabilities                                                                                     2,594
   Note payable - shareholder                                                                                500
   Current portion of long term debt                                                                       1,363
                                                                                                        --------
       Total current liabilities                                                                                            $ 15,521

LONG TERM DEBT                                                                                                                15,705

PREFERRED STOCK
  $.01 par value, authorized 1,000,000 shares, issued
   and outstanding none
STOCKHOLDERS' EQUITY:
   Preferred stock $.01 par value, authorized 1,000,000 shares,
      issued and outstanding none                                                                             --
   Common stock, $.01 par value, authorized
      10,000,000 shares, issued and outstanding 5,262,565 shares                                              53
   Capital in excess of par value                                                                         25,346
   Accumulated other comprehensive loss                                                                      (79)
   Accumulated deficit                                                                                   (22,046)
                                                                                                        --------
       Total stockholders' equity                                                                                              3,274
                                                                                                                            --------
                                                                                                                            $ 34,500
                                                                                                                            ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-2
<PAGE>

                              TearDrop Golf Company
                      Consolidated Statements of Operations
                 For the Years Ended December 31, 1999 and 1998
       (All dollar amounts, except share and per share amounts, in $000's)

                                                       Years Ended December 31
                                                     --------------------------
                                                         1999          1998
                                                     -----------    -----------

Net sales                                            $    59,769    $    60,715

Cost of sales                                             32,865         36,428
                                                     -----------    -----------

Gross profit                                              26,904         24,287

Selling, general and
   administrative expenses                                29,837         28,836

Other income                                                 267             --
                                                     -----------    -----------

Loss from operations                                      (2,666)        (4,549)

Interest (expense) income, net                            (1,805)        (1,595)
                                                     -----------    -----------

Loss before income taxes                                  (4,471)        (6,144)

Income tax (expense)                                          --             --
                                                     -----------    -----------

Net loss                                             $    (4,471)   $    (6,144)
                                                     ===========    ===========

Preferred dividends                                           --            137
                                                     -----------    -----------

Loss attributable to common shareholders             $    (4,471)   $    (6,281)
                                                     ===========    ===========

Net loss per common share - basic and diluted        $     (0.86)   $     (1.58)
                                                     ===========    ===========

Weighted average number of
   common shares outstanding - basic and diluted       5,205,449      3,982,382
                                                     ===========    ===========

          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

                              TearDrop Golf Company
          Consolidated Statements of Stockholders' Equity (Deficiency)
                 For the Years Ended December 31, 1999 and 1998
       (All dollar amounts, except share and per share amounts in $000's)

<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                           Common Stock           Capital in     Other
                                                    ---------------------------   Excess of   Comprehensive Accumulated
                                                       Shares         Amount      Par Value       Loss        Deficit        Total
                                                    --------------------------------------------------------------------------------

<S>                                                  <C>             <C>           <C>             <C>       <C>            <C>
Balance January 1, 1998                              2,654,857       $    27       $ 9,634         ($25)     ($11,431)      ($1,795)

Comprehensive loss:
   Net loss                                                                                                    (6,144)       (6,144)
   Currency translation adjustment                                                                 (204)                       (204)
Comprehensive loss                                                                                                           (6,348)

Conversion of preferred stock to
    common stock                                       933,333             9         6,991                                    7,000
Exercise of common stock options                        50,000             1           199                                      200
Redemption of common stock warrants                  1,541,700            15         8,299                                    8,314
Options issued to non-employees                                                        200                                      200
Preferred dividends paid                                                              (137)                                    (137)
                                                     ---------       -------       -------         ----      --------       -------

Balance December 31, 1998                            5,179,890            52        25,186         (229)      (17,575)        7,434

Comprehensive loss:
   Net loss                                                                                                    (4,471)       (4,471)
   Currency translation adjustment                                                                  150                         150
                                                                                                                             ------
Comprehensive loss                                                                                                           (4,321)
                                                                                                                             ------

