UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                 FORM 10-QSB/A1

               X     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
              ------
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

                 TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
           -----
                                  EXCHANGE ACT


                           COMMISSION FILE NO. 0-22321

                            WHEELS SPORTS GROUP, INC.
             (Exact name of registrant as specified in its charter)

       NORTH CAROLINA                                      56-2007717
       (State of other jurisdiction of                     (I. R .S. Employer
       incorporation or organization)                      Identification No.)

              1368 SALISBURY ROAD, MOCKSVILLE, NORTH CAROLINA 27028
                    (Address of principal executive offices)
                                 (704) 634-3000
               (Registrant's telephone number including area code)

         Check whether the issuer (1) 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
                                    -----       -----


         State the number of shares outstanding in each of the issuer's classes
of common stock, as of the latest practicable date.

     CLASS                                      OUTSTANDING AT OCTOBER 31, 1997
     COMMON STOCK                                          4,664,445

     Transitional Small Business Disclosure Format (check one):

                               Yes         No  X
                                   ------     -------


<PAGE>



                                      INDEX


PART I - FINANCIAL INFORMATION

         ITEM 1 - Financial Statements (Unaudited)

                 Consolidated Financial Statements
                 Consolidated Balance Sheets as of December 31, 1996
                          and June 30, 1997  (restated)                        3
                 Consolidated Statements of Operations for the quarters
                          ended June 30, 1996 and 1997, and for the six
                          months ended June 30, 1996 and 1997 (restated)       4

                 Consolidated Statements of Cash Flows for the six
                          months ended June 30, 1996 and 1997 (restated)       5

                 Notes to Consolidated Financial Statements                 6-11

         ITEM 2  Management's Discussion and Analysis of
                 Financial Conditions and Results
                 of Operations                                             12-16


PART II - OTHER INFORMATION                                                   17


SIGNATURES                                                                    17


<PAGE>


WHEELS SPORTS GROUP, INC.
CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                    December 31,                   June 30,
                                                        1996                         1997
                                                --------------------        --------------------
                                                    (Unaudited)                  (Unaudited)
ASSETS                                          (Restated,Notes 2&3)        (Restated,Notes 2&3)

Currrent assets:
<S>                                                   <C>                       <C>         
   Cash                                               $   257,750               $  3,274,608
   Accounts receivable, net of allowances               2,120,079                  1,491,331
   Inventories                                            570,081                    349,281
   Other current assets                                   101,664                    186,017
                                                --------------------        --------------------
      Total current assets                              3,049,574                  5,301,237
   Property and equipment, net                            579,615                    732,515
   Other assets                                           362,725                     90,795
                                                --------------------        --------------------
      Total assets                                    $ 3,991,914               $  6,124,547
                                                ====================        ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable                                      $   138,500               $    240,000
   Current maturities of long term debt                   173,266                     15,600
   Loans from shareholders and officers                   150,000                    125,000
   Accounts payable and accrued expenses                1,742,630                    829,346
   Deferred revenues                                      255,845                    370,504
   Net liabilities of operations to be discontinued                                  222,483
                                                --------------------        --------------------
      Total current liabilities                         2,460,241                  1,802,933
Long-term debt, net of current portion                    484,919                    431,445
                                                --------------------        --------------------
      Total liabilities                                 2,945,160                  2,234,378
                                                --------------------        --------------------
Stockholders' equity:                                                                      
   Common stock                                            26,350                     39,800
   Additional paid in capital                             339,670                  6,138,908
   Retained earnings/(accumulated deficit)                680,734                 (2,288,539)
                                                --------------------        --------------------
      Total stockholders' equity                        1,046,754                  3,890,169
                                                --------------------        --------------------
      Total liabilities and
        stockholders' equity                          $ 3,991,914               $  6,124,547
                                                ====================        ====================
</TABLE>

See notes to Consolidated Financial Statements

                                        3


<PAGE>

WHEELS SPORTS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                          Quarter Ended June 30,         Six Months Ended June 30,
                                                          (Restated, Notes 2&3)            (Restated, Notes 2&3)
                                                          1996             1997           1996              1997
                                                       -----------     ------------   -------------    -------------
                                                       (Unaudited)     (Unaudited)     (Unaudited)      (Unaudited)

<S>                                                    <C>            <C>             <C>              <C>          
Net revenues                                           $ 2,044,532    $  1,374,232    $   2,541,432    $   3,033,369

Cost of sales                                            1,214,694       1,254,489        1,411,878        2,714,241
                                                       -----------     ------------   -------------    -------------
   Gross margin                                            829,838         119,743        1,129,554          319,128

Selling, general and administrative expenses               319,035         536,970          611,050        1,003,954

