<Page>

                                    FORM 10-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

     FOR THE FISCAL YEAR ENDED JUNE 30, 2001

                                       OR

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

     For the transition period from ____________ to ____________


                         Commission file number: 1-12888


                                SPORT-HALEY, INC.
             (Exact Name of Registrant as Specified in Its Charter)


                COLORADO                                  84-1111669
     (State or Other Jurisdiction of                   (I.R.S. Employer
     Incorporation or Organization)                  Identification Number)


              4600 EAST 48TH AVENUE
                 DENVER, COLORADO                            80216
     (Address of Principal Executive Offices)              (Zip Code)


       Registrant's telephone number, including area code: (303) 320-8800

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

     Title of each class          Name of each exchange on which registered
           NONE                                     NONE

      Securities registered pursuant to section 12(g) of the Exchange Act:

                      COMMON STOCK, NO PAR VALUE PER SHARE

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

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

As of October 5, 2001, the aggregate market value of the 3,272,985 shares of
Common Stock (the Registrant's only common equity) held by non-affiliates was
approximately $8.215 million based on the closing sale price of the Registrant's
Common Stock on the Nasdaq National Market(R) on such date. For purposes of the
foregoing calculation only, each of the Registrant's officers and directors is
deemed to be an affiliate.

There were 3,272,985 shares of the Registrant's Common Stock outstanding at the
close of business on October 5, 2001.

                      DOCUMENTS INCORPORATED BY REFERENCE:

                                      NONE

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                                     PART I

ITEM 1. BUSINESS

GENERAL

     Sport-Haley designs, contracts for the manufacture of and markets men's and
women's quality fashion golf apparel known for its innovative design, quality
fabrics, generous fit and classic style. Sport-Haley's apparel is sold under the
distinctive Haley(R) label in the premium and mid-price markets, primarily to
golf professional shops, country clubs and resorts throughout the United States
and internationally. Sport-Haley markets its apparel primarily to golf
professional shops located at private and resort courses. Appeal for the
Haley(R) brand name is enhanced because golf professional shops generally prefer
to sell quality apparel that is not broadly distributed in the retail market.
Sport-Haley continually seeks to expand its marketing programs. During the past
years, Sport-Haley focused its marketing efforts on expanding demand for
Haley(R) brand apparel in the men's golf apparel market. Sport-Haley offers
custom embroidering of its apparel with each customer's personalized club,
resort or corporate logo, thereby promoting the image of both Sport-Haley and
its customers and enhancing the marketability of its products. Sport-Haley was
incorporated in Colorado in January 1991. The principal executive offices are
located at 4600 East 48th Avenue, Denver, Colorado 80216, and the main telephone
number is (303) 320-8800.

PRODUCTS AND PRODUCT DESIGN

     During the fiscal year ended June 30, 2001, Sport-Haley's golf apparel
consisted of a men's line, a women's line, the Elements line that was comprised
of men's and women's outerwear, and a corporate line. All of the lines were
marketed under the distinctive Haley(R) label. Sport-Haley introduces the fall
collections for all of its lines at a major golf industry trade show, generally
held in January of each year. Sport-Haley's spring collections typically account
for approximately 60% of sales, with the fall collections accounting for the
remaining sales.

     Over the years, Sport-Haley has expanded the number of items available in
each of the men's and women's lines, offering more extensive selections of
styles, colors and fabrics. Each of the men's and women's lines typically has
between 130 and 150 pieces of apparel, including shirts, pullovers, vests,
shorts, sweaters, jackets and pants. The Elements outerwear line typically
consists of over 70 pieces of apparel such as rain suits, casual jackets, wind
shirts, vests and pants.

     Sport-Haley's golf apparel is sold in the premium and mid-price markets.
Apparel designed for premium pricing features larger sizing, higher quality
materials and more detailed designs. The following table sets forth information
regarding suggested retail price ranges for various apparel items:

<Table>
<Caption>
                             SUGGESTED RETAIL                              SUGGESTED RETAIL
     MEN'S APPAREL             PRICE RANGE        WOMEN'S APPAREL            PRICE RANGE
     -------------           ----------------     ---------------          ----------------
<S>                          <C>                  <C>                      <C>
     Shirts                   $  45 - $  85       Tops                      $  48 - $  75
     Shorts                   $  60 - $  75       Shorts                    $  60 - $  85
     Pants                    $  80 - $ 150       Pants                     $  70 - $ 120
     Pullovers/Vests          $  50 - $ 120       Sweaters                  $  50 - $ 140
     Elements Outerwear       $  45 - $ 200       Elements Outerwear        $  45 - $ 200
</Table>

     Sport-Haley's golf apparel is designed in the classic style with
contemporary influences intended to develop and maintain brand recognition and
loyalty. Each product in a line of apparel is sold separately, although the
lines are designed using coordinated styles, color schemes and fabrics to
encourage purchase of multiple garments. Apparel is manufactured using a variety
of fabrics and weave patterns, including interlock, pique, French terry and
twill, and may feature a unique trim, a special fabric finish or extra
needlework.


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     Sport-Haley closely coordinates the design function with sales and
production operations. The design process for each collection of garments is a
continual cycle of selecting fabric and weave patterns, coloring, styling, and
sewing techniques and includes supervising the production of prototype garments.
Sport-Haley relies on in-house designers as well as outside contract designers
to develop its apparel collections. Sport-Haley's design staff is responsible
for negotiating price and quantities with suppliers, arranging for pattern and
sample manufacturing, and coordinating finished goods delivery schedules with
production personnel. The design staff also supervises the quality controls for
inspection of fabric samples, as well as the testing of fabric samples for
shrinkage and colorfastness.

     Sport-Haley men's apparel is generally embroidered with the Haley logo on
the right sleeve of each garment. A large percentage of the men's apparel, and a
smaller percentage of women's apparel, is also custom embroidered with each
customer's personalized club or resort logo. Shirts and other garments for
tournaments, promotional events, and corporate sales are custom embroidered with
a sponsor or corporate logo along with the Haley(R) sleeve logo. Garments are
custom embroidered on Sport-Haley's premises using ten computer-controlled
embroidering machines. The embroidering machines have the capacity for
Sport-Haley to embroider up to 4,000 garments per day. Sport-Haley maintains an
electronic library of over 10,000 custom logos. Embroidering charges represent
an additional source of revenue.

SALES AND MARKETING

     OVERVIEW. Sport-Haley implements marketing strategies to enhance its
position as a high-quality provider of fashion golf apparel by capitalizing on
the market awareness of the Haley(R) brand name and establishing and maintaining
distribution channels for existing apparel lines. Sport-Haley implements these
strategies by (i) increasing distribution channels through its network of
independent sales representatives in an effort to add new golf professional
shops to its customer base and increase purchases from existing customers, (ii)
securing, utilizing and maintaining distributor arrangements for international
sales, (iii) diversifying product lines by developing new styles and designs
that are natural variations on its existing apparel designs, and (iv)
intensifying marketing efforts in the premium, mid-priced and corporate markets.

     In the fiscal year ended June 30, 2001 ("fiscal 2001"), domestic and
international golf course professional shops, country clubs and resorts
accounted for approximately 68% of Sport-Haley's net sales. Corporate, special
event and retail customers accounted for 21% of net sales, 1% was sold through a
factory outlet store in Laughlin, Nevada, and the remaining 10% consisted of
excess inventory sold to a limited number of customers at discounted wholesale
prices. No single customer accounted for 5% or more of net sales.

     GOLF PROFESSIONAL SHOPS, COUNTRY CLUBS AND RESORTS. Domestic sales are
solicited primarily through a network of approximately 30 independent sales
representatives who sell Sport-Haley apparel, on a commission basis, mainly to
golf professional shops, country clubs and resorts in all of the 50 states. The
independent sales representatives, many of whom may also carry other
golf-related lines, are responsible for generating new business and serving
customers in specific geographic territories. Since January 1997, Sport-Haley
has maintained buying programs with various entities whereby the participating
golf professional shop operators may purchase directly from Sport-Haley in
accordance with specific promotional programs. The promotional programs
accounted for less than 30% of sales in fiscal 2001. International sales are
made through distributors in the Caribbean Islands, Mexico, Japan, Chile,
portions of Southeast Asia, the Philippines and to U.S. military bases overseas.
Historically, the vast majority of Sport-Haley's sales have been to United
States customers. International sales represented less than 4% of net sales in
fiscal 2001.

     Sport-Haley's sales and marketing executives are responsible for
implementing marketing plans and sales programs, coordinating the network of
independent sales representatives, providing customer service and participating
in industry trade shows. Sport-Haley supports the sales activities of the
independent sales representatives and distributors by assigning specific
customer service personnel to specific geographic regions, providing detailed
catalogs that present pricing, sizing and style options for each collection of

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garments, and providing access to a private electronic network designed to
expedite sales order processing. Via personal computers, each sales
representative can access current inventory availability and create and transmit
orders from a remote location. Remote computer access enhances the
representatives' order processing speed and accuracy and reduces the risk of
placing customer orders that cannot be timely delivered. The electronic network
also interfaces with Sport-Haley's management information system that provides
key sales data to assist management with planning, production scheduling, sales
trends and standard cost control. Sport-Haley also maintains an internet webpage
at "www.sporthaley.com". The Sport-Haley webpage is purely informational at
present, providing limited information about Sport-Haley and its apparel.
Sport-Haley is continuing to develop a highly comprehensive website that will
provide much more detailed information about Sport-Haley and the products it
offers for sale.

     Sport-Haley introduces its distinctive golf apparel collections for the
fall selling season at a major golf industry trade show that is generally held
in January of each year in Orlando, Florida. Because many buyers for golf
resorts and professional shops attend this particular trade show, Sport-Haley
usually books a significant number of customer orders at or following the show.
The trade show also provides Sport-Haley with direct customer feedback regarding
apparel designs, fabrics, styles, fashion trends and other information necessary
to assist management with the preparation of detailed sales forecasts and
production schedules.

     In order to enhance the visibility of the Haley brand, Sport-Haley sustains
oral endorsement agreements with several select PGA and LPGA professionals.
Sport-Haley also sustains an agreement with a Canadian Tour professional in
order to maintain its presence in an international market. Under these
endorsement agreements, Sport-Haley generally compensates the respective
professionals with cash payments and/or apparel allowances.

     Sport-Haley periodically advertises the availability of Haley(R) brand
apparel in several separate golf industry publications, including those that are
distributed primarily to operators of golf professional shops. Sport-Haley also
expends a portion of its advertising budget to support the sales activities of
its network of independent sales representatives. International distributors
provide and pay for advertising in their respective geographic territories.

     Sport-Haley maintains a program that provided select customers with
distinctive fixtures dedicated to featuring Haley(R) brand apparel. Upon the
customer's agreement to maintain a pre-determined amount of inventory for a
specified period of time, the fixture became the property of the customer for a
nominal delivery fee. This display fixture program encourages customers to keep
their loyal commitment to Sport-Haley by continuing to prominently displaying a
large selection of Haley(R) brand apparel.

     CORPORATE MARKET. Sport-Haley's management believes that there is a natural
synergy between the golf apparel market and the corporate apparel market,
because both markets can be served from some of the same inventory, allowing
quick response to a shifting demand in either market. Sport-Haley has developed
several direct corporate accounts, and is actively pursuing this market
primarily though promotional product companies that source and supply a variety
of products for corporate fulfillment programs and special events. These
promotional product companies generally produce corporate catalogs containing
apparel and other products that may be used for employee recognition, customer
appreciation and other corporate purposes. A promotional product company will
also source and supply a specific product or products for special events
sponsored by a corporation. Sport-Haley's apparel is currently included, or
confirmed to be included, in a variety of catalogs, including catalogs for
several Fortune 500 companies. Sport-Haley does not enter into formal agreements
or contracts with these promotional product companies but does agree that it
will make available the products advertised in any specific catalog during the
period the catalog is being used, generally a one-year period. Sport-Haley
generally selects a limited number of its most popular, classic styles of golf
apparel and includes those in its corporate catalog. Because the corporate
apparel inventory must be maintained for a longer period of time and the classic
styles of corporate apparel are generally not designed for one specific season,
Sport-Haley features one collection of garments in its corporate catalog each
year. Corporate sales are

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made periodically throughout the year, and thus Corporate sales are not
historically quantifiable within the fixed or seasonal selling periods of the
other Haley(R) brand garment collections.

     FACTORY OUTLET AND RETAIL SALES. Sport-Haley maintains a 2,200 square foot
factory outlet store in Laughlin, Nevada. Since June 1996, Sport-Haley has
utilized this facility to market closeout inventories and discontinued styles at
discounted retail prices, as opposed to discounted wholesale prices, enabling
Sport-Haley to maximize sales revenue. Sport-Haley also sells a small percentage
of its apparel in the retail market through selected upscale department stores.

     BEN HOGAN(R) LICENSING AGREEMENT. In May 2001, Sport-Haley entered into a
licensing agreement with Spalding Sports Worldwide, Inc. for marketing a
complete collection of men's premium golf apparel under the Ben Hogan(R) brand
name in the United States. The first collections of Ben Hogan(R) apparel are
expected to be introduced at a major golf related tradeshow in January 2002. The
Ben Hogan(R) apparel collections will feature tops, bottoms, windwear and
outerwear with suggested retail prices ranging from approximately $75 to $300.
Sport-Haley intends to devote a separate sales organization to market the Ben
Hogan(R) apparel to elite golf professional shops, upscale resorts and exclusive
department stores.

COMPETITION

     The golf apparel market, both domestically or internationally, is highly
fragmented and the leading supplier has only slightly over a 10% market share.
Sport-Haley currently views Ashworth, Cutter & Buck, Inc., Izod Club, Polo/Ralph
Lauren Corporation, and Tommy Hilfiger as its most significant competitors in
the golf apparel market. In addition to competing with golf apparel
manufacturers, Sport-Haley must also compete with manufacturers of high quality
men's and women's sportswear and general leisure wear such as Nike and Nautica
Enterprises Inc. Many of these same companies are competitors in the corporate
market. Competition is intense and is based primarily on brand recognition and
loyalty, quality, price, style and design, service and availability of shelf
space in the golf apparel and leisure wear markets. Many of Sport-Haley's
competitors have longer operating histories, better name recognition and greater
financial, marketing and other resources than Sport-Haley. Because of the
intense competition in the golf apparel and leisure wear markets, Sport-Haley
cannot be assured of obtaining or maintaining its market share, and market
conditions may dictate a reduction in selling prices that could result in
reduced margins.

RAW MATERIALS SOURCING AND FINISHED GOODS PURCHASING

     Most of Sport-Haley's garments are made from 100% cotton fabrics. Certain
women's apparel contain silk and rayon fabrics or micro-fiber and certain
garments in the Elements outerwear line contain micro-fiber, fleece, nylon or
Gore-tex(R) products, including Gore Windstopper(R) fabric, in accordance with
non-exclusive licensing rights.

     Purchases of made-to-order finished goods are manufactured by outside
suppliers in accordance with Sport-Haley's quality and custom styling
specifications. Sport-Haley may assist outside suppliers with the sourcing of
raw materials for these finished products, but generally does not purchase the
fabric and trim for the suppliers. In fiscal 2001, Sport-Haley purchased
approximately 50% of its apparel as finished goods.

     During the first six months of fiscal 2001, Sport-Haley purchased fabric in
bulk from approximately fifteen separate domestic and international mills, the
seven largest of which accounted for approximately 70% of fabric expenditures in
fiscal 2001. Raw materials also included trim consisting principally of buttons,
collars, bands, linings, labels and zippers. Sport-Haley purchased trim from
several suppliers during fiscal 2001, with the four largest suppliers accounting
for approximately 80% of total trim expenditures.

     During the last six months of fiscal 2001, Sport-Haley significantly
increased its reliance on foreign suppliers that provided finished and packaged
apparel. The increased reliance on foreign suppliers greatly diminished the need
for raw materials purchasing and production scheduling. Approximately 80% of the

                                       5
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garments offered for sale in the spring 2001 collections were purchased as
finished and packaged apparel from foreign suppliers.

     Sport-Haley did not initiate any formal contractual arrangements for the
purchase of raw materials or finished goods from its suppliers, but issued
purchase orders as raw materials and finished goods apparel purchases were
ordered. Although Sport-Haley believes that all of the components of its apparel
are available from a large number of domestic and foreign sources, its inability
to secure finished goods apparel or raw materials from existing suppliers during
periods of high seasonal demand could result in delays in deliveries to
customers, thereby adversely affecting profitability.

     Sport-Haley's production personnel assist the design department with the
sourcing of finished goods apparel, negotiating costs consistent with desired
profit margins and the inspection of sample fabrics and garments prior to the
commencement of actual production. Production personnel are also responsible for
ensuring timely-receipt of finished goods.