Exercise of common stock options                         2,000                          10                                       10
Redemption of common stock warrants                        100                           1                                        1
Issuance of common stock to employee
   401(k) plan                                          80,575             1           149                                      150
                                                     ---------       -------       -------         ----      --------       -------
Balance December 31, 1999                            5,262,565       $    53       $25,346         ($79)     ($22,046)      $ 3,274
                                                     =========       =======       =======         ====      ========       =======
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

                              TearDrop Golf Company
                      Consolidated Statements of Cash Flows
                 For the Years Ended December 31, 1999 and 1998
        (All Dollar amounts, except share and per share amounts, $000's)

<TABLE>
<CAPTION>
                                                                                   Years
                                                                              Ended December 31
                                                                              ------------------
                                                                                1999      1998
                                                                              -------    -------
<S>                                                                           <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                      $(4,471)   $(6,144)
Adjustments to reconcile net loss to net
  cash provided by (used in) operating activities:
    Depreciation and amortization                                               1,192      1,116
    Provision for doubtful accounts                                               411        801
    Common stock and options issued for services                                   --        200
 Changes in operating assets and liabilities:
    (Increase) in accounts receivable                                          (2,229)    (3,568)
    (Increase) decrease in inventories                                          8,248        (20)
    (Increase) decrease in other current assets                                   214       (330)
     Increase  (decrease) in accounts payable and other current liabilities       405       (170)
                                                                              -------    -------
NET CASH PROVIDED BY  (USED IN) OPERATING ACTIVITIES                            3,770     (8,115)
                                                                              -------    -------

CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in patents and trademarks                                           (216)        --
  Purchases of property and equipment                                            (265)      (190)
                                                                              -------    -------
NET CASH USED IN INVESTING ACTIVITIES                                            (481)      (190)
                                                                              -------    -------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net (repayments) borrowings under financing agreements                      (3,842)     3,648
   Proceeds from stockholder's note                                               500         --
   Repayment of stockholder's notes                                                --       (400)
   Proceeds from exercise of common stock options                                  10        200
   Proceeds from redemption of common stock warrants                                1      8,314
   Redemption of preferred stock                                                   --     (3,000)
   Preferred dividends                                                             --       (137)
                                                                              -------    -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                            (3,331)     8,625
                                                                              -------    -------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                           150       (204)
NET INCREASE IN CASH AND CASH EQUIVALENTS                                         108        116
CASH AND CASH EQUIVALENTS:
   Beginning of year                                                              373        257
                                                                              -------    -------
   End of year                                                                $   481    $   373
                                                                              =======    =======
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                             Tear Drop Golf Company

                   Notes to Consolidated Financial Statements

       (All dollar amounts, except share and per share amounts, in $000's)

1. Organization and Nature of Operations

      The TearDrop Golf Company ("TearDrop" and/or the "Company") was
incorporated under the laws of Delaware in September 1996. Our common stock is
traded on the Nasdaq SmallCap Market under the symbol TDRP.

      TearDrop and our subsidiaries manufacture and market golf clubs, including
putters, irons, drivers and wedges throughout the world, distribute high quality
golf shoes in the United States, and operate a professional golf tour in the
United States.

2. Summary of Significant Accounting Policies

      Basis of Presentation - The accompanying financial statements have been
prepared on a going concern basis. In January 2000, we successfully completed
the refinancing of our debt (See Note 5 - Long Term Debt) and in connection
therewith appropriately classified a significant portion of our December 31,
1999 outstanding debt balance as long term. Therefore as of December 31, 1999,
we had working capital of $7,818.

      Basis of Consolidation - The consolidated balance sheet contains the
accounts of TearDrop Golf Company and our wholly owned subsidiaries. The related
statements of operations and cash flow contain the operations of TearDrop and
our wholly owned subsidiaries for each period. All significant inter-company
accounts have been eliminated in consolidation.

      Inventories - Inventories are stated at the lower of cost, on a first-in,
first-out method, or market.