Other income, net                                              707          18,088              892           27,186
                                                       -----------     ------------   -------------    -------------
   Operating income (loss)                                 511,510        (399,139)         519,396         (657,640)

Interest expense                                               521          27,275              802           54,921
                                                       -----------     ------------   -------------    -------------
   Net income (loss) from continuing operations
     before income tax (benefit)                           510,989        (426,414)         518,594         (712,561)

Taxes on income (benefit) (Note 6)                               -               -                -                -
                                                       -----------     ------------   -------------    -------------
   Net income (loss) from continuing operations            510,989        (426,414)         518,594         (712,561)

Discontinued operations

   Loss from discontinued operations, net
       of income tax (benefit) of $0                                      (266,007)                         (427,730)

   Loss from disposition of discontinued
       operations, net of income tax (benefit) of $0                    (1,032,350)                       (1,032,350)
                                                       -----------     ------------   -------------    -------------
   Net income (loss)                                   $   510,989    $ (1,724,771)   $     518,594    $  (2,172,641)
                                                       ===========     ============   =============    =============
Pro forma data: (Note 6)

   Net income (loss) from continuing
       operations, as reported                         $   510,989    $   (426,414)   $     518,594    $    (712,561)

   Pro forma income tax expense                            204,396        -                 207,438           40,761
                                                       -----------     ------------   -------------    -------------
   Pro forma net income (loss) from
       continuing operations                           $   306,593    $   (426,414)   $     311,156    $    (753,322)
                                                       ===========     ============   =============    =============
Per share data:

   Net income (loss) from continuing operations              $0.19          ($0.11)           $0.20           ($0.21)

   Pro forma income (loss) from continuing
       operations                                            $0.12          ($0.11)           $0.12           ($0.23)

   Loss from discontinued operations                                        ($0.34)                           ($0.44)

   Net income (loss)                                         $0.19          ($0.45)           $0.20           ($0.65)

Weighted average number of shares used
   to compute per share data                             2,635,000       3,831,550        2,635,000        3,341,776
                                                       ===========     ============   =============    =============
</TABLE>

See notes to Consolidated Financial Statements

                                        4

<PAGE>


(No hard copy for this table.??????)

Calculation of Restated Balance Sheet
Dec 31, 1996

                              adjs &        
                              Wheels         WoR         Elims          combined

Cash                              209,834       72,608               282,442
                                                                           0
A/R                             2,006,127                          2,006,127
Int rec                             2,468                              2,468
PP Expenses                        11,000       36,580                47,580
                                                                           0
Inventories                       541,274                            541,274
                                                                           0
            tot Curr Assets     2,770,703      109,188             2,879,891
                                                                          0
PPE                               118,871       97,950              216,821
Land                              127,968                           127,968
other assets                      248,778        1,500              250,278
                                                                          0
               Total assets     3,266,320      208,638            3,474,958
                                                                          0
Curr Mats of LTD                  261,306      151,500              412,806
Loans from Shers                  150,000                           150,000
Deposits                            6,994                             6,994
A/P                             1,659,296       14,052            1,673,348
Accxs                              17,455                            17,455
Cap Leases                          2,704                             2,704
                                                                          0
             tot Curr Liabs     2,097,755      165,552            2,263,307
                                                                          0
LTD                               124,960                           124,960
Cap lease                          12,409                            12,409
                                                                          0
                Total Liabs     2,235,124      165,552            2,400,676
                                                                          0
Equity                                                                    0
Note Rec from WoR                 (95,436)      95,436                    0
Common stock                       21,500        1,000     2,500          25,000
APIC                              344,500                 (2,500)        342,000
RE                                760,632      (53,350)                  707,282
                                                                               0
                 tot equity     1,031,196       43,086           1,074,282
                                                                         0
                Total L & E     3,266,320      208,638           3,474,958





<PAGE>

WHEELS SPORTS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                      Six Months Ended June 30,
                                                                                        (Restated, Notes 2&3)
                                                                                     1996                    1997
                                                                              -----------------       ------------------
                                                                                 (Unaudited)             (Unaudited)

Cash flows from operating activities:
<S>                                                                           <C>                     <C>               
  Net income (loss)                                                           $         518,594       $      (2,172,641)
  Adjustments to reconcile net income (loss) to net cash flows
     used in operating activities:
     Depreciation and amortization                                                       21,032                  27,672
     Provision for allowances for doubtful accounts and returns                             175                 347,610
     Provision for losses related to discontinued operations                                                    375,000
     Write down of goodwill related to acquisition of World of Racing, Inc.                                     657,350
     Stock option expense                                                                                        47,720
     Other                                                                                 (717)                (31,460)