MANUFACTURING

     With the exception of custom embroidering, which is done at Sport-Haley's
facility in Denver, Colorado, most manufacturing activities were undertaken by
"cutting and sewing" vendors, including Sport-Haley's wholly-owned subsidiary
(the "Subsidiary"). Following the purchase of raw materials, Sport-Haley
arranged for shipment of the materials directly to the cutting and sewing
vendors that were located primarily in the United States and its territories.
The individual vendors were responsible for cutting and sewing apparel to
Sport-Haley specifications. During fiscal 2001, Sport-Haley used fourteen
domestic and foreign cutting and sewing vendors other than the Subsidiary.
Sport-Haley did not purchase 10% or more of its component materials or apparel
as finished goods from any one outside vendor. The Subsidiary operated
exclusively for the benefit of Sport-Haley, and in fiscal 2001 the Subsidiary
produced approximately 35% of Sport-Haley's shirts and tops for men and women.
Sport-Haley did not execute contractual arrangements other than purchase orders
with any of its other domestic or foreign cutting and sewing vendors and
believes that these services could be obtained from a large number of
international and other domestic sources. Because of a significant increase in
reliance on purchasing finished and packaged apparel from foreign suppliers,
Sport-Haley closed the Subsidiary in August 2001.

     Sport-Haley receives orders for the spring and fall collections over a
period commencing when samples are first shown to customers and continuing
through the respective selling seasons. Sport-Haley must begin to schedule
purchases and production in advance of sales order placements. Because the
receiving and delivery of apparel collections is time-sensitive, Sport-Haley
devotes considerable time and efforts to the revision of forecasts of apparel
sales by item and style. Sport-Haley's computerized management information
system provides management with key data that facilitates planning, product
tracking and standard cost control as well as providing perpetual inventory
records and inventory availability.

     Finished apparel is generally received from the ready-made manufacturers or
the cutting and sewing vendors at Sport-Haley's warehouse and distribution
facilities in Denver, Colorado. Some apparel, primarily shirts and tops, is
embroidered with the Haley(R) sleeve logo. Approximately 75% of men's shirts are
custom embroidered with a golf course, country club, resort or company logo,
whereas only approximately 40% of women's apparel is similarly embroidered.
Sport-Haley maintains ten computer-controlled embroidering machines on its
premises, which together have the capacity to embroider up to 4,000 custom logos
each day. After being embroidered to the customer's specifications, apparel
receives a final inspection by quality assurance personnel, and is packaged and
shipped from the Denver, Colorado facility.

MANAGEMENT INFORMATION SYSTEMS AND INVENTORY MANAGEMENT

     Sport-Haley utilizes an integrated computer system to manage all business
transactions, historical data and record keeping, including sourcing,
warehousing, embroidering and shipping. The computer system

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provides information to all of Sport-Haley's internal departments. The
electronic computer system used by Sport-Haley's sales representatives
interfaces with the main system to provide sales representatives with inventory
information and order entry capability and allows the sales force to order
against actual inventory availability. The computer system has improved
operations by providing information critical to forecasting such as analyses of
sales histories, purchasing histories, and future customer commitments, all of
which allow for better management of finished goods inventories.

NATURE OF BUSINESS

     Golf apparel sales in golf professional shops tend to be seasonal in
nature, with a disproportionate share of sales occurring from January through
June, which are Sport-Haley's third and fourth quarters of each fiscal year.
Sport-Haley continues to seek to reduce the impact of seasonal revenues by
attempting to increase sales in other markets, such as the corporate and
international markets.

     The amount of back orders outstanding at any particular time may be
affected by a number of factors, including the timely flow of products from
suppliers and the sufficiency of labor available to the suppliers, which can
impact Sport-Haley's ability to ship garments on time, and the timing of orders
placed by customers. Accordingly, a comparison of Sport-Haley's backlog of
orders from period to period is not necessarily meaningful and may not be
indicative of actual shipments during any specific period. In addition, partial
orders are shipped if they are at least 75% to 80% complete. Orders may be
changed or canceled up to 30 days prior to the scheduled shiping date of the
order. Generally, Sport-Haley does not sell its apparel on consignment and
generally does not accept returns of purchased apparel other than apparel which
is damaged or which is delivered after the specified delivery date. Returns and
allowances were approximately 5% of net sales in fiscal 2001 and approximately
3% of net sales in fiscal 2000 and fiscal 1999. Historically, the backlog of
orders has not materially impacted Sport-Haley's sales with respect to
cancellations and rejections of back orders.

TRADEMARK

     Sport-Haley markets its products under the Haley(R) label. Sport-Haley has
registered the Haley(R) mark and the distinctive "H" design with the United
States Patent and Trademark Office. Sport-Haley has also registered the Haley(R)
mark in a number of international jurisdictions.

EMPLOYEES

     At June 30, 2001, Sport-Haley had 70 full-time employees and four part-time
employees, including 31 full-time and one part-time executive and administrative
employees, 3 full-time marketing and corporate sales employees, 35 full-time
personnel in inspection, packaging, embroidering and distribution operations,
and one full-time and three part-time retail employees in the factory outlet
store. The Subsidiary had one administrative employee and 28 manufacturing
employees. None of Sport-Haley's or the Subsidiary's employees are represented
by any labor unions.

     In August 2001, Sport-Haley closed the manufacturing plant operated by the
Subsidiary. Since that date, the Subsidiary has ceased operations and no longer
has any employees.

YEAR 2000 COMPUTER CONVERSION

     The Company was cognizant of the Year 2000 issues associated with
programming code in computer systems. The Company utilizes an integrated
computer system to manage all business transactions, historical data and record
keeping, including sourcing, warehousing, embroidering, and shipping. In
preparation for the Year 2000, the Company installed a Year 2000 compliant
upgrade to the software for this system and tested all other systems. As of June
30, 2001, the Company had not experienced, nor does it expect to experience any
disruption related to Year 2000 issues in the operation of its system. To the
best knowledge of the Company, none of the suppliers, vendors or financial
institutions with which the Company has a business relationship experienced any
failures or disruptions in their computer systems caused by Year 2000 issues.

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ITEM 2. PROPERTIES

     Sport-Haley's executive offices and warehouse facilities are located in
Denver, Colorado and consist of 96,500 square feet of floor space. These
facilities were leased at an annual base rent of approximately $206,000 in
fiscal 2001. Sport-Haley is obligated to pay taxes, insurance and maintenance
expenses for the leased space. The Company has reached an agreement in principle
with the landlord to extend this lease for an additional five-year term at a
comparable lease rate.

     Sport-Haley also leases approximately 2,200 square feet of retail space for
its retail factory outlet store in Laughlin, Nevada. The annual base rental for
the Laughlin lease, which expires in March 2002, is approximately $48,000.

     The Subsidiary leases 22,000 square feet of manufacturing facilities in
Four Oaks, North Carolina from two of the Subsidiary's former minority
shareholders. The lease commenced on April 1, 1998 and expires March 31, 2008,
subject to the Subsidiary's right to extend the lease term for two additional
five-year periods. The annual lease payments are approximately $65,000, and the
Subsidiary must pay all utilities, taxes, insurance and certain repair costs.
The Subsidiary ceased operations in August 2001. Sport-Haley has not yet reached
an agreement with the Subsidiary's landlord for the termination of this lease.

ITEM 3. LEGAL PROCEEDINGS

     On June 30, 1999, Sport-Haley filed a complaint against Ben Elias
Industries Corp. in the District Court in and for the City and County of Denver
and State of Colorado. Sport-Haley alleged that Ben Elias Industries failed to
pay for goods that were shipped to it in March 1999. The total amount invoiced
to Ben Elias Industries was approximately $280,000. Sport-Haley reached an
out-of-court settlement with Ben Elias Industries in March 2001 and received
$210,000 in full settlement of this matter. Pursuant to the terms of the
settlement, the action has been dismissed.

     The Securities and Exchange Commission is currently investigating
Sport-Haley to determine whether the Company or any of its officers, directors
or employees violated any of the federal securities laws pursuant to a formal
order of investigation. The Commission has not brought an action or proceeding
against Sport-Haley, but it may do so in the future. In such an event, the
Commission may seek injunctive or other relief from the Company.

     As previously reported, in conjunction with the audit of Sport-Haley's
financial statements for the fiscal year ended June 30, 2000, Sport-Haley
determined that its financial statements for the fiscal years ended June 30,
1999 and 1998 required restatement due to accounting errors. The effects of
significant financial statement adjustments related to the restatements for the
fiscal years ended June 30, 1999 and 1998 are set forth in Sport-Haley's Form
10-K for the fiscal year ended June 30, 2000, which was filed with the
Securities and Exchange Commission on November 3, 2000. In addition, Sport-Haley
filed amended quarterly reports on Forms 10-Q for the quarterly periods of
fiscal years 2000 and 1999 in order to correct material quarterly information
for the prior interim reporting periods of fiscal years 2000, 1999 and 1998.
There is no litigation currently pending or threatened against Sport-Haley
concerning the restatements. However, if such litigation is initiated, it could
have a material adverse impact on Sport-Haley's income from operations.

     Sport-Haley has retained legal counsel to possibly pursue claims against
its former auditors in connection with damages suffered as a result of the
restatements. Further, counsel to the former auditors has advised Sport-Haley
that the former auditors may bring certain claims against Sport-Haley. Each
party denies any liability to the other party. No legal action has been filed by
Sport-Haley or its former auditors to assert any of these claims. To-date,
Sport-Haley has incurred approximately $440,000 in expenses related to the

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restatements of its fiscal year 1999 and 1998 financial statements and the
correction of material quarterly financial information for its fiscal years
2000, 1999 and 1998.

     Sport-Haley is subject to various other legal proceedings and claims which
arise in the ordinary course of its business. In the opinion of management, the
amount of ultimate liability with respect to those actions will not materially
affect the financial position or results of operations of Sport-Haley.

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

     Sport-Haley held a special meeting in lieu of its annual meeting of
shareholders on June 25, 2001. The following matters were considered and
approved by the shareholders:

     A.   The following six directors were elected to hold office for one-year
          terms or until their successors are elected and qualified.

<Table>
<Caption>
                                                      Votes Against
                                      Votes for        or Withheld       Total Voted
                                      ---------       -------------      -----------
<S>                                  <C>              <C>                <C>
          Robert G. Tomlinson         3,047,299           205,519         3,252,818
          Robert W. Haley             3,047,299           205,519         3,252,818
          Kevin M. Tomlinson          3,047,299           205,519         3,252,818
          Mark J. Stevenson           3,047,299           205,519         3,252,818
          Ronald J. Norick            3,047,299           205,519         3,252,818
          James H. Everest            3,047,299           205,519         3,252,818
</Table>

     B.   To ratify appointment of Hein + Associates LLP as the independent
          certified public accountants for Sport-Haley.

<Table>
<S>                           <C>
          For                 3,196,304
          Against                31,714
          Abstain                24,800
          Total Voted         3,252,818
</Table>

     C.   The following matter was approved by Sport-Haley's shareholders that
          were present personally or by proxy at the June 25, 2001 special
          meeting and was presented by management to shareholder vote under the
          "other business" item of the meeting's agenda as set forth in the
          Proxy Statement filed on May 29, 2001:

          To amend the Sport-Haley, Inc. Stock Option Plan to permit the
          issuance of an additional 400,000 shares of Sport-Haley, Inc. common
          stock.

<Table>
<S>                           <C>
          For                 2,830,055
          Against                15,649
          Abstain               407,114
          Total Voted         3,252,818
</Table>

                                       9
<Page>

                                     PART II

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

     Sport-Haley's Common Stock is quoted on the Nasdaq National Market(R) under
the trading symbol "SPOR." The following table sets forth the range of high and
low sale prices of the Common Stock, as reported by The Nasdaq Stock Market(R),
from July 1, 1998 through June 30, 2001. The prices set forth below reflect
interdealer quotations, without retail markups, markdowns or commissions, and
may not represent actual transactions.

<Table>
<Caption>
          FISCAL YEAR 2001            HIGH            LOW
          ----------------         -----------     ----------
<S>                                <C>             <C>
          First Quarter            $     4.750     $    3.250
          Second Quarter                 4.438          2.875
          Third Quarter                  3.563          2.750
          Fourth Quarter                 3.360          2.563

          FISCAL YEAR 2000
          ----------------
          First Quarter            $     5.125     $    4.000
          Second Quarter                 4.625          3.938
          Third Quarter                  5.000          3.938
          Fourth Quarter                 4.875          3.938

          FISCAL YEAR 1999
          ----------------
          First Quarter            $    13.750     $    9.500
          Second Quarter                11.000          8.000
          Third Quarter                 10.250          8.125
          Fourth Quarter                 8.625          3.938
</Table>

     As of May 18, 2001, Sport-Haley's common stock was held by approximately
930 shareholders. Holders of common stock are entitled to receive such dividends
as may be declared by Sport-Haley's Board of Directors. No dividends have been
paid on the common stock, and the Board of Directors does not anticipate that
dividends will be declared in the foreseeable future.

ITEM 6. SELECTED FINANCIAL DATA

     The following consolidated selected financial data should be read in
conjunction with the Consolidated Financial Statements and related Notes thereto
appearing elsewhere in this report on Form 10-K and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The consolidated
statements of operations data for each of the years in the three-year period
ended June 30, 2001 and the balance sheets data at June 30, 2001 and 2000 are
derived from the consolidated financial statements of Sport-Haley which have
been audited by Hein + Associates LLP, independent auditors, as indicated in
their report included herein. The selected financial data provided below is not
necessarily indicative of the future results of operations or financial
performance of Sport-Haley.

     As previously reported, the Company restated its financial statements for
fiscal years 1999 and 1998. The Company's beginning account balances as of July
1, 1997 were corrected for certain accounting errors attributable to periods
prior to July 1, 1997. The Company made an adjustment to reduce the retained
earnings balance as of July 1, 1997 by approximately $872,000. It has not been
possible to allocate the $872,000 to specific period in fiscal years prior to
July 1, 1997 or to calculate related accounting adjustments in those years, such
as tax effects. Therefore, Sport-Haley has not provided comparison financial
information for the fiscal

                                       10
<Page>

year ended June 30, 1997. The following consolidated selected financial
information for the fiscal years ended June 30, 1999 and 1998 are derived
from the restated financial statements for those years:

<Table>
<Caption>
                                                                                     FISCAL YEAR ENDED JUNE 30,
                                                                       -----------------------------------------------------
                                                                         2001           2000           1999           1998
                                                                       --------       --------       --------       --------
                                                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                                    <C>            <C>            <C>            <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Net sales .......................................................      $ 21,714       $ 23,139       $ 27,541       $ 30,449
Cost of goods sold ..............................................        15,141         15,879         18,833         19,363
Gross profit ....................................................         6,573          7,260          8,708         11,806
Selling, general and administrative expenses ....................         7,967          6,948          7,776          7,616
Impairment of fixed assets ......................................           254              0              0              0
Income (loss) from operations ...................................        (1,648)           312            932          3,470
Other income and expense, net ...................................           591            686            454            336
Income (loss) from operations
     before provision for income taxes ..........................        (1,057)           998          1,386          3,806
(Provision for) benefit from income taxes .......................           291           (344)          (810)        (1,404)
Income (loss) from continuing operations ........................          (766)           654            576          2,402
Income (loss) from discontinued operations ......................             0              0           (428)            77
Cumulative effect of change in accounting principle .............             0            361              0              0
Net income (loss) ...............................................          (766)         1,015            148          2,479

Income (loss) per common and equivalent shares outstanding:
    From continuing operations (basic) ..........................         (0.22)          0.17           0.13           0.52
    From discontinued operations (basic) ........................          0.00           0.00          (0.10)          0.02
    Cumulative effect of change in accounting
         principle (basic) ......................................          0.00           0.10           0.00           0.00
    Net income (loss) (basic) ...................................         (0.22)          0.27           0.03           0.54

    From continuing operations (diluted) ........................         (0.22)          0.17           0.13           0.51
    From discontinued operations (diluted) ......................          0.00           0.00          (0.10)          0.02
    Cumulative effect of change in accounting
         principle (diluted) ....................................          0.00           0.10           0.00           0.00
    Net income (loss) (diluted) .................................         (0.22)          0.27           0.03           0.53

Weighted average common and basic
     equivalent shares outstanding (basic) ......................         3,439          3,755          4,408          4,564

Weighted average common and basic
     equivalent shares outstanding (diluted) ....................         3,439          3,784          4,452          4,658
</Table>

<Table>
<Caption>
                                                                                               JUNE 30,
                                                                       -----------------------------------------------------
                                                                         2001           2000           1999           1998
                                                                       --------       --------       --------       --------
                                                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                                    <C>            <C>            <C>            <C>
CONSOLIDATED BALANCE SHEETS DATA:
Working capital .................................................      $ 22,581       $ 23,085       $ 24,969       $ 26,756
Total assets ....................................................        25,383         26,985         30,155         33,012
Long-term debt ..................................................             0              0              0              0
Total liabilities ...............................................         1,097          1,366          2,133          3,356
Shareholders' equity ............................................        24,286         25,619         28,022         29,595
Net book value per share of common stock ........................          7.42           7.40           6.58           6.56
</Table>