      Property and Equipment - Property and equipment is stated at cost less
accumulated depreciation and amortization. We provide for depreciation and
amortization for operations acquired after 1996 principally using the
straight-line method. We use the double declining balance method for assets
acquired prior to 1997. There is no significant difference between the two
methods for either 1998 or 1999. Estimated useful lives, for each method, are as
follows:

        Asset                                        Estimated Useful Lives
        Building and improvements                        10 to 40 years
        Machinery and equipment                           5 to 10 years
        Office furniture and equipment                       5 years

      Patents and Trademarks - Patents and trademarks are stated at the cost
associated with obtaining patents and trademarks within and outside the United
States. Patents and trademarks acquired in acquisitions were valued on the basis
of independent appraisals of the fair market values of such assets at the time
of acquisition. All patents and trademarks are amortized on a straight-line
basis over 15 years.


                                      F-6
<PAGE>

      Goodwill - Goodwill relates to the excess of fair value over the cost of
net assets acquired and is amortized on a straight-line basis over 15 years.
During the years ended December 31, 1999 and 1998, amortization expense of
patents and trademarks and goodwill was $532 and $513, respectively.

      Impairment of Long-Lived Assets - We periodically assess the
recoverability of the carrying amounts of long-lived assets, including
intangible assets. A loss is recognized when expected undiscounted future cash
flows are less than the carrying amount of the asset. The impairment loss is the
difference by which the carrying amount exceeds its fair value.

      Revenue Recognition - We recognize revenue from sales of product when
title to the product has passed, which is generally the date product is shipped.

      Advertising Costs - We expense production costs of advertising and
promotions on the first date the advertisements take place. Advertising costs
included in selling, general and administrative expenses for the years ended
December 31, 1999 and 1998 were approximately $9,317 and $7,523, respectively.

      Research and Development Expense - We expense research and development
costs as incurred. Research and development expenses included in selling,
general and administrative expenses for the years ended December 31, 1999 and
1998 were approximately $612 and $572, respectively.

      Foreign Currency Translation - The functional currency for our foreign
subsidiary is the applicable local currency. Assets and liabilities of our
foreign subsidiary and operations are translated at the exchange rates in effect
at the balance sheet dates, while revenue, expenses and cash flows are
translated at average exchange rates for the period.

      Income Taxes - Deferred income tax assets and liabilities are computed
annually for differences between financial reporting and tax bases of assets and
liabilities, if any, that will result in taxable or deductible amounts in the
future, based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce the deferred income tax assets to the
amount expected to be realized.

      Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported. Management believes
that our estimates are reasonable and proper; however actual results could
differ from those estimates.

      Net Income or Loss Per Common Share - Net loss per common share is
computed based on net loss applicable to common shareholders, divided by the
weighted average number of common shares outstanding in each period. Due to the
operating loss in each period presented, the effect of all outstanding options
and warrants is antidilutive. Therefore, they have been excluded from our
computation of net loss per share.

      Stock Options - We account for stock options in accordance with Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" and
includes proforma information in Note 7, as permitted the Statement of Financial
Accounting Standards ("SFAS") No. 123 "Accounting for Stock Based Compensation".
Accordingly, there is no compensation expense to us when stock options are
granted to employees at prices equal to the fair market value at the date of
grant. Proceeds from exercises of stock options and the associated income tax
benefits are credited to stockholders' equity when received. Stock options
granted to professional golfers result in compensation expense equal to the fair
value of the options on the date of grant using an option-pricing model in
accordance with SFAS No. 123.


                                      F-7
<PAGE>

3. Inventories

      Inventories at December 31, 1999 consist of the following:

           Raw materials                         $5,401
           Finished goods                         5,377
                                                -------
                                                $10,778

4. Property and Equipment

      Property and equipment at December 31, 1999 consist of the following:

           Land                                                $1,730
           Building and improvements                            1,389
           Machinery and equipment                              1,805
           Office furniture and equipment                         856
                                                               ------
                                                                5,780
           Less accumulated depreciation and amortization       1,446
                                                               ------
                                                               $4,334