  Changes in operating assets and liabilities:
     Accounts receivable, net of allowances                                            (167,984)                281,138
     Inventories                                                                       (140,781)                220,800
     Other current assets                                                                50,266                 (84,353)
     Accounts payable and accrued expenses                                               33,403              (1,087,064)
     Deferred revenues                                                                  (43,888)                203,633
     Discontinued operations-noncash charges and working capital changes                                        132,731
                                                                              -----------------       ------------------
        Net cash provided by (used in) operating activities                             270,100              (1,081,864)
                                                                              -----------------       ------------------
Cash flows from investing activities:
  Acquisition of property and equipment                                                  (6,127)               (180,572)
                                                                              -----------------       ------------------
     Net cash (used in) investing activities                                             (6,127)               (180,572)
                                                                              -----------------       ------------------
Cash flows from financing activities:
  Increase in short term borrowings                                                      25,000                 600,000
  Reductions in short term borrowings                                                                          (650,000)
  Payments on loans from shareholders                                                    (1,838)               (150,000)
  Payments on long-term debt                                                            (13,021)                (76,994)
  Distributions to shareholders                                                                                (436,000)
  Proceeds of public offering, net of expenses                                                                4,992,288
                                                                              -----------------       ------------------
     Net cash provided by financing activities                                           10,141               4,279,294
                                                                              -----------------       ------------------
Net increase in cash                                                                    274,114               3,016,858
Cash, beginning of period                                                               203,090                 257,750
                                                                              -----------------       ------------------
Cash, end of period                                                           $         477,204       $       3,274,608
                                                                              =================       ==================
</TABLE>

See notes to Consolidated Financial Statements

                                        5

<PAGE>


                            WHEELS SPORTS GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1            CONDENSED FINANCIAL STATEMENTS


                  The accompanying unaudited consolidated financial statements
                  include the accounts of Wheels Sports Group, Inc. and its
                  subsidiaries, Wheels Sports Group Acquisition, Inc. (which
                  operates as World of Racing) and Diamond Sports Group, Inc..
                  These financial statements have been prepared by Wheels Sports
                  Group, Inc. (the "Company") without audit, pursuant to the
                  rules and regulations of the Securities and Exchange
                  Commission. Certain information and footnote disclosures
                  normally included in the financial statements prepared in
                  accordance with generally accepted accounting principles have
                  been condensed or omitted as allowed by such rules and
                  regulations. The Company believes that the disclosures are
                  adequate to make the information presented not misleading. It
                  is suggested that these financial statements be read in
                  conjunction with the Company's audited financial statements
                  for the year ended December 31, 1996.

                  In the opinion of the management, the accompanying unaudited
                  condensed financial statements prepared in conformity with
                  generally accepted accounting principles which require the
                  use of management estimates, contain all adjustments
                  (including normal recurring adjustments) necessary to present
                  fairly the financial position and results of operations and
                  cash flows for the periods presented.


NOTE 2            RESTATEMENT OF FINANCIAL STATEMENTS

                  The January 1997 acquisition of World of Racing Inc. ("WOR")
                  described in Note 3 below was originally accounted for as a
                  pooling-of-interests. That accounting method was used in the
                  Company's previously issued financial statements for the first
                  and second quarters of 1997. Because the Company decided in
                  August 1997 to terminate operations of WOR, that acquisition
                  is now required to be accounted for using the purchase method.
                  Further, the decision to terminate that business also requires
                  that the financial statements present the results of
                  operations of WOR as discontinued operations. Because the
                  decision to close WOR was made concurrently with the original
                  issuance of the June 30, 1997 financial statements, the
                  Company has restated those financial statements to reflect
                  that decision.

                                        6
<PAGE>


NOTE 3            BUSINESS COMBINATIONS


                  On January 28, 1997, the Company's newly incorporated
                  wholly-owned subsidiary, Wheels Sports Group Acquisition,
                  Inc., merged with WOR by exchanging 350,000 shares of stock in
                  Wheels Sports Group, Inc. for 100% of the common stock of WOR.
                  WOR, originally incorporated on August 26, 1996, was a
                  privately held South Carolina corporation established to
                  operate a fantasy race game. The consideration was
                  subsequently reduced to 310,000 shares of stock valued at
                  $620,000.

                  As discussed in note 2 above, these financial statements have
                  been restated to reflect the acquisition of WOR under the
                  purchase method of accounting. As such, the $657,350
                  unamortized excess of the purchase price over the $43,086
                  value of the net assets acquired was written off as of June
                  30, 1997 because of the decision to close WOR. The operations
                  of WOR are presented as discontinued operations, and a
                  provision for expected future losses from discontinued
                  operations has been included in the June 30, 1997 financial
                  statements.