                                       11
<Page>

The following table summarizes selected quarterly financial information for each
of the quarterly periods in the fiscal years ended June 30, 2001 and 2000:

QUARTERLY FINANCIAL DATA - UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<Table>
<Caption>
                                                                              FISCAL QUARTER ENDED                      YEAR
                                                             ---------------------------------------------------        ENDED
                                                              SEP 30        DEC 31         MAR 31        JUN 30         JUN 30
                                                             --------      --------       --------      --------       --------
<S>                                                          <C>           <C>            <C>           <C>            <C>
YEAR ENDED JUNE 30, 2001:
Net sales .............................................      $  5,863      $  4,963       $  5,908      $  4,980       $ 21,714
Gross profit ..........................................         1,818         1,729          2,361           665          6,573
Income (loss) from continuing operations ..............            53           (23)           179          (975)          (766)
Cumulative effect of change in
    accounting principle ..............................            --            --             --            --
Net income (loss) .....................................      $     53      ($    23)      $    179      ($   975)      ($   766)

Income (loss) per share:
    Basic and diluted:
         Income (loss) from continuing operations .....      $   0.02      ($  0.01)      $   0.05      ($  0.28)      ($  0.22)
         Cumulative effect of change in
              accounting principle ....................            --            --             --            --             --
         Net income (loss) ............................      $   0.02      ($  0.01)      $   0.05      ($  0.28)      ($  0.22)

Weighted average shares outstanding
    Basic .............................................         3,460         3,460          3,444         3,391          3,439
    Diluted ...........................................         3,496         3,460          3,455         3,393          3,439

YEAR ENDED JUNE 30, 2000:
Net sales .............................................      $  5,236      $  4,726       $  7,837      $  5,340       $ 23,139
Gross profit ..........................................         1,758         1,659          2,574         1,269          7,260
Income (loss) from continuing operations ..............           204            96            228           126            654
Cumulative effect of change in
   accounting principle ...............................            --            --             --           361            361
Net income (loss) .....................................      $    204      $     96       $    228      $    487       $  1,015

Income (loss) per share:
    Basic and diluted:
         Income (loss) from continuing operations .....      $   0.05      $   0.03       $   0.06      $   0.03       $   0.17
         Cumulative effect of change in
              accounting principle ....................            --            --             --          0.10           0.10
         Net income (loss) ............................      $   0.05      $   0.03       $   0.06      $   0.13       $   0.27

Weighted average shares outstanding
    Basic .............................................         3,940         3,771          3,605         3,645          3,755
    Diluted ...........................................         3,956         3,775          3,658         3,701          3,784
</Table>


                                       12
<Page>

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

     This Report on Form 10-K contains certain forward-looking statements. When
used in this report, the words "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend," "believe" and similar expressions
are intended to identify forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 regarding events, conditions and financial trends
including, without limitation, business conditions and growth in the fashion
golf apparel market and the general economy, competitive factors, and price
pressures in the high-end golf-apparel market; inventory risks due to shifts in
market and/or price erosion of purchased apparel, raw fabric and trim; cost
controls; changes in product mix; and other risks or uncertainties detailed in
other Securities and Exchange Commission filings made by Sport-Haley. Such
statements are based on management's current expectations and are subject to
risks, uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect, the
actual plan of operations, business strategy, operating results and financial
position of Sport-Haley could differ materially from those expressed in, or
implied by, such forward-looking statements. Sport-Haley's business in general
is subject to certain risks including the following:

     o    The demand for Sport-Haley's products may decrease if the popularity
          of golf decreases or if other factors, such as a slowing economy or
          inclement weather, cause golfers not to patronize golf professional
          shops.

     o    Sport-Haley must continue to design apparel that is accepted by
          consumers as fashionable and stylish in order to continue to have
          market acceptance.

     o    Sport-Haley's sales are seasonal, and historically sales from July
          through December, Sport-Haley's first and second fiscal quarters, are
          weaker than sales from January through June, which are Sport-Haley's
          third and fourth fiscal quarters.

     o    The market for golf apparel is extremely competitive; price
          competition or industry consolidation could weaken Sport-Haley's
          competitive position.

     o    Sport-Haley maintains a significant level of finished goods
          inventories to support its sales volume and its corporate apparel
          program. Disposal of excess prior seasons' inventory is an ongoing
          part of operations, but a significant amount of sales at the lower
          margins dictated by inventory reduction may impair Sport-Haley's
          financial condition. Inventory write-downs may also affect its
          financial condition.

     o    Sport-Haley depends on timely delivery of finished garments from its
          suppliers. The loss of certain suppliers, and/or delays in receiving
          garments from suppliers caused by various factors, including labor
          shortages and transportation difficulties, could adversely affect
          Sport-Haley's ability to make timely delivery of finished garments to
          its customers.

     o    Sport-Haley's increased reliance on foreign suppliers amplified the
          risk that Sport-Haley's revenues might be adversely affected if a
          foreign shipment were lost. Sport-Haley maintains insurance for risk
          of loss relating to goods shipped from its foreign and domestic
          suppliers. However, the increased reliance on foreign suppliers
          increases the risk that Sport-Haley would be left with inadequate or
          unsatisfactory recourse should the goods received from the foreign
          suppliers be nonconforming.

                                       13
<Page>

     THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO.

RESULTS OF OPERATIONS

     The following table sets forth the percentage of net sales represented by
items included in or derived from Sport-Haley's statements of income for fiscal
2001 and 2000 and as previously restated for fiscal years 1999 and 1998:

<Table>
<Caption>
                                                                           FISCAL YEAR ENDED JUNE 30,
                                                                ---------------------------------------------
                                                                 2001         2000         1999         1998
                                                                ------       ------       ------       ------
<S>                                                             <C>          <C>          <C>          <C>
Net Sales ..............................................        100.0%       100.0%       100.0%       100.0%
Cost of goods sold .....................................         69.7         68.6         68.4         63.6
Gross profit ...........................................         30.3         31.4         31.6         36.4
Selling, general and administrative expenses ...........         36.7         30.0         28.2         25.0
Impairment of fixed assets .............................          1.2          0.0          0.0          0.0
Income from operations .................................         (7.6)         1.4          3.4         11.4
Other income and expenses, net .........................          2.7          2.9          1.6          1.1
Income from operations before provision for
   income taxes ........................................         (4.9)         4.3          5.0         12.5
(Provision for) benefit from income taxes ..............          1.4         (1.5)        (2.9)        (4.6)
Income (loss) from discontinued operations .............         --           --           (1.6)         0.2
Cumulative effect of change in accounting principle ....         --            1.6         --           --
Net income (loss) ......................................         (3.5)%        4.4%         0.5%         8.1%
</Table>

COMPARISON OF FISCAL YEARS ENDED JUNE 30, 2001 AND 2000. Net sales for the year
ended June 30, 2001 ("fiscal 2001") were approximately $21.7 million, a decrease
of approximately $1.4 million, or 6%, as compared with approximately $23.1
million for the fiscal year ended June 30, 2000 ("fiscal 2000"). The decrease is
attributable to several factors. Both a general slowing of the economy and
unusually inclement weather conditions in major geographic markets were
contributing factors to the decrease in net sales. Each of those circumstances
contributed to late season cancellations of customer orders for spring season
merchandise and a decrease in the number of golf shops that placed orders for
"basic" goods at the opening of the spring golf season. The net decrease in
sales is also consistent with the similar negative trend with respect to the
number of rounds of golf played at country club and resort courses. Per
published reports, the number of rounds played during fiscal 2001 were markedly
less than were played during fiscal 2000. Further, intense competition within
the golf apparel industry has continued throughout fiscal 2001. Companies with
greater financial resources and better name recognition than Sport-Haley, such
as Nike, have continued to intensify their individual marketing efforts within
the golf apparel industry. Because of the increased competition with "big name"
companies, Sport-Haley, through its network of independent sales
representatives, implemented marketing strategies to attract new customers to
the Haley(R) brand and to strengthen relationships with its long-time customers.

     For fiscal 2001, the men's and women's lines accounted for approximately
37% and 46% of total net sales, respectively. The Elements line accounted for
approximately 11% of total net sales. The remaining 6% was comprised of
embroidering, shipping and sales at the retail factory outlet store, which
Sport-Haley used to sell prior seasons' and other inventories at discounted
retail prices.

     For fiscal 2000, the men's and women's lines accounted for approximately
47% and 41% of total net sales, respectively. The Elements line accounted for
approximately 8% of total net sales. The remaining 4% was comprised of
embroidering, shipping and sales at the retail factory outlet store.

                                       14
<Page>

     Gross profit for fiscal 2001 was approximately $6.6 million, a decrease of
approximately $687,000 or 9%, as compared with approximately $7.3 million in
fiscal 2000. While the decrease in gross profit is consistent with the downward
trend in net sales, the decrease is not entirely due to such a downward trend.
Sport-Haley dramatically altered its business operations during fiscal 2001 in
order to place the Company in a better competitive position within the golf
apparel industry. Prior to fiscal 2001, Sport-Haley primarily manufactured its
finished goods inventories predominantly by utilizing United States vendors.
During fiscal 2001, Sport-Haley evolved from a company that manufactured its
finished goods inventories into a company that primarily purchases its
inventories from foreign suppliers. Because of the completion of its change in
operations at or near June 30, 2001, Sport-Haley incurred one-time charges to
cost of goods sold of approximately $872,000 during the fiscal quarter ended
June 30, 2001. Of the $872,000, raw materials inventories were deduced by
approximately $800,000 to reduce the value of those inventories to estimated
amounts realizable upon disposal sales of the fabric and trim items. This
revaluation of raw materials inventories directly related to the Company's exit
from the garment manufacturing industry as of June 30, 2001. The balance of the
$872,000 consisted of a charge of approximately $72,000 to reduce the valuation
of prior seasons' finished goods inventories to the lower of cost or market.
Management expects that their decisions to exit from the garment manufacturing
industry and to rely heavily on foreign suppliers for finished goods inventory
purchases will help Sport-Haley achieve higher gross margins in future reporting
periods.

     Gross margin for fiscal 2001 was approximately 30%, a decrease of
approximately 1%, from approximately 31% in fiscal 2000. As discussed above,
gross margin was negatively impacted in fiscal 2001 due to cost of goods sold
inventory write-down adjustments of approximately $872,000. Had the cost of
goods sold inventory write-down adjustments not been taken, gross margin
would have been higher in fiscal 2001 than the margin achieved in fiscal
2000. In both fiscal 2001 and fiscal 2000, gross margins were negatively
impacted by dispositions of excess and prior seasons' inventories ("closeout
inventories") at discounted sales prices. Disposition of closeout inventories
is common and recurring within the seasonal apparel business in general.
Sales of closeout inventories represented approximately 10% of Sport-Haley's
net sales in both fiscal 2001 and fiscal 2000 and generated approximately
$2.2 million in operating cash from the reduction of inventories in each of
the fiscal years. Because of dramatic changes in business operations that
include purchasing finished goods inventories from foreign suppliers, the
Company expects to achieve higher gross margins in fiscal 2002 and beyond
than were achieved in fiscal 2001.

     Selling, general and administrative expenses for fiscal 2001 were
approximately $8.0 million, an increase of approximately $1.1 million or 15%,
as compared with approximately $6.9 million for fiscal 2000. A significant
portion of the increase was attributable to additional accounting, legal and
other expenses of approximately $420,000 incurred in fiscal 2001 related to
the restating of the Company's financial statements for fiscal years 1999 and
1998 and the correction of material quarterly information for the quarters of
fiscal years 2000, 1999 and 1998. Another portion of the increase was related
to increased design costs. Sport-Haley retained the services of Donald W.
Jewell during fiscal 2001 to redesign and re-source the men's apparel
collections and to design and source apparel to be included in the Ben
Hogan(R) apparel collections. Sales commissions expense also attributed
approximately $100,000 to the increased selling, general and administrative
expenses. Commissions increased primarily because of the differences between
fiscal years 2001 and 2000 in the sales prices of current seasons' sales.
Other contributing factors to the increase in selling, general and
administrative expenses were increased general and health insurance premiums,
increased costs of shipping materials and the increased cost of natural gas
and electricity utilities. As a percentage of net sales, selling, general and
administrative expenses were 37% and 30% for fiscal years 2001 and 2000,
respectively.

     In August 2001, the Company formalized its decision to close its
subsidiary. Therefore, in the fourth quarter of fiscal 2001, Sport-Haley
recorded a charge of approximately $254,000 related to an impairment of fixed
assets. The impairment related to fixed assets used by the Subsidiary in its
manufacturing operations. Because of the significant increase in reliance on
purchasing finished and packaged apparel from foreign suppliers, Sport-Haley
closed the Subsidiary in August 2001. Since that time, substantially all of
the Subsidiary's assets have been sold at public auction. Future costs
associated with the closure of the Subsidiary, such as costs of transporting
raw fabrics and trim to other

                                       15
<Page>

locations, freight costs associated with transporting certain fixed assets to
the Denver facility and future rent, utilities and other costs associated
with the Four Oaks facility, cannot be reasonably quantified at this time.
The subsidiary leases its facilities from two of the subsidiary's former
minority shareholders with future minimum lease payments totalling
approximately $423,000 remaining. Since the subsidiary's lease is not
guaranteed by Sport-Haley, management believes that the Company may be able
to terminate this lease without a material effect on the Company's results of
operations. However, no assurance can be given that a material effect will
not occur.

     Total other income, net, for fiscal 2001 was approximately $591,000, a
decrease of approximately $95,000 or 14%, as compared with approximately
$686,000 for fiscal 2000. The decrease was primarily due to the difference
between fiscal years 2001 and 2000 in refunds of state income taxes and interest
on the refunds relating to certain expenditures recorded in prior years.

     Income (loss) from operations before provision for income taxes for fiscal
2001 was approximately ($1.1 million), a decrease of approximately $2.1 million,
or 206%, as compared with approximately $1.0 million for fiscal 2000. Income
(loss) from continuing operations for fiscal 2001 was approximately ($766,000),
a decrease of approximately $1.4 million, or 217%, as compared with
approximately $654,000 for fiscal 2000. The disparity between the decrease in
income (loss) from operations before provision for income taxes and the decrease
in income (loss) from operations arose because of the difference in effective
tax rates for financial statement, as opposed to tax, purposes. The effective
tax rate in any fiscal year can vary significantly from the effective tax rate
in another year due to differences between the recording of certain transactions
for financial statement versus tax purposes. Certain deductions recognized for
tax purposes may not be recorded for financial purposes in the same fiscal year,
and certain expenses recorded for financial statement purposes may not be
deductible for tax purposes in the same fiscal year. The disparity was primarily
caused by differences in recording net operating loss carrybacks. Federal income
tax law requires a recalculation of the net operating loss created in fiscal
2001, because the loss will be carried back to a tax year in which the Company
did not file a consolidated tax return. State income tax law requires that the
operating loss be carried forward. The Company recorded an increase in income
taxes receivable of approximately $250,000 relating to the fiscal 2001 loss from
continuing operations. The effective tax rate for fiscal 2001 was approximately
(28%) as compared with 35% for fiscal 2000.

     Net income (loss) for fiscal 2001 was approximately ($766,000), a decrease
of approximately $1.8 million), or 175%, as compared with approximately $1.0
million for fiscal 2000. The decrease was primarily attributable to the
combination of the factors discussed above combined with the approximate
$361,000 cumulative effect of change in accounting principle that was reported
for fiscal 2000.

COMPARISON OF FISCAL YEARS ENDED JUNE 30, 2000 AND 1999. Net sales for the year
ended June 30, 2000 were approximately $23.1 million, a decrease of
approximately $4.4 million, or 16%, as compared with approximately $27.5 million
for the fiscal year ended June 30, 1999 ("fiscal 1999"). The decrease was
attributable to several factors. Prior to June 30, 2000, competition within the
golf apparel industry increased significantly due mainly to several well-known
companies with strong financial resources which entered the sportswear market.
These companies' name recognitions allowed them to market golf apparel
effectively in the retail and catalog markets, which, in turn, adversely
impacted sales of golf apparel in the club and resort markets, where the Company
has primarily operated. Increased competition in the sportswear market
significantly increased competition among the companies competing in the resort
and club market. The increased competition resulted in downward sales price
pressures in the resort and club markets, which contributed to the downward
trend in the Company's net sales.