5. Long Term Debt

      At December 31, 1999, there was $17,068 outstanding under a line of credit
we obtained from First Union National Bank, successor by merger to CoreStates
Bank, N.A. (the "Bank"). The line of credit was initially $18,000, later
increased to $25,000, increased to $30,000 from March 1999 through June 30,
1999, reduced to $25,000 through October 1999 and reduced to $20,000 through
maturity. The maturity date of the line of credit was November 10, 1999, which
was extended in several steps to January 21, 2000. Interest on the outstanding
principal amount was payable, at our option, at either the Bank's prime lending
rate less 0.5% or LIBOR plus 2%. The Bank increased this interest rate on
October 10, 1999 to the Bank's prime lending rate plus 1%. We were in violation
of certain financial covenants of the line of credit throughout 1999 for which
the Bank issued waivers. The Bank also agreed to a forbearance agreement from
October 10, 1999 to January 21, 2000.

      On January 21, 2000, we completed a new revolving loan and credit
agreement with Congress Financial Corporation ("Congress") for $28,000,
including term loans of $6,675, which replaced and repaid the outstanding
amounts due the Bank under the line described above. The loan is due in two
years and bears interest at Congress' prime lending rate plus a) 1% for the
revolving portion and $2,175 of the term portion and b) 1.5% for $4,500 of the
term loan, and is secured by substantially all of our assets. Of the term loans,
$4,500 is payable at the rate of $500 quarterly, commencing August 1, 2000 with
the balance due at maturity of the line and $2,175 is payable at the rate of $36
on the first day of each month for 60 months, commencing March 1, 2000.

      As a result of the new credit agreement, we have classified $15,705, which
is the amount due under the Bank's line of credit at December 31, 1999 less
those portions of the term loans due prior to December 31, 2000, as a
non-current liability. The carrying value of the outstanding debt approximates
its fair value.

      In March 1999, our Chairman of the Board and Chief Executive Officer
loaned us $500 bearing interest at 8% due upon demand, once we have reached
certain reduced levels of indebtedness under the credit facility with the Bank.
In January 2000, the loan was increased to $1,000, and the repayment terms were
changed to be due on demand, payable upon the achievement of certain specified
debt levels under the revolving credit


                                      F-8
<PAGE>

agreement and was made convertible into our Common Stock at the rate of $1 per
share, subject to shareholder approval at the 2000 Annual Meeting of the
Stockholders. In this connection, the difference between the fair market value
of our Common Stock on the date of shareholder approval at the 2000 annual
meeting of shareholders and the conversion price of $1 would result in a charge
to earnings in the quarter such shareholder approval is obtained.

      Interest paid for the years ended December 31, 1999 and 1998 was $1,767
and $1,570, respectively.

6. Stockholders' Equity

      In connection with an acquisition in 1997, we issued 100,000 shares of
Series A Redeemable Convertible Preferred Stock. During 1998, we redeemed 30,000
shares at a cost of $3,000 and the remaining 70,000 shares were converted into
933,333 shares of our common stock. In that connection, the excess of the par
value of the preferred stock converted over the par value of the common stock
issued, $6,991, was credited to Capital in Excess of Par Value.

      Also during 1998, we issued 1,541,700 common shares in connection with the
redemption of common stock purchase warrants and 50,000 shares in connection
with the exercise of a stock option.

      In connection with 1997 acquisitions, we issued warrants to purchase
50,000 shares of common stock at a price of $6.625, which expire on December 29,
2002, and options to purchase 25,000 shares at a price of $4.50 per share, and
agreed to issue up to 50,000 additional shares, such issuance being dependent on
the performance of the acquired operations in the years 1998 and 1999. In March
1999, 12,500 shares were issued under that agreement.

      During 1999, we satisfied an obligation to certain of our employees by
issuing an additional 80,575 shares of our common stock to the applicable 401(k)
accounts.

7. Stock Options

      We have adopted the TearDrop Golf Company Stock Option Plan (the "Plan")
providing for the issuance of up to 800,000 (increased to 1,300,000 subject to
stockholder approval at the 2000 Annual Meeting of Stockholders) shares of
common stock for incentive stock options ("ISO's") and non-qualified stock
options. The exercise price of and ISO or non-qualified stock option will not be
less than 100% of the fair market value of our common stock at the date of
grant. The exercise price of an ISO granted to an employee owning greater than
10% of our common stock will not be less than 110% of the fair market value of
our common stock at the date of the grant and will have a maximum term of five
years.