                  On June 30, 1997, the Company acquired 100% of the common
                  stock of Diamond Sports Group, Inc. ("Diamond"), a privately
                  held corporation located in Charlotte, North Carolina, in
                  exchange for 485,000 shares of stock in Wheels Sports Group,
                  Inc.. Diamond is engaged in merchandising NASCAR oriented
                  products and in providing hospitality and other services to
                  corporations involved in NASCAR stock car racing. This
                  transaction has been accounted for as a pooling-of-interests.
                  The December 31, 1996 balances have been restated to reflect
                  the acquisition of Diamond. A reconciliation of the unaudited
                  December 31, 1996 amounts reported in the June 30, 1997 Form
                  10-QSB/A1 to the audited December 31, 196 amounts reported in
                  the Form SB-2 is as follows:

<TABLE>
<CAPTION>
                                                               Note 
                                         December 31, 1996  Receivable                  December 31, 1996
                                             Amounts per    From World     Diamond          Amounts per
                                         Audited Form SB-2  of Racing   Sports Group  Unaudited Form 10-QSB/A1
<S>               <C>                        <C>            <C>         <C>            <C>       
                  Current assets             $2,770,703                    $278,871       $3,049,574
                  Total assets               $3,266,320     $95,436        $630,158       $3,991,914
                  Current liabilities        $2,097,755                    $362,486       $2,460,241
                  Total liabilities          $2,235,124                    $710,036       $2,945,160
                  Equity                     $1,031,196     $95,436        ($79,878)      $1,046,754
</TABLE>


                  Details of the operations of the previously separate companies
                  before the acquisitions are as follows:

<TABLE>
<CAPTION>
                                              Six months ended June 30, 1996               Six months ended June 30, 1997
                                                Wheels      Diamond                      Wheels         Diamond
                                            Sports Group  Sports Group     Total      Sports Group   Sports Group      Total

<S>               <C>                        <C>            <C>         <C>          <C>              <C>           <C>
                  Revenues                   $2,078,706     $462,726    $2,541,432   $1,433,129       $1,600,240    $3,033,369
                  Net income (loss) from
                    continuing operations    $  463,478     $ 55,116    $  518,594    ($814,463)      $  101,902     ($712,561)
                  Pro Forma income
                    tax expense              $  185,392     $ 22,046    $  207,438           --       $   40,761    $   40,761
                  Pro Forma net income
                    (loss) from continuing
                    operations               $  278,086     $ 33,070      $311,156    ($814,463)      $   61,141     ($753,322)
</TABLE>

                                        7

<PAGE>

NOTE 4            NEW ACCOUNTING PRONOUNCEMENTS

                  In June, 1997 the Financial Accounting Standards Board issued
                  SFAS 130, "Reporting Comprehensive Income" and SFAS 131,
                  "Disclosures about Segments of an Enterprise and Related
                  Information". Both pronouncements are effective for periods
                  beginning after December 15, 1997. Adoption of these
                  Statements is not expected to have a material impact on the
                  financial statements of the Company.


NOTE 5            INVENTORIES


                  Inventories consisted of the following:

                                            12-31-96            6-30-97
                                            ---------          ---------
                  Raw materials              $ 19,595        $         0
                  Work in process             488,594              4,058
                  Finished goods               61,892            345,223
                                           ----------            -------
                                            $ 570,081          $ 349,281
                                            =========          =========

NOTE 6            INCOME TAXES


                  Wheels Sports Group, Inc. and World of Racing, Inc. elected
                  under Subchapter S of the Internal Revenue Code to have their
                  taxable income included in the income tax returns of their
                  individual shareholders for all periods prior to January 1,
                  1997. Diamond Sports Group, Inc. made a similar election for
                  all periods prior to July 1, 1997. Subsequent to those dates,
                  the companies were taxable as regular Subchapter C
                  corporations.

                  For periods in which the companies were subject to the
                  Subchapter S elections, no taxes on income have been provided.
                  However, for informational purposes, the statements of
                  operations include a proforma income tax provision on taxable
                  income for financial statement purposes using statutory
                  federal and state rates that would have applied had the
                  companies been taxed as regular Subchapter C corporations.

                  For periods in which the companies were taxable as regular
                  corporations, no provision for an income tax benefit has been
                  recognized because the realization of such a benefit is
                  dependent on future taxable income. The Company intends to
                  record such a benefit when its realization is considered
                  assured.


                                       8

<PAGE>

NOTE 7            DISTRIBUTIONS TO SHAREHOLDERS


                  In connection with the termination of the Subchapter S
                  elections of Wheels Sports Group, Inc. and Diamond Sports
                  Group, Inc., distributions of $400,000 and $36,000 were made
                  to those individual shareholders required to report on their
                  personal tax returns the taxable incomes of the respective
                  companies. These distributions represent the Company's
                  estimate of the shareholders' tax liability on the
                  corporations' income.