     The Company experienced a significant increase in the backlog of customer
orders near the end of fiscal 2000. The increase in backlog orders was primarily
attributable to the combination of the inability of several suppliers to timely
deliver component materials to the Subsidiary and the inability of two suppliers
to timely deliver apparel as finished goods to the Company's distribution
facility. As a result, the Company lost approximately $1.5 million in gross
sales due to the combination of late shipments and canceled customer orders at
the end of fiscal 2000. The company sells fashion garments in multiple groups
consisting of mixes of items manufactured either by the Subsidiary or other
finished goods suppliers. Because customers order apparel by specific fashion
groups and the Company is dependent upon more than one supplier to deliver
garments in any one fashion group, it is impossible to quantify how the
inability of any individual supplier to deliver goods on a timely basis directly
relates to the loss of sales due to the late shipment to or canceled orders

                                       16
<Page>

by any one customer. In order to mitigate the non-timely shipment and
cancellation of customer orders, the Company implemented controls to monitor its
Subsidiary and suppliers to ensure more timely receipt of component materials
and apparel as finished goods inventories. Specific controls included
terminating business relationships with poorly performing suppliers, increasing
the total number of suppliers used and establishing business relationships with
a greater number of offshore suppliers. Adding suppliers was expected to
minimize the detrimental effect of late delivery by one or more suppliers,
although there was no assurance of that result. The increased use of offshore
suppliers was expected to increase gross margins achieved in future periods.

     For fiscal 2000, the men's and women's lines accounted for approximately
47% and 41% of total net sales, respectively. The Elements line accounted for
approximately 8% of total net sales. The remaining 4% was comprised of
embroidering, shipping and sales at the retail factory outlet store, which
Sport-Haley used to sell prior seasons' and other inventories at discounted
retail prices.

     For fiscal 1999, the men's and women's lines accounted for approximately
46% and 40% of total net sales, respectively. The Elements line accounted for
approximately 8% of total net sales, and the headwear line accounted for
approximately 2%. The remaining 4% of net sales was comprised of embroidering,
shipping and sales at the retail factory outlet store.

     Gross profit for fiscal 2000 was approximately $7.3 million, a decrease of
approximately $1.4 million or 17%, as compared with approximately $8.7 million
in fiscal 1999. The decrease was consistent with the corresponding decline in
net sales in fiscal 2000.

     Gross margin for fiscal 2000 was approximately 31%, a decrease of
approximately 1%, from approximately 32% in fiscal 1999. The decrease was
chiefly attributable to proportionately higher incentive sales discounts offered
in fiscal 2000 as compared with fiscal 1999. In both fiscal 2000 and 1999, gross
margins were negatively impacted by dispositions of excess and prior seasons'
inventories at discounted sales prices. Disposition of closeout inventories were
common within the seasonal apparel business in general. An increase in closeout
inventories was indicative of increased competition within the club and resort
markets and other factors. Sales of closeout inventories accounted for
approximately 10% of net sales in both fiscal 2000 and 1999. By comparison, in
fiscal 1998, sales of closeout inventories accounted for approximately 2% of net
sales. The Company estimated that sales of closeout inventories at reduced sales
prices negatively impacted gross margins by approximately 6% in both fiscal 2000
and 1999, as compared with the gross margin achieved in fiscal 1998. However,
the Company generated approximately $2.2 million in operating cash from the
reduction of inventories in fiscal 2000.

     Selling, general and administrative expenses for fiscal 2000 were
approximately $6.9 million, a reduction of approximately $828,000, or 11%, as
compared with approximately $7.8 million for fiscal 1999. Selling expenses
decreased in fiscal 2000 primarily due to a reduction in sales commissions
corresponding to a decreased sales volume. Sales commissions for fiscal 2000
were approximately $1.6 million, a decrease of approximately $400,000, or 20%,
as compared with approximately $2.0 million for fiscal 1999. As a percentage of
net sales, sales commissions were approximately 7% for both fiscal 2000 and
1999. The Company implemented certain cost-containment measures during fiscal
2000 that were specifically designed to reduce general and administrative
expenses. Other than advertising expenses, which increased by approximately 2%
due to increased marketing efforts, general and administrative costs generally
decreased for fiscal 2000, as compared with fiscal 1999, primarily because of a
reduction in the number of employees of the Company. Salaries and related
payroll taxes for fiscal 2000 were approximately $3.0 million, a decrease of
approximately $600,000, or 12%, as compared with approximately $3.6 million for
fiscal 1999. While total selling, general and administrative expenses decreased
for fiscal 2000 as compared with fiscal 1999, as a percentage of net sales,
selling, general and administrative expenses increased for fiscal 2000, as
compared with fiscal 1999. Selling, general and administrative expenses as a
percentage of net sales for fiscal 2000 were approximately 30%, an increase of
approximately 2%, as compared with 28% for fiscal 1999. The increase was mainly
attributable to lower net sales in fiscal 2000 over which fixed costs were
allocated.

                                       17
<Page>

     Total other income for fiscal 2000 was approximately $686,000, an increase
of approximately $232,000, or 51%, as compared with approximately $454,000 for
fiscal 1999. The increase was primarily due to refunds of state income taxes and
interest earned on the refunds relating to certain expenditures in prior years.

     Income from operations before provision for income taxes for fiscal 2000
was approximately $998,000, a decrease of approximately $388,000, or 28%, as
compared with approximately $1.4 million for fiscal 1999. Income from continuing
operations for fiscal 2000 was approximately $654,000, an increase of
approximately $78,000, or 14%, as compared with approximately $576,000 for
fiscal 1999. The disparity between the decrease in income from operations before
provision for income taxes and the increase in income from continuing operations
arose because of the difference in effective tax rates for financial statement,
as opposed to income tax, purposes. The effective tax rate in any fiscal year
can vary significantly from the effective tax rate in another year due to
differences between the recording of certain transactions for financial
statement versus tax purposes. Certain deductions recognized for tax purposes
may not be expensed for financial statement purposes in the same fiscal year,
and certain expenses recorded for financial statement purposes may not be
deductible for tax purposes in the same fiscal year. The disparity was primarily
caused by differences in the recording of transactions relating to accounting
for the equity interest in the loss of the Subsidiary that was not consolidated
for tax purposes in fiscal 1999 and changes in deferred tax valuation allowances
related to the Subsidiary. The effective tax rate for fiscal 2000 was
approximately 35% as compared with approximately 79% for fiscal 1999.

     Sport-Haley adopted Financial Accounting Standards Board Interpretation No.
44 ("FIN 44") in fiscal 2000. Because of adopting that standard, the Company
changed its accounting for stock options issued to non-employee directors. The
change resulted in a cumulative effect adjustment of $361,000, net of taxes, in
fiscal 2000.

     Net income for fiscal 2000 was approximately $1.0 million, an increase of
approximately $867,000, or 586%, as compared with approximately $148,000 for
fiscal 1999. The increase was attributable primarily to the cumulative effect of
changing the accounting method for stock-based compensation of non-employee
directors in fiscal 2000, in accordance with adopting FIN 44, and the loss
recognized on the discontinuance of headwear operations in fiscal 1999.

LIQUIDITY AND CAPITAL RESOURCES

     Historically, Sport-Haley has financed its operations through a combination
of revenue from operations and the public sale of equity. Sport-Haley intends to
rely on cash generated from operations to finance its working capital
requirements for at least the next 12 months. To the extent such amounts are
insufficient to finance Sport-Haley's working capital requirements or if working
capital requirements are greater than estimated, Sport-Haley may take down
borrowings under its revolving line of credit.

     Net cash provided by operating activities totaled approximately $438,000,
$4.584 million, and $4.819 million for fiscal years 2001, 2000, and 1999,
respectively. The primary components of adjustments to reconcile net income to
cash provided by operating activities were changes between fiscal years relating
to inventories, accounts receivable, prepaid expenses, income taxes receivable,
accounts payable, and accrued commissions and other expenses.

     o    Inventories used cash of approximately $377,000 in fiscal 2001,
          provided operating cash of approximately $2.228 million in fiscal
          2000, and provided operating cash of approximately $4.589 million in
          fiscal 1999. Inventories decreased from approximately $9.659 million
          at June 30, 2000 to approximately $9.164 million at June 30, 2001.

     o    Accounts receivable used operating cash of approximately $478,000 in
          fiscal 2001, provided operating cash of approximately $472,000 in
          fiscal 2000, and provided operating cash of approximately $1.061

                                       18
<Page>

          million in fiscal 1999. Accounts receivable net of allowances
          increased from approximately $4.795 million at June 30, 2000 to
          approximately $5.208 million at June 30, 2001.

     o    Prepaid expenses and other provided operating cash of approximately
          $224,000 in fiscal 2001, used operating cash of approximately $404,000
          in fiscal 2000, and provided operating cash of approximately $75,000
          in fiscal 1999. Prepaid expenses and other decreased from
          approximately $669,000 at June 30, 2000 to approximately $445,000 at
          June 30, 2001.

     o    Income taxes receivable provided operating cash of approximately
          $61,000 in fiscal 2001 and provided operating cash of approximately
          $498,000 in fiscal 2000. Income taxes receivable decreased from
          approximately $449,000 at June 30, 2000 to $388,000 at June 30, 2001.

     o    Accounts payable used operating cash of approximately $394,000 in
          fiscal 2001, provided operating cash of approximately $59,000 in
          fiscal 2000, and used operating cash of approximately $336,000 in
          fiscal 1999. Accounts payable decreased from approximately $848,000 at
          June 30, 2000 to approximately $454,000 at June 30, 2001.

     o    Accrued commission and other expenses provided operating cash of
          approximately $125,000 in fiscal 2001, used operating cash of
          approximately $232,000 in fiscal 2000, and used operating cash of
          approximately $1.015 million in fiscal 1999. Accrued commissions and
          other expenses increased from approximately $512,000 at June 30, 2000
          to approximately $643,000 at June 30, 2001.

     Working capital requirements are expected to remain relatively constant.
Working capital was approximately $22.581 million at June 30, 2001 and
approximately $23.085 million at June 30, 2000. Cash and cash equivalents
totaled approximately $4.413 million and approximately $6.676 million at June
30, 2001 and 2000, respectively.

     Net cash provided by (used in) investing activities totaled approximately
($2.114 million), ($2.642 million), and $1.218 million for fiscal years 2001,
2000, and 1999, respectively. The primary components of net cash provided by
(used in) investing activities were maturities (purchases) of marketable
securities and purchases of fixed assets.

     o    Maturities (purchases) of marketable securities used investing
          activities cash of approximately $1.931 million in fiscal 2001, used
          investing activities cash of approximately $1.967 million in fiscal
          2000, and provided investing activities cash of approximately $1.996
          million in fiscal 1999. Marketable securities increased from $1.967
          million at June 30, 2000 to approximately $3.898 million at June 30,
          2001.

     o    Purchases of fixed assets used investing activities cash of
          approximately $184,000, $679,000, and $803,000 in fiscal 2001, 2000,
          and 1999, respectively. Property and equipment, at cost, increased
          from approximately $4.552 million at June 30, 2000 to approximately
          $4.733 million at June 30, 2001.

     The Company had no long-term debt at June 30, 2001 or 2000. Since April
1994, Sport-Haley has maintained a revolving line of credit with the same bank.
The revolving line of credit agreement, which has been renewed through November
5, 2001, provides for interest at 1/2% below the banks prime rate. The revolving
line of credit agreement is divided into two parts, one of which provides for a
maximum loan amount of $9.0 million to Sport-Haley secured by a lien on
substantially all of Sport-Haley's assets and the other of which provides for a
maximum loan amount of $1.0 million to the Subsidiary secured by a lien on
substantially all of the Subsidiary's assets and guaranteed by Sport-Haley.
Sport-Haley generally maintains its line of credit solely to facilitate the
issuance of letters of credit for inventory purchases from offshore suppliers
and to fund

                                       19
<Page>

any temporary working capital needs. Sport-Haley has no outstanding borrowings
under the line of credit at June 30, 2001.

     Sport-Haley, in the ordinary course of its business, enters into letters of
credit arrangements with a bank to facilitate the purchase of finished and
packaged inventory and/or raw fabric from various offshore suppliers. As of June
30, 2001, the Company had outstanding letters of credit totaling approximately
$659,000, which related to commitments to purchase finished goods inventories
from various suppliers. Amounts outstanding on letters of credit reduce the
amount available for borrowing under the lines of credit.

     Historically, gross proceeds received by Sport-Haley from the exercise of
stock options and warrants have fluctuated significantly from year to year.
Sport-Haley realized proceeds of approximately $0 in fiscal 2001, $32,000 in
fiscal 2000, and $206,000 during fiscal 1999.

     Since December 1994, the Board of Directors has authorized management to
repurchase shares of Sport-Haley's Common Stock, and an aggregate of 1,684,400
shares had been repurchased as of June 30, 2001 at an aggregate cost of
approximately $10.8 million. In fiscal 2001 and 2000, Sport-Haley repurchased
187,400 and 810,000 shares at a cost of approximately $587,000 and $3.3 million,
respectively. The Board's authorization is based on its belief that
Sport-Haley's Common Stock is underpriced at times given its earnings, working
capital, liquidity, assets, book value and future prospects. The shares may be
repurchased from time to time in open market, through block purchases or in
privately negotiated transactions depending upon market conditions and other
factors. Sport-Haley has no commitment or obligation to purchase all or any
portion of the authorized shares. All shares purchased are canceled and returned
to the status of authorized but unissued common stock.

     Most of Sport-Haley's purchases from offshore manufacturers and sales to
foreign distributors are U.S. Dollar denominated and, consequently, Sport-Haley
has no material currency exchange risk. Sport-Haley is not currently using
derivative financial instruments to reduce its exposure to changes in foreign
exchange rates in connection with sales to its Canadian distributor. To the
extent that its receivables were denominated in Canadian currency that are not
hedged, Sport-Haley would be subject to foreign currency transaction gains and
losses.

     Management believes that inflation has not materially affected the results
of operations during the three most recent fiscal years.

NEW ACCOUNTING STANDARDS

     In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin Number 101 ("SAB 101"), entitled, "Revenue Recognition in
Financial Statements." SAB 101 established guidelines in applying generally
accepted accounting principles to the recognition of revenue in financial
statements based on the following four criteria: 1) persuasive evidence of an
arrangement exists; 2) delivery has occurred or services have been rendered; 3)
the seller's price to the buyer is fixed or determinable; and, 4) collectibility
is reasonably assured. SAB 101, as amended by SAB 101B, was effective no later
than the fourth fiscal quarter of the Company's fiscal year ending year 2001.
The adoption of SAB 101 had no material effect on the Company's financial
position or its results of operations.

     In June 2001, the Financial Accounting Standards Board (the "FASB") issued
Statements of Financial Accounting Standards No. 141 "Business Combinations"
("SFAS 141") and No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142").
SFAS 141 requires all business combinations initiated after June 30, 2001 to be
accounted for under the purchase method. For all business combinations for which
the date of acquisition is after June 30, 2001, SFAS 141 also establishes
specific criteria for the recognition of intangible assets separately from
goodwill and requires unallocated negative goodwill to be written off
immediately as extraordinary gain, rather than to be deferred and amortized.
SFAS 142 changes the accounting for goodwill and other intangible assets after
an acquisition. The most significant changes made by SFAS 142 are: 1)

                                       20
<Page>

goodwill and intangible assets with indefinite lives will no longer be
amortized; 2) goodwill and intangible assets with indefinite lives must be
tested for impairment at least annually; and, 3) the amortization period for
intangible assets with finite lives will no longer be limited to forty years.
The adoptions of SFAS 141 and SFAS 142 are not expected to have a material
effect on the Company's financial position as a result of operations.

     In June 2001, the FASB issued Statements of Financial Accounting Standards
No. 143 ("SFAS 143"). SFAS 143 establishes accounting requirements for
retirement obligations associated with intangible long-lived assets, including:
1) the timing of the liability recognition; 2) initial measurement of the
liability; 3) allocation of asset retirement cost to expense; 4) subsequent
measurement of the liability; and, 5) financial statement disclosures. SFAS 143
requires that an asset retirement cost should be capitalized as part of the cost
of the related long-lived asset and subsequently allocated to expense using a
systematic and rational method. The Company will adopt the statement effective
January 1, 2003, as required. The transition adjustment resulting from the
adoption of SFAS 143 will be reported as a cumulative effect of a change in
accounting principle. At this time, the Company cannot reasonably estimate the
effects of the adoption of SFAS 143 on either its financial position, results of
operation or cash flows.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                      INDEX

<Table>
<Caption>
                                                                              PAGE
<S>                                                                           <C>
Report of Independent Certified Public Accountants ......................      F-2

Consolidated Balance Sheets .............................................      F-3

Consolidated Statements of Income and Comprehensive Income ..............      F-4

Consolidated Statement of Shareholders' Equity ..........................      F-5

Consolidated Statements of Cash Flows ...................................      F-6

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

Schedule II - Valuation and Qualifying Accounts .........................      F-28
</Table>

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

     As previously reported, as of July 13, 2000, at the recommendation of the
Audit Committee, the Company terminated the services of its former accountants,
Levine, Hughes & Mithuen, Inc. The reports of Levine, Hughes & Mithuen, Inc. on
the Company's financial statements for the years ending June 30, 1999 and 1998
did not contain any adverse opinions or disclaimers of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
At the advice of the Audit Committee, the Company retained the services of Hein
+ Associates LLP on or about July 13, 2000. During the two years preceding the
termination of Levine, Hughes & Mithuen, Inc., there were no disagreements with
the Company's former accountants on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope of procedure which
would have caused the former accountants to make reference to such disagreements
in connection with their report.