      We granted, in 1998, various ISO's to employees to purchase up to 259,700
shares at prices ranging from $5.25 to $8.00 per share, and in 1999, various
ISO's to employees to purchase up to 325,400 shares at prices ranging from $1.38
to $2.19 per share. The options, generally, vest ratably over three years and
expire five years from the date of grant.

      We have reserved 250,000 shares of common stock (outside the Plan) to be
issued to touring golf professionals based upon their performance. In 1998, we
granted options to touring professional golfers to


                                      F-9
<PAGE>

purchase up to 55,448 shares of common stock at prices ranging from $4.75 per
share to $11.81 per share, exercisable immediately and expiring five years from
the date of grant. Of those options granted in 1998, options to purchase 19,000
shares at $4.75 contained a provision allowing the grantee to sell the option
back to us at the end of the first year for $150. All of the grantees exercised
their right under this provision and the purchase price to us is included in
compensation expense.

      We have recorded compensation of $ 0 and $200 in 1999 and 1998,
respectively, which includes the fair value of the options on the date of grant
and the cost of the options purchased by us.

      In June 1999, our shareholders approved the grant of an option to purchase
up to 1,250,000 shares of common stock to our Chairman of the Board and Chief
Executive Officer. The options are exercisable immediately, as to 250,000
shares, and the remainder upon attainment of certain earnings or share price
levels of our common stock. The options expire 10 years from date of grant.

      In December 1999, the Board of Directors approved, subject to shareholder
approval, the grant of an option to purchase 1,500,000 shares of common stock to
our Chairman of the Board and Chief Executive Officer at an exercise price of
$1.38. The options are exercisable immediately and expire 10 years from date of
grant.

      The following table summarizes the activity for stock options during 1998
and 1999 including the weighted average exercise price:

                                           Under the Plan       Outside the Plan
                                          Shares     Price       Shares    Price
Outstanding, January 1, 1998              368,400    $6.03      804,300    $4.95
Granted during 1998                       259,700     5.40       55,448     5.51
Options exercised                              --       --       50,000     4.00
Options expired or canceled                74,800     6.62       69,000     4.21
                                          -------             ---------
Outstanding December 31, 1998             553,300     5.65      740,748     4.63

Granted during 1999                       325,400     1.51    1,250,000     3.38
Options exercised                              --       --        2,000     4.75
Options expired or canceled                94,667     5.74           --       --
                                          -------             ---------
Outstanding December 31, 1999             784,033    $3.93    1,988,748    $3.84

      The following table summarizes information concerning outstanding options
at December 31, 1999:

Range of Exercise Price      Options             Remaining            Currently
                           Outstanding         Life in Years         Exercisable
$1.38 to $3.00                344,100               4.72                38,000
$3.01 to $5.81              2,254,500               7.34             1,089,166
$6.00 to $11.81               174,181               2.09               121,182
                            ---------                                ---------
 Totals                     2,772,781               6.69             1,248,348


                                      F-10
<PAGE>

      Pro forma net loss and net loss per share, determined as if we had
accounted for our employee stock options under the fair value method of SFAS No.
123 are as follows:

                                                          1999            1998
Net loss:
     As reported                                       $   4,471       $   6,144
     Pro forma                                             5,632           7,454

Loss per share, basic and diluted
     As reported                                       $     .86       $    1.58
     Pro forma                                              1.08            1.87

      The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1998 and 1999, as follows:

                                                                1999      1998
Fair value of options granted with exercise price
  Above market at date of grant                                 $ 2.08    $ 0.00
  At market at date of grant                                      1.05      3.49
  Below market at date of grant                                    -0-      5.16

Expected stock price volatility                                    84%       85%
Expected dividend yield                                           0.0%      0.0%
Risk free interest rate                                          5.10%     5.36%
Expected life of options                                    5-10 years   5 years

8. Major Customers, Suppliers and Export Sales

      During the years ended December 31, 1999 and 1998, we derived
approximately $12,984 (21.7%) and $15,160 (25.1%), respectively, of our net
sales from one customer.