NOTE 8            INITIAL PUBLIC OFFERING

                  On April 16, 1997, the Company's Registration Statement for
                  the sale of 1,035,000 shares of common stock and 1,035,000
                  warrants for the purchase of a total of 517,500 shares of
                  common stock was declared effective by the Securities and
                  Exchange Commission. Gross proceeds from the sale of the
                  shares and warrants were $6,210,000 and expenses of the
                  offering were $1,466,490. Of these expenses, $248,778 were
                  paid in 1996 and $1,217,712 were paid in 1997.

NOTE 9            STOCK OPTIONS

                  On April 16, 1997, the Company awarded 350,000 options to
                  purchase common stock to certain employees and others. Options
                  are exercisable at various dates from April 16, 1998, to April
                  16, 2007, and at prices from $5.02 to $6.49 per share.

                  For options on 107,000 shares granted to non-employees, the
                  Company will recognize expense at $3.31 per optioned share
                  over the vesting period or, for options granted in connection
                  with royalty agreements with NASCAR personalities, over the
                  royalty period. The vesting period is generally one year and
                  the current average royalty period is three years. Expense of
                  $47,720 was recognized in the period ended June 30, 1997.

                  The remaining 243,000 options to employees will be accounted
                  for using the intrinsic value method whereby expense is
                  recognized only when the option price is lower than the market
                  price at the date of the grant. Disclosure of the value of the
                  options under Statement 123 of the Financial Accounting
                  Standards Board will be provided in the 1997 audited financial
                  statements.


                                       9

<PAGE>


NOTE 10           RESTATEMENTS  OF AND CHANGES IN EQUITY ACCOUNTS


                  The following table presents the restatements of and changes
                  in the equity accounts of the Company as a result of the
                  pooling-of-interests of Diamond Sports Group, the purchase of
                  World of Racing, Inc., and of other transactions during the
                  six months ended June 30, 1997.

<TABLE>
<CAPTION>
                                                                                                            (Accumulated
                                                                                                              Deficit)
                                                                    Shares      Common      Additional        Retained
                                                                 Outstanding    Stock     Paid in Capital     Earnings
                                                                 -----------  ---------   ---------------   ------------
<S>                                                              <C>          <C>          <C>              <C>
                  Balances, December 31, 1996 as
                    originally reported                          2,150,000    $ 21,500     $   344,500      $   760,632
                  Pooling of Diamond Sports Group, Inc.            485,000       4,850          (4,830)         (79,898)
                                                                 -----------  ---------   ---------------   ------------
                  Balances, December 31, 1996,
                    as restated                                  2,635,000      26,350         339,670          680,734
                  Issuance of common stock in connection with
                    purchase of World of Racing, Inc.              310,000       3,100         616,900
                  Distribution to shareholders for payment
                    of Subchapter S tax liabilities                                                            (436,000)
                  Effect of converting from Subchapter S
                    to regular corporation for tax purposes                                    360,632         (360,632)
                  Net proceeds from initial public offering      1,035,000      10,350       4,733,160
                  Stock options granted                                                         88,546
                  Net loss through June 30, 1997                                                              (2,172,641)
                                                                 -----------  ---------   ---------------   ------------
                  Balances, June 30, 1997                         3,980,000   $ 39,800    $  6,138,908       $(2,288,539)
                                                                 ===========  =========   ===============   ============
</TABLE>


NOTE 11           SUBSEQUENT EVENTS

                  On August 5, 1997, the Company acquired Emerald Sports Group,
                  Inc., a privately held company involved in merchandising
                  NASCAR related home decor items, in exchange for 65,000 shares
                  of Wheels Sports Group common stock. The transaction will be
                  accounted for as a purchase.

                  On August 18, 1997, the Company's board of directors voted to
                  close World of Racing, Inc.

                  On October 4, 1997, the Company acquired Greens Racing
                  Souvenirs, Inc., a privately held company located in South
                  Boston, Virginia, which sells NASCAR oriented racing souvenirs
                  at race tracks and by mail. Consideration was 175,000 shares
                  of stock of the Company. The transaction will be accounted for
                  as a pooling-of-interests.

                                       10

<PAGE>

NOTE 11           SUBSEQUENT EVENTS - (CONTINUED)

                  On October 3, 1997, the Company announced it had signed
                  definitive agreements to acquire High Performance Sports
                  Marketing of Mooresville, North Carolina, a privately held
                  distributor of NASCAR merchandise and apparel, and Press Pass
                  Partners, of Dallas, Texas, a privately held company which
                  designs and markets collectible sports trading cards. The
                  acquisition of High Performance Sports Marketing was completed
                  on October 24, 1997 and the acquisition of Press Pass is
                  expected to be completed before December 31, 1997.
                  Consideration for High Performance Sports Marketing was
                  444,445 shares of Wheels Sports Group common stock, cash of
                  $1,672,000, and notes payable of $4,250,000. Consideration for
                  Press Pass is expected to be 600,000 shares of Wheels Sports
                  Group common stock, cash of $3,000,000, and notes payable of
                  $1,000,000. Both acquisitions will be accounted for as
                  purchases.