                                       21
<Page>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

<Table>
<Caption>
        NAME                       AGE                POSITION
        ----                       ---                --------
<S>                                <C>       <C>
Robert G. Tomlinson                60        Chairman of the Board and
                                             Chief Executive Officer

Kevin M. Tomlinson                 41        Chief Operating Officer, Executive Vice
                                             President - Operations and Director

Robert W. Haley                    56        President and Director

Patrick W. Hurley(3)               49        Chief Financial Officer, Secretary,
                                             Treasurer and Controller

Donald W. Jewell(5)                50        Senior Vice President

Catherine B. Blair                 50        Vice President - Merchandising/Design

William L. Blair(4)                59        Vice President - Corporate Sales

James A. Saxon(6)                  46        Vice President - Sales, Special Markets
                                             and Brands

Mark J. Stevenson(1)(2)            63        Director

Ronald J. Norick(1)(2)             60        Director

James H. Everest(1)(2)             53        Director
</Table>

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

(1)  Member of the Audit Committee.

(2)  Member of the Compensation Committee.

(3)  Mr. Hurley was appointed Chief Financial Officer in December 2000.

(4)  Mr. Blair resigned from his posisition as Vice President - Corporate Sales
     on December 22, 2000.

(5)  Mr. Jewell was appointed Senior Vice President on February 1, 2001.

(6)  Mr. Saxon was appointed Vice President - Sales, Special Markets and Brands
     on June 1, 2001.

     Officers are appointed by and serve at the discretion of the Board of
Directors except in those instances that officers are employed under employment
agreements. Each director holds office until the next annual meeting of
shareholders or until a successor has been duly elected and qualified. All of
Sport-Haley's officers devote full-time to Sport-Haley's business and affairs.

     ROBERT G. TOMLINSON has served as Chairman of the Board and Chief Executive
Officer of Sport-Haley since October 1992. Since March 1998, he has also served
as a director of the Subsidiary. Prior to joining Sport-Haley, Mr. Tomlinson was
a partner in Tomlinson Enterprises, a real estate investment partnership, and
also engaged in management of his personal investment portfolio. Mr. Tomlinson
is the father of Kevin Tomlinson, the Chief Operating Officer and Executive Vice
President.

     KEVIN M. TOMLINSON served as Vice President of Operations from December
1997 until January 1999, when he became the Chief Operating Officer and
Executive Vice President-Operations. In September 1999, he became a director and
vice-president of the Subsidiary. From 1992 until joining Sport-Haley, Mr.
Tomlinson was employed by Nu-Kote International, Inc., an office products
manufacturer and distributor, in capacities

                                       22
<Page>

including vice president of product marketing, vice president of marketing, vice
president of global procurement and vice president of retail sales. Mr.
Tomlinson is the son of Robert G. Tomlinson, the Chairman and Chief Executive
Officer of Sport-Haley.

     ROBERT W. HALEY has served as President and a director of Sport-Haley since
May 1996. From January 1992 until his appointment to such positions, he served
as Vice President of Marketing of Sport-Haley. Prior to joining Sport-Haley, Mr.
Haley served in various marketing positions for golf apparel manufacturers. Mr.
Haley is a Class A PGA professional golfer with more than 25 years experience in
the golf industry.

     PATRICK W. HURLEY served as Secretary, Treasurer and Controller since
November 1999 and as Chief Financial Officer since December 2000. Prior to
joining Sport-Haley, he was employed as a Senior Staff Accountant at Saltzman
Hamma Nelson Massaro LLP, Denver, Colorado, where among other things, he
supervised or participated in the preparation of audited and unaudited financial
statements and income tax returns, and provided advice and training for business
clients regarding selection and implementation of accounting systems and
procedures. Mr. Hurley is a certified public accountant and received a Bachelor
of Science in Accounting in 1991. He is a member of the American Institute of
Certified Public Accountants and the Colorado Society of Certified Public
Accountants.

     DONALD W. JEWELL has served as Senior Vice President of Sport-Haley since
February 1, 2001. From 1996 until joining Sport-Haley, Mr. Jewell was the
founder, president and director of Jewell Apparel Group, a Canadian distributor
of premium and mid-priced men's golf apparel. Mr. Jewell began designing,
sourcing and marketing golf apparel in 1993 while serving as the president and
chief executive officer of Jewell-Rung, positions that he held from 1980 to
1996.

     CATHERINE B. BLAIR has served as Vice President of Merchandising/Design
since her appointment in May 1996. Ms. Blair has been part of Sport-Haley's
design team since 1992, and was appointed Director of Design in 1995. Prior to
joining Sport-Haley, she was a designer for a golfwear company and also worked
as a freelance designer for companies such as Macy's, Bloomingdale's, Ann Taylor
and The Gap.

     WILLIAM L. BLAIR served as Vice President of Corporate Sales beginning in
March 1998. Mr. Blair resigned as an officer of the Company on December 22,
2000. From September 1996 until joining Sport-Haley, Mr. Blair was director of
marketing for the Activewear Division of Fruit of the Loom. From 1992 to 1996,
Mr. Blair was a director of and consultant to Osterman API, Inc., a promotional
product company.

     JAMES A. SAXON has served as Vice President - Sales, Special Markets and
Brands since June 1, 2001. From August 2000 until joining Sport-Haley, Mr. Saxon
was vice president of sales and marketing for American Design Studios, Inc. From
July 1998 to August 2000, Mr. Saxon was vice president and chief operating
officer for Jewell Apparel Group. From September 1994 to December 1997, Mr.
Saxon was the president and chief operating officer for Montecito Sportswear
Corp.

     MARK J. STEVENSON has been a director of Sport-Haley since November 1993.
From 1994 to 1998, Mr. Stevenson held the positions of president and chief
executive officer of Electronic Manufacturing Systems, Longmont, Colorado, a
contract manufacturer serving the computer, data storage, telecommunications and
medical equipment industries. Electronic Manufacturing Systems merged with RSP
in 1998 to form E-M-Solutions. Since the merger Mr. Stevenson has served
E-M-Solutions as the executive chairman of the board. E-M-Solutions has signed a
definitive agreement to be acquired by Sanmina, a transaction that is scheduled
to close prior to December 31, 2001.

     RONALD J. NORICK has been a director of Sport-Haley since November 1993.
From April 1987 until April 1998, Mr. Norick served as the elected Mayor of the
City of Oklahoma City, Oklahoma. From 1960 to 1992, Mr. Norick served in various
capacities, including serving as president from 1981 to 1992, of a closely-held
printing company, which was acquired by Reynolds & Reynolds in June 1992. Mr.
Norick serves on a number of civic, community, educational, corporate and public
boards, commissions and committees. Mr.

                                       23
<Page>

Norick also serves as manager of Norick Investments Company LLC, a family-owned
limited liability company, which is engaged in investments.

     JAMES H. EVEREST has been a director of Sport-Haley since November 1993.
Mr. Everest has served as president of the Jean I. Everest Foundation, Oklahoma
City, Oklahoma, since 1991. The Jean I. Everest Foundation was organized by Mr.
Everest's father to conduct charitable activities. Mr. Everest has been the
managing partner of Everest Brothers, a general partnership active in oil and
gas exploration and development, since 1984. Mr. Everest has also been engaged
in managing his personal investments since 1984. Mr. Everest is a member of the
Oklahoma Bar Association and the American Bar Association and serves in a number
of capacities for various civic and community organizations.

BOARD COMMITTEES

     The Board of Directors has delegated certain of its authority to a
Compensation Committee and an Audit Committee. The Compensation Committee is
composed of Messrs. Stevenson, Norick and Everest. The Audit Committee is also
composed of Messrs. Norick, Stevenson and Everest. No member of either committee
is a current or former officer or employee of Sport-Haley.

     The Compensation Committee held one meeting in fiscal 2001. The primary
function of the Compensation Committee is to review and make recommendations to
the Board with respect to the compensation, including bonuses, of Sport-Haley's
officers and to administer Sport-Haley's Option Plan. See "Compensation
Committee Report" included in Item 11 below. All of the committee members
attended the meeting held during fiscal 2001.

     The Audit Committee held two formal meetings during fiscal 2001. The
function of the Audit Committee is to review and approve the scope of audit
procedures employed by Sport-Haley's independent auditors, to review and approve
the audit reports rendered by Sport-Haley's independent auditors and to approve
the audit fee charged by the independent auditors. The Audit Committee reports
to the Board of Directors with respect to such matters and recommends the
selection of independent auditors. All of the committee members attended the
meeting held during fiscal 2001.

     The Board of Directors authorized the hiring of a consultant to assist the
Audit Committee with the review of financial statements in accordance with
recently promulgated regulations of the Securities and Exchange Commission. The
consultant attended the Audit Committee meeting held during fiscal 2001.

     In fiscal 2001, the Board of Directors held three formal meetings. Messrs.
Haley and Everest attended two of the three meetings and each other director
attended all board and committee meetings held during fiscal 2001.

ITEM 11. EXECUTIVE COMPENSATION

     SUMMARY COMPENSATION TABLE. The following table sets forth the annual and
long-term compensation for services in all capacities to Sport-Haley for the
three fiscal years ended June 30, 2001 of Robert G. Tomlinson, Chief Executive
Officer, Kevin M. Tomlinson, Chief Operating Officer, Robert W. Haley,
President, and William L. Blair, Vice President-Corporate Sales, the only
executive officers of Sport-Haley whose total annual salary and bonus exceeded
$100,000 during the year ended June 30, 2001 (the "Named Officers").

                                       24
<Page>

<Table>
<Caption>
                                                                                LONG TERM COMPENSATION
                                                                                        AWARDS
                                                       ANNUAL COMPENSATION      ----------------------
                                             FISCAL    --------------------     SECURITIES UNDERLYING       ALL OTHER
NAME AND PRINCIPAL POSITION                   YEAR       SALARY       BONUS        OPTIONS/SARS(#)        COMPENSATION
---------------------------                  ------    ----------     -----     ----------------------    -------------
<S>                                          <C>       <C>            <C>       <C>                       <C>
Robert G. Tomlinson,                           2001    $ 170,000      $ -0-             $ -0-              $  1,301 (1)
 Chairman of the Board and                     2000      176,539        -0-               -0-                 2,213 (1)
 Chief Executive Officer                       1999      202,692        -0-               -0-                 1,022 (1)

Kevin M. Tomlinson,
  Chief Operating Officer, Executive           2001      140,000        -0-               -0-                 1,255 (1)
  Vice President - Operations and              2000      129,885        -0-               -0-                 1,278 (1)
  Director

Robert W. Haley,                               2001      150,000        -0-               -0-                   124 (2)
 President                                     2000      155,769        -0-               -0-                 1,000 (1)
                                               1999      171,154        -0-               -0-                 1,022 (1)

William L. Blair,                              2001      140,385 (3)    -0-               -0-                   124 (2)
 Vice President-Corporate Sales                2000      124,154        -0-               -0-                   135 (2)
                                               1999      114,461        -0-               -0-                   138 (2)
</Table>

(1)  Comprised of contributions by Sport-Haley to the Named Officer's 401(k)
     account and term life insurance premiums.

(2)  Comprised solely of term life insurance premiums.

(3)  Mr. Blair was employed by Sport-Haley as an executive officer until January
     2001.

FISCAL YEAR-END OPTIONS/OPTION VALUES TABLE.

<Table>
<Caption>
                                                            NUMBER OF SECURITIES UNDER-          VALUE OF UNEXERCISED IN-
                                                            LYING UNEXERCISED OPTIONS/          THE-MONEY(1) OPTIONS/SARS
                                 SHARES                       SARS AT FISCAL YEAR-END             AT FISCAL YEAR-END(2)
                                ACQUIRED        VALUE       ----------------------------       ----------------------------
NAME                          ON EXERCISE      REALIZED     EXERCISABLE    UNEXERCISABLE       EXERCISABLE    UNEXERCISABLE
----                          -----------      --------     -----------    -------------       -----------    -------------
<S>                           <C>              <C>          <C>            <C>                 <C>            <C>
Robert G. Tomlinson                -0-           -0-           68,333          16,667              -0-            -0-
Kevin M. Tomlinson                 -0-           -0-           53,333          16,667              -0-            -0-
Robert W. Haley                    -0-           -0-           58,334          16,667              -0-            -0-
William L. Blair (3)               -0-           -0-              -0-             -0-              -0-            -0-
</Table>

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

(1)  Options are "in the money" if the fair market value of the underlying
     securities exceeds the exercise or base price of the option.

(2)  The dollar values are calculated by determining the difference between the
     fair market value of the securities underlying the options at fiscal year
     end and the exercise or base price of the options. The closing bid price
     for the Common Stock was $3.000 on June 30, 2001.

(3)  Mr. Blair resigned as an officer of Sport-Haley on December 22, 2000. He
     surrendered his outstanding options, which were canceled, on or about
     January 31, 2001.

     No employee of Sport-Haley receives any additional compensation for his
services as a director. Non-management directors receive no salary for their
services as such, but may receive a fee of $250 per meeting attended. The Board
of Directors has also authorized payment of reasonable travel and other
out-of-pocket expenses incurred by non-management directors in attending
meetings of the Board of Directors. During fiscal 2001, no non-employee
directors were granted any options.

     EMPLOYMENT AGREEMENTS. Effective January 1, 1997, Sport-Haley entered into
an employment agreement with Mr. Robert G. Tomlinson. The agreement requires
that he devote his full business time to

                                       25
<Page>

Sport-Haley as Chief Executive Officer and/or Chairman of the Board at an annual
salary of $200,000, be provided an automobile and such bonuses as awarded by the
Board of Directors. The term of the employment agreement extends from January 1,
1997 to December 31, 1999, subject to automatic one (1) year extensions at the
end of each year. Mr. Tomlinson has the option to convert the employment
agreement to a consulting agreement in the event of a change in control of
Sport-Haley or upon his resignation. Subject to the right of Sport-Haley to
terminate the consulting agreement for cause, Mr. Tomlinson is entitled to serve
as a consultant to Sport-Haley for the duration of the agreement and to continue
to receive compensation in the amount of 60% of his annual salary. If Mr.
Tomlinson terminates the agreement with "cause" (as defined in the agreement),
or Sport-Haley terminates the agreement for other than "cause" (as defined in
the agreement), or if there is a change in control of Sport-Haley or if Mr.
Tomlinson dies, Mr. Tomlinson or his estate, as applicable, is entitled to
receive severance compensation for three years from the date of termination in
an amount equal to his annual salary and bonus payments during the preceding 12
months. During the time he is receiving such severance compensation, he is
entitled to participate in all employee benefit plans, at Sport-Haley's expense.
The change of control provisions and death benefits entitle Mr. Tomlinson or his
estate, as applicable, to receive such amount in a lump sum. If Mr. Tomlinson
becomes totally disabled during the term of the agreement, his full salary will
be continued for one year from the date of disability. If termination is for any
reason other than by Sport-Haley with cause, all options previously granted
shall become fully vested on the date of termination. The agreement contains a
non-competition provision for one-year following termination.

     Effective December 1, 1999, Sport-Haley entered into an employment
agreement with Mr. Kevin Tomlinson. The agreement requires that he devote his
full business time to Sport-Haley as Chief Operating Officer and Executive Vice
President-Operations at an annual salary of $140,000 per year and such bonuses
as awarded by the Board of Directors. The term of the employment agreement
extends from December 1, 1999 to December 1, 2002, subject to automatic one (1)
year extensions at the end of each year. If Sport-Haley terminates the agreement
for other than "cause" (as defined in the agreement), Mr. Tomlinson is entitled
to receive severance compensation equal to 12 months salary and bonus and
incentive payments over the last 12 months. During the time he is receiving any
such severance compensation, he is eligible to participate in all employee
benefit plans, at Sport-Haley's expense. If there is a non-negotiated change in
control of Sport-Haley, he is entitled to lump sum severance compensation equal
to three times his annual salary and bonus payment during the preceding 12
months. If Mr. Tomlinson becomes disabled during the term of the agreement, his
full salary shall be continued for one year from the date of disability. If
termination is for any reason other than by Sport-Haley with cause, all options
previously granted shall become fully vested on the date of termination. The
agreement contains a non-competition provision for one-year following
termination.