      During the years ended December 31, 1999 and 1998, approximately 13% and
10%, respectively, of our net sales were export sales.

      During the years December 31, 1999 and 1998, we purchased approximately
$1,944 and $4,885, respectively, from one supplier.

9. Employee Benefit Plans

      Tommy Armour Golf Company, which was acquired in November 1997, had a
defined benefit pension plan covering substantially all of our United States
employees and a 401(k) defined contribution plan. Under the pension plan,
benefits were based primarily on years of credited service and compensation as
defined under the respective plan provisions.

      We have suspended the pension plan and frozen benefits to those vested
participants at the date of the transfer of the plan and our assets from
Armour's previous parent to the Company.


                                      F-11
<PAGE>

      Assumptions used in the accounting for the Armour defined benefit plan,
for our fiscal years ended September 30, 1999 and 1998, were as follows:

                                                                    1999   1998

Weighted average discount rate                                      7.5%    7.5%
Rate of increase in compensation levels                             4.5%    4.5%
Expected long-term rate of return on assets                         9.0%    9.0%

      The following table sets forth the plan's change in the benefit obligation
for the year ended December 31, 1999:

Benefit obligation at beginning of year                                  $3,189
Service cost                                                                  0
Interest cost                                                               222
Actuarial gain                                                             (185)
Curtailment gain                                                              0
Benefits paid                                                               (84)
                                                                         ------
Benefit obligation at end of the year                                    $3,142

      The following table sets forth the plan's assets for the year ended
December 31, 1999:

Fair value of assets at beginning of year                                $3,120
Actual return on plan assets                                                427
Benefits paid                                                               (84)
                                                                         ------
Fair value of assets at end of year                                      $3,463

      The following table sets forth the plan's funded status at December 31,
1999:

Funded status of plan                                                     $(321)
Unrecognized prior actuarial gain                                           355
                                                                          -----
Accrued pension liability recognized in balance sheet                     $  34

      Net periodic pension cost for 1999 and 1998 includes the following
components:

                                                               1999        1998

Service cost-benefit earned during the period                 $   0       $ 512
Interest cost on projected benefit obligation                   222         298
Expected return on plan assets                                 (277)       (331)
                                                              -----       -----
Net periodic pension costs                                    $ (55)      $ 479


                                      F-12
<PAGE>

      Under our 401(k) plan, all U.S. employees are eligible to contribute up to
10% of their compensation. We, at the discretion of the Board of Directors, make
matching contributions. We made no matching contributions to the 401(k) plan
during the years ended December 31, 1999 or 1998.

      Pension and other employee benefits of our foreign subsidiaries and
operations are primarily provided by government-sponsored plans and being
accrued currently over the period of active employment. The costs of such plans
are not significant.

10. Income Taxes

      There were no provisions for income taxes or current income tax expense
during the years ended December 31, 1999 and 1998, due to net operating losses
during those two years. The reconciliation of the income tax benefit computed at
the federal statutory rate of 34% and the provision for income taxes, is as
follows:

<TABLE>
<CAPTION>
                                                                          1999     1998

<S>                                                                      <C>      <C>
Income tax benefit computed at statutory rate                            (34.0%)  (34.0%)
State income tax benefit at statutory rate, net of federal tax benefit    (4.8%)   (4.8%)
Other permanent differences                                                1.0%    (0.4%)
Valuation allowance against net deferred tax asset                        37.8%    39.2%
                                                                          -----    -----
Provision for income taxes                                                00.0%    00.0%
</TABLE>

      No deferred taxes have been reflected in the consolidated statements of
operations because we have fully reserved the tax benefit of net deductible
temporary differences and operating loss carry forwards due to the fact that the
likelihood of realization of the tax benefits cannot be established. We did not
pay any income taxes during the years ended December 31, 1999 or 1998.