                                       11

<PAGE>


                            WHEELS SPORTS GROUP, INC.
                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


GENERAL

The Company's business is seasonal in nature and therefore the results of
operations for any one or more quarters or its financial condition at any
specific time are not necessarily indicative of annual results, continuing
trends, or future financial condition.


RESTATED FINANCIAL STATEMENTS

Concurrently with the August 18, 1997 issuance of the Company's June 30, 1997
financial statements, the board of directors decided to terminate operations of
World of Racing, Inc., ("WOR") the Company's wholly owned subsidiary which had
been acquired in January 1997 to operate a fantasy race game. That acquisition
had been accounted for as a pooling-of-interests, but the decision to terminate
operations of WOR required that the acquisition be accounted for as a purchase.
Because the decision to terminate was made concurrently with the release of the
June 30 financial statements, those financial statements have been restated to
reflect purchase accounting for the acquisition of WOR and the presentation of
its operations as discontinued operations.


CORPORATE ACQUISITIONS

On June 30, 1997, the Company acquired Diamond Sports Group, ("Diamond") a
privately held Charlotte, North Carolina company involved in merchandising
NASCAR oriented products. On August 5, 1997 the Company acquired Emerald Sports
Group, ("Emerald") a privately held Charlotte, North Carolina company involved
in merchandising NASCAR related home decor fabric products. On October 4, 1997,
the Company acquired Greens Racing Souvenirs, ("GRS") a privately held South
Boston, Virginia company that sells NASCAR merchandise trackside at NASCAR races
and by mail. On October 24, 1997 the Company acquired High Performance Sports
Marketing, ("HPSM") a privately held Mooresville, North Carolina company that
distributes NASCAR merchandise. On October 3, 1997 the Company signed a
definitive agreement to acquire the business of Press Pass Partners, ("Press
Pass"), a Dallas, Texas partnership which designs and distributes collectible
items, primarily NASCAR trading cards. The acquisition of Press Pass is expected
to close prior to December 31, 1997. The terms of these acquisitions are
described in Notes 3 and 11 to the financial statements.


FINANCIAL CONDITION

As of June 30, 1997, the Company's principal sources of liquidity included cash
of $3,275,000 and net accounts receivable of $1,491,000. As of such date,
current assets were $5,301,000 as compared to current liabilities of $1,803,000.
Current liabilities

                                       12

<PAGE>

included a $375,000 accrual for future costs related to the discontinued
operations of WOR. Long-term debt net of current maturities was $431,000.

During the six months ended June 30, 1997 the Company's financial condition
strengthened as a result of its successful initial public offering of 1,035,000
shares of common stock, which resulted in net proceeds of $4,743,000. This was
in part offset by losses from the discontinued operations of WOR and operating
losses in the Company's trading card business. Proceeds of the public offering
were used to repay $650,000 in short term bank borrowings, fund approximately
$450,000 in costs relating to the subsequently discontinued operations of WOR,
and pay $150,000 for the acquisition of land for the construction of an office
and warehouse building. An additional $309,000 of the proceeds were used in
August 1997 to purchase the building previously leased by Diamond. Of the
$650,000 in bank borrowings, $400,000 had been incurred to fund a distribution
to shareholders to pay their personal tax liabilities on income of the Company,
as disclosed in Note 7 to the Consolidated Financial Statements. The balance of
the proceeds were used to increase working capital, including funding a
reduction of $914,000 in accounts payable and accrued expenses. The remaining
working capital will be used for anticipated expansion of the business of the
Company's subsidiaries, Diamond, Emerald, GRS and HPSM, for expansion of
marketing and promotional activities, and for general corporate purposes.

The acquisitions of HPSM and Press Pass will require the Company to raise
additional capital to fund the acquisitions, retire certain short term notes
issued and to be issued in conjunction with those acquisitions, and to provide
working capital for those companies. The Company has engaged the investment
banking firm of Morgan Keegan & Company to advise it in obtaining additional
capital. As of this date, the Company has received proposals from several
possible sources of capital, but has not reached a definitive agreement to
obtain the financing required by the acquisitions of HPSM and Press Pass. There
is no assurance that such financing will be obtained. Should financing not be
obtained, the previous owners of HPSM have the right to rescind the completed
acquisition of HPSM and the owners of Press Pass have the right to terminate
their acquisition agreement. Should the Company become involved in additional
new business ventures requiring additional working capital, the Company would be
required to obtain additional financing.