     Effective January 1, 1997, Sport-Haley entered into an employment agreement
with Mr. Robert W. Haley. The agreement requires that he devote his full
business time to Sport-Haley as President or Senior Executive Officer at an
annual salary of $160,000 and such bonuses as awarded by the Board of Directors.
The employment agreement extended through December 31, 1998 and has subsequently
automatically renewed for additional one-year terms. If Sport-Haley terminates
the agreement for other than "cause" (as defined in the agreement), Mr. Haley is
entitled to receive severance compensation for one year from the date of
termination in an amount equal to his annual salary and bonus payment during the
preceding 12 months. If Mr. Haley terminates the agreement with or without
cause, Mr. Haley is entitled to receive severance compensation for one year in
an amount equal to 60% of his annual salary and bonus payment during the
preceding 12 months. During the time he is receiving any such severance
compensation, he is eligible to participate in all employee benefit plans, at
Sport-Haley's expense. If there is a non-negotiated change in control of
Sport-Haley or if Mr. Haley dies, Mr. Haley or his estate, as applicable, is
entitled to lump sum severance compensation equal to three times his annual
salary and bonus payment during the preceding 12 months. If Mr. Haley becomes
disabled during the term of the agreement, his full salary will be continued for
one year from the date of disability. If termination is for any reason other
than by Sport-Haley with cause, all options previously granted shall become
fully vested on the date of termination. The agreement contains a
non-competition provision for one year following termination.

                                       26
<Page>

     Sport-Haley entered into an employment agreement with Mr. William Blair
effective March 2, 1998. The agreement required that he devote his full business
time to Sport-Haley as Vice President of Corporate Sales at an annual salary of
$120,000 and such bonuses as awarded by the Board of Directors. The employment
agreement for Mr. Blair extended through March 1, 2001 and by its terms would
automatically renew for one additional year unless notice of termination were
given by either party. If Sport-Haley terminated the agreement for other than
"cause" (as defined in the agreement) or if Mr. Blair terminated the agreement
with or without "cause", he was entitled to receive severance compensation equal
to six months salary and 50% of the last annual bonus. During the time he should
receive any such severance compensation, he would be eligible to participate in
all employee benefit plans, at Sport-Haley's expense. Had there been a
non-negotiated change in control of Sport-Haley, he would have been entitled to
lump sum severance compensation equal to three times his annual salary and bonus
payment during the preceding 12 months. Options previously granted could have
become fully vested on the date of termination, depending on the reason for
termination. The agreement contained a non-competition agreement for six months
following termination, provided Mr. Blair could have been released from the
non-compete if the agreement were terminated without cause and if he had elected
to forego any severance pay. Mr. Blair notified Sport-Haley of his resignation
from his position as Vice President - Corporate Sales on December 22, 2000. His
employment agreement was terminated effective January 5, 2001.

STOCK OPTION PLAN

     Sport-Haley adopted a stock option plan in 1993 (as amended, the "Option
Plan"). The Option Plan, as amended, provides for the granting of incentive
stock options within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended, non-qualified stock options and stock appreciation rights
("SARs"), up to a maximum number of 2,150,000 shares. Non-qualified options may
be granted to employees, directors and consultants of Sport-Haley, while
incentive options may be granted only to employees. No options may be granted
under the Option Plan subsequent to February 28, 2003.

     The Option Plan is administered by the Compensation Committee of the Board
of Directors, which determines the terms and conditions of the options and SARs
granted under the Option Plan, including the exercise price, number of shares
subject to the option and the exercisability thereof.

     The exercise price of all incentive options granted under the Option Plan
must be at least equal to the fair market value of the Common Stock of
Sport-Haley on the date of grant. In the case of an optionee who owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of Sport-Haley, the exercise price of incentive options shall
be not less than 110% of the fair market value of the Common Stock on the date
of grant. The exercise price of all non-qualified stock options granted under
the Option Plan shall be determined by the Compensation Committee, but shall not
be less than 85% of the fair market value of the Common Stock. The term of all
non-qualified stock options granted under the Option Plan may not exceed ten
years and the term of all incentive options may not exceed five years. The
Option Plan may be amended or terminated by the Board of Directors.

     The Option Plan provides the Board of Directors or the Compensation
Committee the discretion to determine when options granted thereunder shall
become exercisable and the vesting period of such options. Upon termination of a
participant's employment or consulting relationship with Sport-Haley, all
unvested options terminate and are no longer exercisable. Vested options shall
remain exercisable for a specified period of time following the termination
date. The length of such extended exercise period generally ranges from 30 days
to one year, depending on the nature and circumstances of the termination.

     The Option Plan provides that, in the event Sport-Haley enters into an
agreement providing for the merger of Sport-Haley into another corporation or
the sale of substantially all of Sport-Haley's assets, any outstanding
unexercised option shall become exercisable at any time prior to the effective
date of such

                                       27
<Page>

agreement. Upon the consummation of a merger or sale of assets, such options
shall terminate unless they are assumed or another option is substituted
therefor by the successor corporation.

     As of June 31, 2001, a total of 529,881 non-qualified and incentive options
were outstanding, with exercise prices ranging from $2.500 to $10.625 per share
and a weighted average exercise price per share of $6.572.

401(k) PLAN

     In January 1996, Sport-Haley adopted a defined contribution savings plan
(the "401(k) Plan") to provide retirement income to employees of Sport-Haley.
The 401(k) Plan is intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended. The 401(k) Plan covers all full-time employees
who are at least age 18 and have been employed at least three months. It is
funded by voluntary pre-tax contributions from employees up to a maximum amount
equal to 15% of annual compensation and through matching contributions by
Sport-Haley of $0.25 on the dollar for employee contributions on the first 5% of
the employee's annual compensation. Upon leaving Sport-Haley, each participant
is 100% vested with respect to the participant's contributions and is vested
based on years of service with respect to Sport-Haley's matching contributions.
Contributions are invested as directed by the participant in investment funds
available under the 401(k) Plan. Upon retirement, benefits are payable to each
participant in a single cash payment or an actuarial equivalent form of annuity
on the first day of the month following the participant's retirement.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Under the securities laws of the United States, Sport-Haley's directors,
its executive officers, and any persons holding more than ten percent of its
Common Stock are required to report their initial ownership of Common Stock and
other equity securities and any subsequent changes in that ownership to the
Securities and Exchange Commission and Sport-Haley. Specific due dates for these
reports have been established and Sport-Haley is required to disclose in this
annual report on Form 10-K any failure to file, or late filing, of such reports
with respect to the period ended June 30, 2001. Based solely on Sport-Haley's
review of the reports furnished to Sport-Haley and written representations that
no other reports were required during fiscal 2001, Sport-Haley's officers,
directors and beneficial owners of more than ten percent of its Common Stock
complied with all Section 16(a) filing requirements, with the exception that the
following two reports were filed late:

     o    Form 3 - James A. Saxon - filed August 17, 2001 (reporting status as
          officer, beneficial ownership of options but no transactions).

     o    Form 3 - Donald W. Jewell - filed August 17, 2001 (reporting status as
          officer, but no beneficial ownership or transactions).

COMPENSATION COMMITTEE REPORT

     Notwithstanding anything to the contrary set forth in any of the previous
filings made by Sport-Haley under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including, but not limited to, this Report on Form 10-K, in whole or in
part, the following Compensation Committee Report shall not be deemed to be
"filed" with the Securities and Exchange Commission nor shall it be incorporated
by reference into any such future filings.

     This Compensation Committee Report discusses Sport-Haley's executive
compensation policies and the basis for the compensation paid to Sport-Haley's
executive officers, including its Chief Executive Officer, during fiscal 2001.

                                       28
<Page>

     COMPENSATION POLICY. Sport-Haley's policy with respect to executive
compensation was designed to:

     o    Adequately and fairly compensate executive officers in relation to
          their responsibilities, capabilities and contributions to Sport-Haley
          in a manner that is commensurate with compensation paid by companies
          of comparable size or within the golf apparel industry;

     o    Reward executive officers for the achievement of short-term operating
          goals and for the enhancement of the long-term value of Sport-Haley;
          and

     o    Align the interests of the executive officers with those of
          Sport-Haley's shareholders.

     The components of compensation paid to certain executive officers consist
of (a) base salary, (b) incentive compensation in the form of discretionary
annual bonus payments, (c) long-term incentive compensation in the form of
awards under Sport-Haley's Option Plan, and (d) various other benefits.

     BASE SALARY. For fiscal 2001, the Compensation Committee reviewed the base
salary paid by Sport-Haley to its executive officers under their respective
employment agreements. Annual adjustments to base salaries, if any, are
determined based upon a number of factors, including Sport-Haley's performance
(to the extent such performance can fairly be attributed or related to each
executive officer's performance), as well as the value of each executive
officer's responsibilities, capabilities and contributions and internal
compensation equity considerations. In addition, for fiscal 2001, the
Compensation Committee reviewed the base salaries of its executive officers in
an attempt to ascertain whether those salaries fairly reflect job
responsibilities and prevailing market conditions and rates of pay. The
Compensation Committee believes that base salaries for Sport-Haley's executive
officers have been reasonable in relation to its size and performance in
comparison with the compensation paid by similarly sized companies or companies
within the golf apparel industry. The Compensation Committee did not increase
the base pay of Sport-Haley's executive officers in fiscal 2001, except for one
officer.

     INCENTIVE CASH BONUS COMPENSATION. The Compensation Committee feels that a
relatively lower level of base salary and relatively higher level of incentive
compensation, in the form of bonuses and grants of options, most effectively
aligns the interests of management with that of shareholders. It also believes
that its policy regarding incentive compensation is similar to policies of other
companies of comparable size within the golf apparel industry. The decision on
whether to award incentive cash bonus compensation is based on a combination of
achievement of business targets and objectives and certain other financial
measures which the Compensation Committee feels will dictate, in large part,
Sport-Haley's future operating results, and on an officer's responsibilities,
capabilities and contribution to Sport-Haley. There is no formal written bonus
incentive plan for executive officers, although certain executive officers'
employment agreements provide that the executive is eligible for a discretionary
bonus of up to a specified percentage of his or her base salary. Although all of
the executive officers' contributions were noted and commended, the Compensation
Committee awarded an incentive cash bonus to one of the executive officers but
the Committee did not believe that other such bonuses were merited in view of
the continued negative sales and profitability trends of Sport-Haley in fiscal
2001.

     LONG-TERM INCENTIVE (OPTION) COMPENSATION. The Compensation Committee also
has authority to select the executive officers and employees who will be granted
options and other awards and to determine the timing, pricing and amount of any
such options or awards. As stated above, the Compensation Committee believes
that incentive compensation, in the form of bonuses and grants of options, most
effectively aligns the interests of management with that of shareholders. In
fiscal 2001, the Compensation Committee did not grant any options to executives
or employees of the Company.

     OTHER BENEFITS. Executive officers are eligible for various benefits,
including health and welfare plans generally available to all full-time
employees. In addition, executive officers are eligible to participate in the

                                       29
<Page>

401(k) Plan, also generally available to all employees, whereby the officers may
elect to defer part or all of their base and incentive cash compensation, with
matching contributions from Sport-Haley. Sport-Haley does not maintain any other
plans and arrangements for the benefit of its executive officers except to
provide a life insurance policy for the benefit of certain executive officers'
named beneficiaries and vehicles for use by its Chief Executive Officer and
Chief Operating Officer. The Compensation Committee believes these benefits are
reasonable in relation to the executive compensation practices of other
similarly sized companies or companies within the golf apparel industry.

     TAX CONSIDERATIONS. Beginning in 1994, the Internal Revenue Code limited
the federal income tax deductibility of compensation paid to a company's chief
executive officer and to each of the four most highly compensated executive
officers. For this purpose, compensation can include, in addition to cash
compensation, the difference between the exercise price of stock options and the
value of the underlying stock on the date of exercise. A company may deduct
compensation with respect to any of these individuals only to the extent that
during any fiscal year such compensation does not exceed $1 million or meets
certain other conditions (such as shareholder approval). Considering current
compensation plans and policy and the exercise price of currently outstanding
stock options held by the executive officers, the Compensation Committee
believes that, for the near future, there is little risk that Sport-Haley will
lose any significant tax deduction relating to executive compensation. At such
time, if any, that the deductibility of executive compensation becomes an issue,
modifications to compensation plans and policies will be considered by the
Compensation Committee.

     CEO COMPENSATION. In reviewing the Chairman and Chief Executive Officer's
compensation package, the Committee pursues the same objectives, which apply for
other executive officers. The overall goal is to base the Chairman and Chief
Executive Officer's salary at a base comparable to those of persons employed in
similar capacities with competitors that are similar in industry size and
performance. However, the actual level approved by the Committee may be higher
or lower based upon the Committee's subjective evaluation of the annual and
long-term performance of Sport-Haley, the individual performance of the Chairman
and Chief Executive Officer particularly with respect to leadership and
strategic vision, and the cash resources and needs of Sport-Haley. The Committee
believes that Mr. Tomlinson's leadership has been essential in growing
Sport-Haley's revenues up to seven fold from 1994 to 2001. The Compensation
Committee noted that Mr. Tomlinson previously had made a voluntary decision to
reduce his base salary and commended that action as a demonstration of his
continued leadership and administration of resources. In fiscal 2001, no raises
or cash bonuses were awarded to Mr. Tomlinson. His voluntary reduction in his
salary has continued into fiscal 2001 and he is currently being paid at an
annual rate of $170,000, rather than the $220,000 to which he is entitled under
his employment agreement.

     The Compensation Committee believes that the concepts discussed above
further the shareholders interests and that officer compensation encourages
responsible management of Sport-Haley. The Compensation Committee considers the
effect of management compensation on shareholder interests. In the past, the
Board of Directors based its review in part on the experience of its own members
and on information requested from management personnel. These same factors will
be used in the future in determining officer compensation.

     This report was furnished by Mark J. Stevenson, Ronald J. Norick and James
H. Everest, all of the members of the Compensation Committee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     All of the Compensation Committee members are independent directors of
Sport-Haley. None of these members have ever been an officer or employee of
Sport-Haley or its Subsidiary nor have any of them had a relationship, which
would require disclosure under the "Certain Relationship and Related
Transactions" captions of any of Sport-Haley's filings with the Commission
during the past three fiscal years.

                                       30
<Page>

PERFORMANCE GRAPH

     Notwithstanding anything to the contrary set forth in any of the previous
filings made by Sport-Haley under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including, but not limited to, this Report on Form 10-K, in whole or in
part, the following performance graph shall not be deemed to be incorporated by
reference into any such future filings.

     Set forth below is a line graph prepared by Media General Financial
Services comparing the yearly percentage change in Sport-Haley's cumulative
total shareholder return (share price appreciation plus dividends) on
Sport-Haley's Common Stock with the cumulative total return of (i) a Nasdaq
Market Index and (ii) the stocks of apparel manufacturers having Standard
Industrial Classification codes from industry group numbers 231 through 235,
which is deemed as a market weighted index of publicly traded peers, for the
period from July 1, 1996 through June 30, 2001 (the "Measurement Period"). The
graph assumes that $100 is invested in each of Sport Haley's Common Stock, the
Nasdaq Market Index and the publicly traded peers on July 1, 1996 and that all
dividends were reinvested (there were no dividends paid by Sport-Haley during
the Measurement Period). Sport-Haley's shareholder return is calculated by
dividing (i) the difference between Sport-Haley's share price at July 1, 1996
and at each June 30 of the Measurement Period by (ii) the share price at the
beginning of the Measurement Period.

                               [PERFORMANCE GRAPH]


<Table>
<Caption>

                                                      FISCAL YEAR ENDED JUNE 30,
                                   1996        1997        1998        1999        2000        2001
                                  ------      ------      ------      ------      ------      ------
<S>                               <C>         <C>          <C>         <C>         <C>         <C>
Sport-Haley, Inc.                 100.00      114.53       89.74       32.91       28.21       20.51
Industry Peer Group Index         100.00      117.41      139.83      127.94      103.98      132.85
Nasdaq Market Index               100.00      120.46      159.68      223.77      336.71      186.46
</Table>


                                       31
<Page>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding beneficial
ownership of Sport-Haley's Common Stock as of September 28, 2001 by (i) each
person known by Sport-Haley to own beneficially more than 5% of the outstanding
Common Stock, (ii) each director or nominee, and (iii) all executive officers
and directors as a group. The information with respect to institutional
investors is derived solely from statements filed with the Commission under
Section 13(d) or 13(g) of the Securities Exchange Act. Each person has sole
voting and sole investment or dispositive power with respect to the shares shown
except as noted.