      Deferred tax assets (liabilities) are as follows:

                                                         1999             1998

Net operating loss carry-forwards                      $  9,435        $  7,115
Allowance for doubtful accounts                             527             551
Accrued expenses                                            319           1,371
Restructuring reserves                                      629           1,053
Other                                                     1,783           1,156
                                                       --------        --------
                                                         12,693          11,246
Valuation allowance                                     (12,693)        (11,246)
                                                       --------        --------
Net deferred taxes                                     $      0        $      0

      At December 31, 1999, we have cumulative net operating loss carry forwards
expiring between 2011 and 2020 of approximately $25,000. Net operating loss
carry forwards are also available for state income tax purposes.


                                      F-13
<PAGE>

11. Commitments and Contingencies

      We have entered into endorsement agreements with touring golf
professionals for periods up to three years. The agreements typically provide
for a base compensation and bonuses based upon, among other things, tournament
performances, standings on the official money list and earning spots on the
Ryder or President Cup teams. Minimum compensation requirements for the years
ending December 31, 2000 and 2001 are approximately $3,200 and $1,000,
respectively. Additionally, we have agreed to issue options to purchase 25,000
and 16,000 shares of common stock in connection with these agreements for the
years ending December 31, 2000 and 2001, respectively. Of the options to be
issued under these agreements, 4,000 to be granted in 2000 could be exchanged
for $50,000.

      In April 1999, we extended an employment agreement with our Chairman of
the Board and Chief Executive Officer to expire on June 24, 2002. The agreement,
as amended, provides for annual compensation of $500 for the year ending
December 31, 2000, and performance bonuses, as defined. No bonuses were earned
in 1999 or 1988.

      We have received formal notice demanding arbitration from Pro Golf
Promotions, LLC and its former owners in connection with certain disputes
between such parties and us relating to the purchase by us from such parties of
the TearDrop Professional Golf Tour. Such parties are seeking certain money
damages and the issuance of up to 65,000 shares of the Company's Common Stock
related to alleged incentive obligations for 1998 and up to 65,000 shares of the
Company's Common Stock related to such obligations for 1999. We believe that
such parties are not entitled to the issuance of any shares or to any money
damages and we are vigorously defending such claim. Accordingly, no reserve has
been established in this connection.

12. Segment Information

      It is management's opinion that we, at this time, have only one reportable
segment, and that segment is the manufacture, marketing and distribution of golf
clubs. We distribute from our manufacturing and distribution facility in Morton
Grove, Illinois to all areas of the world where golf is played.

      The following discussion sets forth the required disclosure regarding
single segment information:

      We operate as a single reportable segment in the United States with 1999
sales of $59.8 million, of which $52.0 million were sales in the United States
and $7.8 million were sales outside of the United States. We sell our products
in the United States through our own sales force to approximately 1,500 national
accounts (such as national cataloguers, sporting goods retail chain stores,
etc.) and over 10,000 green grass accounts (golf course pro shops), who in turn
sell directly to the end user. We sell our products outside of the United States
through a sales office in Canada and through distributors in other countries.


                                      F-14
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                    TEARDROP GOLF COMPANY


Dated: March 27, 2000               /s/ Rudy A. Slucker
                                    ----------------------------------
                                    Rudy A. Slucker
                                    President and Chief Executive
                                    Officer
                                    (Principal Executive Officer)

         In accordance with 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.


Dated: March 27, 2000               /s/ Rudy A. Slucker
                                    ----------------------------------
                                    Rudy A. Slucker
                                    Director


Dated: March 27, 2000               /s/ Joseph A. Cioni
                                    ----------------------------------
                                    Joseph A. Cioni
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


Dated: March 27, 2000               /s/ Fred K. Hochman
                                    ----------------------------------
                                    Fred K. Hochman
                                    Director


Dated: March 27, 2000               /s/ Leslie E. Goodman
                                    ----------------------------------
                                    Leslie E. Goodman
                                    Director


Dated: March 27, 2000               /s/ Jeffrey Baker
                                    ----------------------------------
                                    Jeffrey Baker
                                    Director


Dated: March 27, 2000               /s/ Bruce H. Nagel
                                    ----------------------------------
                                    Bruce H. Nagel
                                    Director