During the first quarter of 1997, the Company experienced slightly slower than
usual collections and higher than usual returns on a trading card set sold in
late 1996, Crown Jewels Elite. During that quarter, the Company accepted product
returns totaling $56,000 and increased its reserves for additional returns by
$54,000. During the second quarter of 1997, it became apparent that the Crown
Jewels Elite product had been improperly packaged by the Company's contract
packager and that there was a substantial problem collecting accounts receivable
relating to that product line. The Company recognized that the packaging of
Crown Jewels Elite did not meet industry standards and therefore the product was
less salable by its dealers and distributors. The Company was constrained to
accept product returns and issued approximately $334,000 in credits and price
concessions to its customers. As a result, during the six months ended June 30,
1997, the Company increased its reserves for returns by $347,000, of which
$54,000 was in the first quarter

                                       13

<PAGE>

and $293,000 was in the second quarter. The Company has filed suit against the
packager of Crown Jewels Elite seeking unspecified damages.

The net loss from continuing operations was partially funded by reductions in
accounts receivable and inventories of $281,000 and $220,000 respectively.
Deferred revenues, which represents advance payments of royalties and fees by
corporate customers of Diamond, increased by $204,000. Other current assets
increased $84,000, primarily as a result of an increase of $58,000 in advance
payments for tickets and related expenses on behalf of corporate customers of
Diamond.

Capital expenditures were $181,000, including $150,000 for the acquisition of
land. Payments on long term debt totaled $77,000 and short term debt, including
loans from shareholders and officers, was reduced by $200,000.

The Company is currently evaluating its needs and current facilities for office
and warehouse space, and may modify previously announced plans accordingly. The
two parcels of vacant land in Mocksville, North Carolina on which the Company
had planned to construct an office and warehouse facility are to be sold and the
Company's headquarters are to move to the HPSM facility in Mooresville, North
Carolina.


RESULTS OF OPERATIONS

Net revenues during the quarter ended June 30, 1997 were $1,374,000 compared to
$2,045,000 during the same quarter in the prior year, a decrease of $671,000 or
33%. Net revenues for the six months ended June 30, 1997 were $3,033,000
compared to $2,541,000 for the same six month period in the prior year, an
increase of $492,000 or 19%. During the second quarter of 1997, the Wheels
Sports Group released one trading card set, Predator, which created $766,000 in
revenue, and derived $347,000 from sales of other products and activities. These
revenues were offset by returns and price adjustments of $334,000 on the Crown
Jewels Elite card set. Revenues were lower during the second quarter of 1997 as
compared to the same period in the prior year due to the 1996 introduction of
Viper, the most successful trading card set in the Company's history, which
created revenues of approximately $1,500,000 during the second quarter of 1996.
Diamond, the subsidiary acquired June 30, 1997 in a pooling of interests
transaction, had its second quarter revenues increase to $592,000 from $335,000
in the same quarter of the previous year, an increase of $257,000 or 77%. For
the six months ended June 30, 1997, Diamond's revenues were $1,600,000 compared
to $463,000 for the same period of the prior year, an increase of $1,137,000 or
246%. These increases reflect the expansion of Diamond's business as it added
new retail products and corporate clients.


Cost of sales during the second quarter of 1997 were $1,254,000 as compared to
$1,215,000 during the second quarter, 1996, an increase of $39,000 or 3%. As a
percentage of net revenues, costs of sales was 91% in the second quarter of 1997
as compared to 59% in the second quarter of 1996. The increase in cost of sales
as a percentage of revenues resulted primarily from the reduction in 1997 net
revenues because of credits relating to Crown Jewels Elite returns and the
strong 1996 revenues from the

                                       14

<PAGE>

complete sell out of the Viper trading card set. Cost of sales in the six months
ended June 30, 1997 was $2,714,000 compared to $1,412,000 for the same period in
the prior year, an increase of $1,302,000 or 92%. The increase was the result of
the Company's having had very low cost of sales in the first quarter of 1996
because most sales during that period were of trading cards produced in previous
years and carried in inventory at nominal value, and of the growth of the
business of Diamond.

Gross margin during the second quarter of 1997 was $120,000 as compared to
$830,000 during the second quarter of 1996. The decline in gross margin was
primarily attributable to the combined effects of the credits issued with
respect to Crown Jewels Elite returns and the unusual margins produced by Viper
in 1996.

Selling, general and administrative expenses increased $218,000, or 68%, from
$319,000 in the second quarter of 1996 to $537,000 in the second quarter of
1997. Of this increase, $115,000 is attributable to Diamond. As a percentage of
net revenues, such expenses increased from 16% in the second quarter of 1996 to
39% in the second quarter of 1997. For the six months ended June 30, 1997,
selling, general and administrative expenses increased $393,000, or 64%, from
$611,000 in the same period of 1996 to $1,004,000 in 1997. Of this increase,
$252,000 is attributable to Diamond (which had started business in late 1995 and
had only limited operations during early 1996).