<Table>
<Caption>
                                                            SHAREHOLDINGS ON SEPTEMBER 28, 2001
                                                        ------------------------------------------
   NAME AND ADDRESS (1)                                 NUMBER OF SHARES (2)  PERCENT OF CLASS (3)
--------------------------                              --------------------  --------------------
<S>                                                     <C>                   <C>
Robert G. Tomlinson (4) ...............................         121,333            3.7%
Kevin M. Tomlinson (7) ................................          53,333            1.6
Robert W. Haley (5) ...................................          69,900            2.1
Patrick W. Hurley (7) .................................           5,000            *
Catherine Blair (6) ...................................          22,500            *
Mark J. Stevenson (7) .................................          25,000            *
Ronald J. Norick (8) ..................................          63,117            1.9
James H. Everest (8) ..................................          65,000            2.0
U.S. Bancorp (9) ......................................         314,500            9.6
     601 Second Avenue South
     Minneapolis, Minnesota 55402
Catalyst Master Fund, L.P. (10)
     c/o W.S. Walker & Co.
     Walker House, Mary Street P.O. Box 265GT
      George Town, Grand Cayman, Cayman Islands .......         210,085            6.4
Dimensional Fund Advisors Inc.(11)
      1299 Ocean Avenue, 11th Floor
      Santa Monica, California 90401 ..................         259,500            7.9
Hillson Partners Limited Partnership(12)
      6900 Wisconsin Avenue, Suite 501
      Bethesda, MD 20815 ..............................         274,600            8.4
Kennedy Capital Management, Inc.(13)
      10829 Olive Boulevard
      St. Louis, MO  63141 ............................         250,400            7.7
Michael Cook Asset Management, Inc.(14)
      d/b/a Cook Mayer Taylor
      5170 Sanderlin Avenue, Suite 200
      Memphis, Tennessee 38117 ........................         523,100           16.0
All directors and officers as a group
(Nine persons)(15) ....................................         425,183           13.0
</Table>

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

*    Less than 1%

(1)  Except as noted above, the address for all persons listed is 4600 E. 48th
     Avenue, Denver, Colorado 80216.

(2)  Ownership includes both outstanding common stock and shares issuable upon
     exercise of options that are currently exercisable or will become
     exercisable within 60 days after the date hereof.

(3)  All percentages are calculated based on the number of outstanding shares in
     addition to shares which a person or group has the right to acquire within
     60 days of September 28, 2001.

(4)  Includes 68,333 shares subject to currently exercisable options.

(5)  Includes 58,334 shares subject to currently exercisable options or options
     which will become exercisable within 60 days after the date hereof.

                                       32
<Page>

(6)  Includes 17,500 shares subject to currently exercisable options or options
     which will become exercisable within 60 days after the date hereof.

(7)  Consists solely of shares subject to currently exercisable options.

(8)  Includes 25,000 shares subject to currently exercisable options.

(9)  U.S. Bancorp beneficially owns 314,500 shares (with sole power to vote or
     direct the vote of 312,100 such shares, with sole dispositive power over
     310,400 such shares and with shared dispositive power over 4,100 such
     shares) owned of record by The Small Cap Value Fund, a mutual fund of the
     First American Investment Funds, Inc., an open-ended investment company.

(10) Catalyst Master Fund, L.P. has sole voting power and sole dispositive power
     over 210,085 shares.

(11) Dimensional Funds Advisors, Inc. is an investment advisor company which
     beneficially owns shares owned of record by advisory clients of Dimensional
     Fund Advisors, Inc.

(12) Hillson Partners Limited Partnership has sole voting power and sole
     dispositive power over 274,600 shares.

(13) Kennedy Capital Management, Inc. is an investment advisor company which
     beneficially owns 250,400 shares.

(14) Michael Cook Asset Management, Inc. has sole voting power and sole
     dispositive power over 523,100 shares.

(15) Includes 277,500 shares of common stock subject to currently exercisable
     options. Excludes shares of common stock as to which officers and directors
     disclaim beneficial ownership.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Sport-Haley has adopted a policy pursuant to which material transactions
between Sport-Haley and its executive officers, directors and principal
shareholders (i.e. shareholders owning beneficially 5% or more of the
outstanding voting securities of Sport-Haley) shall be submitted to the Board of
Directors for approval by a disinterested majority of the directors voting with
respect to the transaction. For this purpose, a transaction is deemed material
if such transaction, alone or together with a series of similar transactions
during the same fiscal year, involves an amount that exceeds $60,000. No such
transactions occurred in fiscal 2001.

                                     PART IV

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


     (a)  EXHIBITS, FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

     The following documents are filed herewith or have been included as
exhibits to previous filings with the Securities and Exchange Commission and are
incorporated herein by this reference:

     (1)  FINANCIAL STATEMENTS

     Report of Independent Certified Public Accountants
     Consolidated Balance Sheets - June 30, 2001 and 2000
     Consolidated Statements of Income and Comprehensive Income for the
     years ended June 30, 2001, 2000 and 1999
     Consolidated Statements of Shareholders' Equity for the years ended
     June 30, 2001, 2000 and 1999
     Consolidated Statements of Cash Flows for the years ended June 30,
     2001, 2000 and 1999
     Notes to Consolidated Financial Statements for the years ended
     June 30, 2001, 2000 and 1999

     (2)  FINANCIAL STATEMENT SCHEDULES

     Schedule II - Valuation and Qualifying Accounts

                                       33
<Page>

     (3)  EXHIBITS

<Table>
<Caption>
EXHIBIT NO.    DOCUMENT
-----------    --------
<S>            <C>
*/   3.1.2     Amended and Restated Articles of Incorporation of Sport-Haley as
               filed on March 7, 1994 with the Secretary of State of the State
               of Colorado.

-    3.2.3     Amended and Restated By-laws of Sport-Haley as adopted January 10, 1996.

*/   4.1       Form of Specimen Certificate for Common Stock of Sport-Haley.

#   10.1.3     1993 Stock Option Plan, effective March 1993, as amended.

x   10.2.1     Employment Agreement, dated January 1, 1997, by and between
               Robert G. Tomlinson and Sport-Haley.

III 10.2.4     Employment Agreement, dated December 1, 1999, by and between
               Kevin Tomlinson and Sport-Haley.

x   10.2.5     Employment Agreement, dated July 1, 1997, by and between
               Catherine B. Blair and Sport-Haley.

x   10.2.6     Employment Agreement, dated January 1, 1997, by and between
               Robert W. Haley and Sport-Haley.

*** 10.2.7     Employment Agreement, dated February 1, 2001, by and between
               Donald W. Jewell and Sport-Haley.

*** 10.2.8     Employment Agreement, dated June 1, 2001, by and between James A.
               Saxon and Sport-Haley.

*** 10.2.9     Employment Agreement, dated December 1, 2000, by and between
               Patrick W. Hurley and Sport-Haley.

x   10.2.10    Form of standard Endorsement Agreement by and between various
               golf professionals and Sport-Haley.

II  10.3.2     Business Loan Agreement, dated November 5, 1998, by and between
               U.S. Bank National Association, Sport-Haley and B&L Sportswear,
               Inc.

*** 10.3.5     License Agreement, dated May 3, 2001, between Spalding Sports
               Worldwide, Inc. and Sport-Haley, Inc.*

++  10.4.1     Lease Agreement, dated July 29, 1994, by and among Thomas J.
               Hilb, individually, Thomas J. Hilb, as Trustee of the Connie Hilb
               Trust, and Sport-Haley.

-   10.4.2     Amendment to Lease Agreement, dated January 12, 1996, by and
               among Thomas J. Hilb, individually, Thomas J. Hilb, as Trustee of
               the Connie Hilb Trust, and Sport-Haley.

+   10.4.4     Laughlin Factory Outlet Store Lease, dated March 10, 1995,
               between Horizon Outlet Centers Limited Partnership and
               Sport-Haley.

**  10.4.5     Lease Agreement, dated April, 1998, between Larry M. Jones and
               Roberta C. Jones, and B&L Sportswear, Inc.
</Table>

                                       34
<Page>

<Table>
<S>            <C>
*/  10.5       Form of Independent Sales Representative Agreement.

+   10.7       Trademark Registrations, dated February 21, 1995, issued by the
               United States Patent and Trademark Office to Sport-Haley.

-   10.10      Trademark Licensing Agreement, dated October 14, 1995, by and
               between W.L. Gore & Associates, Inc. and Sport-Haley.

*/- 10.17      Letter regarding change in Certified Public Accountants

**  21.        Subsidiaries of the Registrant

</Table>

*    Certain confidential portions of this Exhibit were omitted by means of
     redacting a portion of the text where indicated. This exhibit, including
     the omitted portions, has been filed separately with the Secretary of the
     Securities and Exchange Commission pursuant to an application requesting
     confidential treatment under Rule 24b-2 of the Securities Exchange Act of
     1934.

*/   Incorporated by reference from Sport-Haley's Registration Statement on Form
     SB-2 (File No. 33-74876-D).

+    Incorporated by reference from Sport-Haley's Form 10-KSB filed October 6,
     1995 (File No. 1-12888).

++   Incorporated by reference from Sport-Haley's Form 10-KSB filed September
     14, 1994 (File No. 1-12888).

-    Incorporated by reference from Sport-Haley's Form 10-QSBA/1 filed February
     2, 1996 (File No. 1-12888).

#    Incorporated by reference from Sport-Haley's Form 10-QSB filed on May 12,
     1997 (File No. 1-12888).

x    Incorporated by reference from Sport-Haley's Form 10-KSB filed on September
     29,1997 (File No. 1-12888).

**   Incorporated by reference from Sport-Haley's Form 10-K filed on September
     28,1998 (File No. 1-12888).

II   Incorporated by reference from Sport-Haley's Form 10-Q filed on February
     16, 1999(File No. 333-18831).

III  Incorporated by reference from Sport Haley's Form 10-K filed on November 3,
     2000 (File No. 03374876-D)

*/-  Incorporated by reference from Sport Haley's Form 8-K filed on July 20,
     2000 (File No. 1-12888).

***  Filed herewith.

     (b)  REPORTS ON FORM 8-K

     None.


                                   SIGNATURES

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


                                  SPORT-HALEY, INC.



October 9, 2001                   By: /s/ ROBERT G. TOMLINSON
                                      ----------------------------------
                                      Robert G. Tomlinson, Chairman of the Board





                                       35
<Page>

     Pursuant to the requirements of the Securities 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.

       SIGNATURE                        TITLE                         DATE
       ---------                        -----                         ----

/s/ ROBERT G. TOMLINSON       Chairman of the Board and          October 9, 2001
------------------------      Chief Executive Officer
    Robert G. Tomlinson       (Principal Executive Officer)


/s/ KEVIN M. TOMLINSON        Chief Operating Officer,           October 9, 2001
------------------------      Executive Vice President -
    Kevin M. Tomlinson        Operations and Director


/s/ ROBERT W. HALEY           President and Director             October 9, 2001
------------------------
    Robert W. Haley

/s/ PATRICK W. HURLEY         Chief Financial Officer,           October 9, 2001
------------------------      Secretary, Treasurer and
    Patrick W. Hurley         Controller

/s/ MARK J. STEVENSON         Director                           October 9, 2001
------------------------
    Mark J. Stevenson

/s/ RONALD J. NORICK          Director                           October 9, 2001
------------------------
    Ronald J. Norick

/s/ JAMES H. EVEREST          Director                           October 9, 2001
------------------------
    James H. Everest




                                       36




<Page>




                                SPORT-HALEY, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                          JUNE 30, 2001, 2000, AND 1999

<Page>



                          INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
                                                                                                                    PAGE
                                                                                                                    ----
<S>                                                                                                                    <C>
INDEPENDENT AUDITOR'S REPORT.........................................................................................F-2

CONSOLIDATED BALANCE SHEETS - June 30, 2001 and 2000.................................................................F-3

CONSOLIDATED STATEMENTS OF OPERATIONS - For the Years Ended June 30, 2001,
         2000 and 1999...............................................................................................F-4

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - For the Years Ended June 30, 2001,
         2000 and 1999...............................................................................................F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS - For the Years Ended June 30, 2001, 2000 and 1999 ............................F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...........................................................................F-7

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS.....................................................................F-23
</Table>


                                      F-1

<Page>


                          INDEPENDENT AUDITOR'S REPORT


Board of Directors
Sport-Haley, Inc. and Subsidiary
Denver, Colorado

We have audited the accompanying consolidated balance sheets of Sport-Haley,
Inc. and Subsidiary as of June 30, 2001 and 2000, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ending June 30, 2001. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sport-Haley, Inc.
and Subsidiary as of June 30, 2001 and 2000, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
2001, in conformity with accounting principles generally accepted in the United
States of America.

As discussed in Note 2 to the consolidated financial statements, the Company
adjusted its consolidated financial statements for the years ended June 30, 2000
and 1999 as a result of amending its tax returns. The adjustments had no effect
on net income in the years presented.

Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule listed in the
index of consolidated financial statements is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic consolidated
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.

HEIN + ASSOCIATES LLP
Denver, Colorado

September 14, 2001



                                      F-2
<Page>


                                                    SPORT-HALEY, INC.

                                               CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                                                            JUNE 30,
                                                                                  -------------------------
                                                                                     2001          2000
                                                                                  -----------   -----------
<S>                                                                               <C>           <C>
                                     ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                                      $ 4,413,000   $ 6,676,000
   Marketable securities                                                            3,898,000     1,967,000
   Accounts receivable, net of allowance of $174,000 and $130,000, respectively     5,208,000     4,795,000
   Inventories                                                                      9,164,000     9,659,000
   Prepaid expenses and other                                                         445,000       669,000
   Tax receivable                                                                     388,000       449,000
   Deferred taxes                                                                     162,000       230,000
                                                                                  -----------   -----------
         Total current assets                                                      23,678,000    24,445,000

PROPERTY AND EQUIPMENT, net                                                         1,519,000     2,364,000

DEFERRED TAXES                                                                        160,000          --

OTHER ASSETS                                                                           26,000       176,000
                                                                                  -----------   -----------

TOTAL ASSETS                                                                      $25,383,000   $26,985,000
                                                                                  ===========   ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                               $   454,000   $   848,000
   Accrued commissions payable                                                        359,000       327,000
   Accrued payroll                                                                     87,000        94,000
   Other                                                                              197,000        91,000
                                                                                  -----------   -----------
         Total current liabilities                                                  1,097,000     1,360,000
                                                                                  -----------   -----------

DEFERRED TAXES                                                                           --           6,000

COMMITMENTS AND CONTINGENCIES (Notes 11 and 12)

SHAREHOLDERS' EQUITY:
   Preferred stock, no par value; 1,500,000 shares authorized; none issued and
     outstanding                                                                         --            --
   Common stock, no par value; 15,000,000 shares authorized; 3,272,985 and
     3,460,385 shares issued and outstanding, respectively                         12,521,000    13,108,000
   Additional paid-in capital                                                       1,248,000     1,228,000
   Retained earnings                                                               10,517,000    11,283,000
                                                                                  -----------   -----------
         Total shareholders' equity                                                24,286,000    25,619,000
                                                                                  -----------   -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                        $25,383,000   $26,985,000
                                                                                  ===========   ===========
</Table>

       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-3
<Page>

                                SPORT-HALEY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                                 FOR THE YEARS ENDED
                                                                                       JUNE 30,
                                                                     ---------------------------------------------
                                                                         2001            2000            1999
                                                                     ------------    ------------    ------------
<S>                                                                  <C>             <C>             <C>
NET SALES                                                            $ 21,714,000    $ 23,139,000    $ 27,541,000
    Cost of goods sold                                                 15,141,000      15,879,000      18,833,000
                                                                     ------------    ------------    ------------
GROSS PROFIT                                                            6,573,000       7,260,000       8,708,000
                                                                     ------------    ------------    ------------
OTHER OPERATING COSTS:
    Selling, general and administrative expenses                        7,967,000       6,948,000       7,776,000
    Impairment of fixed assets                                            254,000            --              --
                                                                     ------------    ------------    ------------
         Total other operating costs                                    8,221,000       6,948,000       7,776,000
                                                                     ------------    ------------    ------------
INCOME (LOSS) FROM OPERATIONS                                          (1,648,000)        312,000         932,000
                                                                     ------------    ------------    ------------
OTHER INCOME AND (EXPENSE):
    Interest income, net                                                  525,000         499,000         240,000
    Other income                                                           70,000         211,000         173,000
    Other expense                                                          (4,000)        (24,000)        (19,000)
    Minority interest benefit (expense)                                      --              --            60,000
                                                                     ------------    ------------    ------------
         Total other income                                               591,000         686,000         454,000
                                                                     ------------    ------------    ------------
INCOME (LOSS) FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES ..     (1,057,000)        998,000       1,386,000
    (Provision for) benefit from income taxes                             291,000        (344,000)       (810,000)
                                                                     ------------    ------------    ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS                                 (766,000)        654,000         576,000
LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX BENEFIT OF
 $255,000 ........................................................           --              --          (428,000)
                                                                     ------------    ------------    ------------

INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE                                                                (766,000)        654,000         148,000

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE,
NET OF INCOME TAX PROVISION OF ($213,000)                                    --           361,000            --

NET INCOME (LOSS)                                                    $   (766,000)   $  1,015,000    $    148,000
                                                                     ============    ============    ============
INCOME PER SHARE:
    Basic and Diluted:
         Income (loss) from continuing operations                            (.22)   $        .17    $        .13
         Income (loss) from discontinued operations                          --              --              (.10)
         Cumulative effect of change in accounting principle                 --               .10            --
                                                                     ------------    ------------    ------------
         Net income (loss)                                           $       (.22)   $        .27    $        .03
                                                                     ============    ============    ============

WEIGHTED AVERAGE SHARES OUTSTANDING:
    Basic                                                               3,439,000       3,755,000       4,408,000
                                                                     ============    ============    ============
    Diluted                                                             3,439,000       3,784,000       4,452,000
                                                                     ============    ============    ============
</Table>


       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-4
<Page>

                                SPORT-HALEY, INC.