The Company and its subsidiary, World of Racing, had elected under Subchapter S
of the Internal Revenue Code to have their income taxed on the returns of their
individual shareholders for periods prior to 1997. Diamond made a similar
election for periods ending prior to its June 30, 1997 acquisition by the
Company. For that reason, no provision for income tax expense has been made for
any period prior to 1997. The operating losses incurred by the Company in the
first half of 1997 will create taxable losses which canl be deductible against
taxable income in 1997, and possibly later years. However, the Company does not
intend to record any future tax benefit from those losses until the timing and
amount of their realization is substantially assured.

As a result of the foregoing, the net loss from continuing operations for the
second quarter of 1997 was $426,000 as compared to a net income from continuing
operations of $511,000 during the second quarter of 1996. Of that loss,
approximately $330,000 was attributable to credits and returns on Crown Jewels
Elite trading cards. For the six months ended June 30, 1997, the net loss from
continuing operations was $713,000 as compared to a net income from continuing
operations of $519,000 for the same period of 1996. Of that loss, $814,000 is
attributable to the trading card business, including the $330,000 in costs
relating to the Crown Jewels Elite card sets as described above.

Net revenues of WOR for the second quarter of 1997 were $80,000 and $121,000 for
the six months ended June 30, 1997. The increase in quarterly revenue resulted
from a higher level of activity of the fantasy race game. As previously
discussed, the Company's board of directors decided to terminate the operations
of WOR on August 18, 1997.

                                       15

<PAGE>


The $266,000 loss from discontinued operations in the second quarter of 1997 and
the $428,000 loss from discontinued operations for the six months ended June 30,
1997 are the operating losses of World of Racing. The $1,032,000 loss from
disposition of the discontinued operations of World of Racing consists of the
write off of $657,000 in goodwill and a $375,000 provision for future operating
losses and losses on disposition of assets.


 FACTORS THAT MAY AFFECT OPERATING RESULTS


The statements that are contained in this release that are not purely historical
are forward looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Act of 1934, including
statements regarding the Company's expectations, hopes, intentions or strategies
regarding the future. Forward looking statements include expectations of trends
to continue through the remainder of the year and plans and objectives for
future operations, including operating margins. Forward looking statements
involve a number of risks and uncertainties. Among other factors that could
cause actual results to differ materially are the following: economic and market
conditions in the collectible sports trading card industry, the NASCAR race
industry, and the general economy; competitive factors, such as price pressures
or the entry of new competitors or increased competition in the collectible
sports trading card market or other NASCAR-related markets; the ability to
secure financing for acquisitions, expansion or capital expenditures;
termination or non-renewal of one or more licenses with well-known NASCAR race
drivers; inventory risks due to shifts in market demand or inaccurate production
forecasting; decrease in collectors' interest in the Company's cards; the
Company's ability to finance and conclude certain business acquisitions; and the
risk factors set forth in the Company's Registration Statement on Forms SB-2
(Registration No. 333-6340). The reader should consult these risk factors as
well as risk factors listed from time to time in the Company's reports on Form
10-QSB, 10-KSB and other filings under the Securities Act of 1934, as amended,
Annual Reports to Shareholders, and other registration statements filed pursuant
to the Securities Act of 1933, as amended. All forward looking statements
included herein are based on information available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward looking
statements. There can be no assurance that the Company will not experience
material fluctuations in future operating results on a quarterly or annual
basis, which would materially and adversely affect the Company's business,
financial condition and results of operations.

                                       16

<PAGE>


                           PART II - OTHER INFORMATION

                  ITEM 1.  LEGAL PROCEEDINGS

                                   None.

                  ITEM 2.  CHANGES IN SECURITIES

                                   None.

                  ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                                   None.

                  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                                   None.

                  ITEM 5.  OTHER INFORMATION

                                   None.

                  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

                                   (a)      Exhibits.

                           27 Financial Data Schedule.

                                   (b)      None.

                                   SIGNATURES

                  Pursuant to the requirements of the Securities Exchange Act of
                  1934, the Registrant has duly caused this form 10-QSB/A1 to
                  be signed on its behalf by the undersigned, thereunto duly
                  authorized.

                  Dated:   November 11, 1997 By:  /s/ Howard L. Correll, Jr.
                                                 ----------------------------
                                                      Howard L. Correll, Jr.
                                        President and Chief Executive Officer

                  Dated:   November 11, 1997 By: /s/ F. Scott M. Chapman
                                                ------------------------------
                                                     F. Scott M. Chapman
                                                   Chief Financial Officer

                                       17

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