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                FOR THE YEARS ENDED JUNE 30, 2001, 2000, AND 1999

<Table>
<Caption>
                                                        COMMON STOCK            ADDITIONAL                          TOTAL
                                                 -------------------------       PAID-IN         RETAINED        SHAREHOLDERS'
                                                    SHARES          AMOUNT       CAPITAL         EARNINGS           EQUITY
                                                 ----------------------------------------------------------------------------
<S>                                              <C>             <C>             <C>             <C>             <C>
BALANCES, as of July 1, 1998, as previously
     reported                                    $  4,512,962    $ 18,416,000    $  1,386,000    $  9,794,000    $ 29,596,000

     Adjustments for tax effect of amended tax
         returns (Note 2)                                --              --            (7,000)        326,000         319,000
                                                 ------------    ------------    ------------    ------------    ------------

BALANCES, as adjusted                               4,512,962      18,416,000       1,379,000      10,120,000      29,915,000
     Income tax benefit from stock options
         exercised                                       --              --            51,000            --            51,000
     Stock options exercised                            9,340          61,000            --              --            61,000
     Warrants exercised                                22,250         145,000            --              --           145,000
     Repurchase of common stock                      (287,000)     (2,267,000)           --              --        (2,267,000)
     Stock option compensation                           --              --           339,000            --           339,000
     Net income                                          --              --              --           148,000         148,000
                                                 ------------    ------------    ------------    ------------    ------------

BALANCES, as of June 30, 1999                       4,257,552      16,355,000       1,769,000      10,268,000      28,392,000

     Income tax benefit from stock options
         exercised                                       --              --             7,000            --             7,000
     Stock options exercised                           12,833          32,000            --              --            32,000
     Repurchase of common stock                      (810,000)     (3,279,000)           --              --        (3,279,000)
     Stock option compensation                           --              --            26,000            --            26,000
     Cumulative effect of change in accounting
         principle                                       --              --          (574,000)           --          (574,000)
     Net income                                          --              --              --         1,015,000       1,015,000
                                                 ------------    ------------    ------------    ------------    ------------

BALANCES, June 30, 2000                             3,460,385      13,108,000       1,228,000      11,283,000      25,619,000

     Stock option compensation                           --              --            20,000            --            20,000
     Repurchase of common stock                      (187,400)       (587,000)           --              --          (587,000)
     Net loss                                            --              --              --          (766,000)       (766,000)
                                                 ------------    ------------    ------------    ------------    ------------

BALANCES, June 30, 2001                             3,272,985    $ 12,521,000    $  1,248,000    $ 10,517,000    $ 24,286,000
                                                 ============    ============    ============    ============    ============
</Table>


       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-5
<Page>

                                SPORT-HALEY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                          FOR THE YEARS ENDED JUNE 30,
                                                                   -----------------------------------------
                                                                       2001          2000           1999
                                                                   -----------    -----------    -----------
<S>                                                                <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                              $  (766,000)   $ 1,015,000    $   148,000
    Adjustments to reconcile net income (loss) to net cash
         provided by operating activities:
             Depreciation and amortization                             774,000        769,000        634,000
             Impairments and writedowns                              1,126,000           --             --
             Deferred taxes and other                                  (92,000)       335,000         31,000
             Provision for doubtful accounts                            65,000        199,000        120,000
             Income tax benefit from stock options exercised              --            7,000         51,000
             Gain/loss on disposal of assets                              --           (2,000)       365,000
             Stock option compensation                                  20,000         26,000        339,000
             Cumulative effect of change in accounting principle          --         (574,000)          --
             Changes in assets and liabilities:
                 Accounts receivable                                  (478,000)       472,000      1,061,000
                 Inventory                                            (377,000)     2,228,000      4,589,000
                 Prepaid expenses                                      224,000       (404,000)        75,000
                 Tax receivable                                         61,000        498,000       (670,000)
                 Other assets                                          150,000        188,000       (513,000)
                 Accounts payable                                     (394,000)        59,000       (336,000)
                 Accrued commissions and other expenses                125,000       (232,000)    (1,015,000)
                 Minority interest                                        --             --          (60,000)
                                                                   -----------    -----------    -----------
         Net cash provided by operating activities                     438,000      4,584,000      4,819,000
                                                                   -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of fixed assets                                          (184,000)      (679,000)      (803,000)
    Maturities (purchases)of marketable securities                  (1,931,000)    (1,967,000)     1,996,000
    Proceeds from the disposal of fixed assets                           1,000          4,000         25,000
                                                                   -----------    -----------    -----------
         Net cash provided by (used in) investing activities        (2,114,000)    (2,642,000)     1,218,000
                                                                   -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Advances on notes payable                                             --             --          100,000
    Repayments on notes payable                                           --         (600,000)          --
    Proceeds from exercised stock options and warrants                    --           32,000        206,000
    Repurchases of common stock                                       (587,000)    (3,279,000)    (2,267,000)
                                                                   -----------    -----------    -----------
         Net cash used in financing activities                        (587,000)    (3,847,000)    (1,961,000)
                                                                   -----------    -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                (2,263,000)    (1,905,000)     4,076,000

CASH AND CASH EQUIVALENTS, Beginning of year                         6,676,000      8,581,000      4,505,000
                                                                   -----------    -----------    -----------

CASH AND CASH EQUIVALENTS, End of year                             $ 4,413,000    $ 6,676,000    $ 8,581,000
                                                                   ===========    ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash payments for:
         Interest                                                  $     6,000    $    28,000    $    51,000
                                                                   ===========    ===========    ===========
         Income taxes                                              $   246,000    $    13,000    $ 1,165,000
                                                                   ===========    ===========    ===========
         Cash received for income tax refund                       $   510,000    $      --      $      --
                                                                   ===========    ===========    ===========
</Table>

       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-6
<Page>

                                SPORT-HALEY, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:

     NATURE OF OPERATIONS - Sport-Haley designs, markets, purchases and
     contracts for the manufacture of quality men's and women's fashion golf
     apparel under the Haley - Registered Trademark- label. The Company's
     fashion golf apparel is known for its innovative styling, high quality
     fabrics, generous and classic appearance. The Company's apparel is sold in
     the premium and mid-price market through a network of independent sales
     representatives and distributors to primarily golf professional shops,
     country clubs and resorts throughout the United States and internationally.
     The Company also sells to college, university, and corporate markets. The
     Company was organized as a Colorado corporation on January 1, 1991.

     PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
     the accounts of Sport-Haley, Inc. and its wholly-owned subsidiary, B&L
     Sportwear, Inc. (collectively referred to as the Company). All significant
     intercompany accounts and transactions have been eliminated. The Company
     purchased 7%, 41%, and 52% of B&L Sportwear, Inc. during the years ended
     June 30, 2000, 1999, and 1998, respectively (see Note 9). Prior to
     Sport-Haley's obtaining a 100% interest in B&L, other shareholder's
     interest in B&L has been recorded as minority interest in the consolidated
     financial statements.

     During 1999, the minority interest basis in B&L was reduced to $-0- as a
     result of the minority interest in the losses of B&L. The Company recorded
     100% of the losses of B&L subsequent to the minority interest basis in B&L
     reaching $-0-.

     MARKETABLE SECURITIES - Marketable securities consist of United States
     government and mortgage backed debt securities which mature within one year
     or less. The securities are classified as held to maturity. Due to the
     short-term nature of the investments, there are no material unrealized
     gains or losses on these investments. As a result, the carrying value
     approximates the fair market value.

     INVENTORIES - Inventories are stated at the lower of cost (first-in,
     first-out) or market. Cost includes materials, labor, direct costs, and
     manufacturing overhead. Generally, slow moving inventories are written down
     to market value during the period in which the impairment is identified.

     PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
     Depreciation is provided over the estimated useful lives of the assets
     ranging from three to twelve years using the straight-line method of
     depreciation. Leasehold improvements are stated at cost and amortized over
     the remaining life of the lease, using the straight-line method. The cost
     of normal maintenance and repairs is charged to operating expenses as
     incurred. Material expenditures which increase the life of an asset are
     capitalized and depreciated over the estimated remaining useful life of the
     asset. Upon disposing of assets, the related cost and accumulated
     depreciation are removed from the books and the resulting gain or loss, if
     any, is recognized in the year of the disposition.

     IMPAIRMENT OF LONG-LIVED ASSETS - In the event that facts and circumstances
     indicate that the cost of assets may be impaired, an evaluation of
     recoverability would be performed. If an evaluation is required, the
     estimated future undiscounted cash flows associated with the asset would be
     compared to the asset's carrying


                                      F-7
<Page>

     amount to determine if a write-down to market value or discounted cash flow
     value is required. As discussed in Footnote 3, the Company determined in
     2001 that certain assets were impaired.

     REVENUE RECOGNITION - The Company recognizes revenue when risk and title on
     its products passes to the buyer. Generally, both risk and title pass to
     the Company's customers at date of shipment via common carrier. During
     fiscal 2001 the Company implemented a limited consignment program with
     certain of its customers. Revenue is recognized on consignment sales at the
     time of collection from the Company's customer. Consigned inventory totaled
     $157,000 at June 30, 2001. The Company also offers, on a limited basis, the
     right of return for certain inventory. The Company estimates a return
     allowance.

     ADVERTISING - The Company expenses the production costs of advertising the
     first time the advertising takes place, except for direct-response
     advertising, which is capitalized and amortized over its expected period of
     future benefits. The Company had no amounts capitalized for direct response
     advertising at June 30, 2001 and 2000. Advertising expense was $585,000,
     $676,000, and $526,000 for the years ended June 30, 2001, 2000, and 1999,
     respectively.

     DEFERRED TAXES - Deferred income taxes are recognized for the tax
     consequences in future years of differences between the tax bases of assets
     and liabilities and their financial reporting amounts at each year end,
     based on enacted tax laws and statutory tax rates applicable to the periods
     in which the differences are expected to affect taxable income. Valuation
     allowances are established when necessary to reduce deferred tax assets to
     the amount expected to be realized. Income tax expense is the tax payable
     for the period and the change during the period in deferred tax assets and
     liabilities.

     USE OF ESTIMATES - The preparation of consolidated financial statements in
     conformity with generally accepted accounting principles requires
     management to make estimates and assumptions that affect certain reported
     amounts and disclosures. Among others, significant estimates include the
     allowance of doubtful accounts and sales returns as well as inventory
     reserves. Accordingly, actual results could differ from those estimates.

     CERTAIN RISKS AND CONCENTRATIONS - The Company's operations consist of the
     design, manufacture and wholesale distribution of golf apparel for men and
     women. The Company's headquarters are located in Colorado and its customers
     are located throughout the United States and abroad. As of June 30, 2001
     and 2000, the majority of the Company's receivables are from companies in
     the golfing industry. Management of the Company believes it maintains
     adequate allowance for potential credit losses and performs on-going credit
     evaluations.

     STATEMENT OF CASH FLOWS - For purposes of the statement of cash flows, the
     Company considers all highly liquid instruments purchased with an original
     maturity of three months or less, that are readily convertible to known
     amounts of cash and present an insignificant risk of change in value
     because of changes in interest rate, to be cash equivalents.

     RECENT PRONOUNCEMENTS - In December 1999, the Securities and Exchange
     Commission (SEC) released Staff Accounting Bulletin (SAB) 101, REVENUE
     RECOGNITION IN FINANCIAL STATEMENTS. SAB 101 established guidelines in
     applying generally accepted accounting principles to the recognition of
     revenue in financial


                                      F-8
<Page>

     statements based on the following four criteria; (1) persuasive evidence of
     an arrangement exists, (2) delivery has occurred or services have been
     rendered, (3) the seller's price to the buyer is fixed or determinable, and
     (4) collectibility is reasonably assured. SAB 101, as amended by SAB 101B,
     was effective no later than the fourth fiscal quarter of the Company's
     fiscal year ending year 2001. The adoption of SAB 101 had no material
     effect on the Company's financial position or results of operations.

     In June 2001, the Financial Accounting Standards Board ("FASB") issued
     Statements of Financial Accounting Standards No. 141 "Business
     Combinations" ("SFAS 141") and No. 142 "Goodwill and Other Intangible
     Assets" ("SFAS 142"). SFAS 141 requires all business combinations initiated
     after June 30, 2001 to be accounted for under the purchase method. For all
     business combinations for which the date of acquisition is after June 30,
     2001, SFAS 141 also establishes specific criteria for the recognition of
     intangible assets separately from goodwill and requires unallocated
     negative goodwill to be written off immediately as an extraordinary gain,
     rather than deferred and amortized. SFAS 142 changes the accounting for
     goodwill and other intangible assets after an acquisition. The most
     significant changes made by SFAS 142 are: 1) goodwill and intangible assets
     with indefinite lives will no longer be amortized; 2) goodwill and
     intangible assets with indefinite lives must be tested for impairment at
     least annually; and 3) the amortization period for intangible assets with
     finite lives will no longer be limited to forty years. The adoption of SFAS
     141 and 142 is not expected to have a material effect on the Company's
     financial position as a result of operations.

     In June 2001, the FASB also approved for issuance SFAS 143 "Asset
     Retirement Obligations." SFAS 143 establishes accounting requirements for
     retirement obligations associated with tangible long-lived assets,
     including (1) the timing of the liability recognition, (2) initial
     measurement of the liability, (3) allocation of asset retirement cost to
     expense, (4) subsequent measurement of the liability and (5) financial
     statement disclosures. SFAS 143 requires that an asset retirement cost
     should be capitalized as part of the cost of the related long-lived asset
     and subsequently allocated to expense using a systematic and rational
     method. We will adopt the statement effective January 1, 2003, as required.
     The transition adjustment resulting from the adoption of SFAS 143 will be
     reported as a cumulative effect of a change in accounting principle. At
     this time, the Company cannot reasonably estimate the effect of the
     adoption of this statement on either its financial position, results of
     operations, or cash flows.

     FINANCIAL INSTRUMENTS - The Company periodically maintains cash balances at
     a commercial bank in excess of the Federal Deposit Insurance Corporation
     insurance limit of $100,000.

     COMPREHENSIVE INCOME (LOSS) - Comprehensive income is defined as all
     changes in shareholders' equity (deficit), exclusive of transactions with
     owners, such as capital investments. Comprehensive income includes net
     income (loss) and income or loss from changes in certain assets and
     liabilities that are reported directly in equity. The Company had no items
     of other comprehensive income at June 30, 2001, 2000 and 1999.

     EARNINGS PER SHARE - Basic EPS is calculated by dividing the income or loss
     available to common shareholders by the weighted average number of common
     shares outstanding for the period. Diluted EPS reflects the potential
     dilution that could occur if securities or other contracts to issue common
     stock were exercised or converted into common stock.


                                      F-9
<Page>

     STOCK-BASED COMPENSATION - As permitted under the SFAS No. 123, ACCOUNTING
     FOR STOCK-BASED COMPENSATION, the Company accounts for its stock-based
     compensation in accordance with the provisions of Accounting Principles
     Board (APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES. As
     such, compensation expense is recorded on the date of grant only if the
     current market price of the underlying stock exceeds the exercise price.
     Certain pro forma net income and EPS disclosures for employee stock option
     grants are also included in the notes to the financial statements as if the
     fair value method as defined in SFAS No. 123 had been applied. Transactions
     in equity instruments with non-employees for goods or services are
     accounted for by the fair value method.

     RECLASSIFICATION - Certain prior amounts have been reclassified to conform
     with the year 2001 and 2000 presentation.

2.   ADJUSTMENTS TO PREVIOUSLY ISSUED FINANCIAL STATEMENTS:

     In the current year, the Company adjusted its previously issued financial
     statements to reflect the final amended tax returns and the results of an
     IRS examination. The adjustments primarily relate to additional
     non-qualified stock option deductions greater than previously estimated,
     and additional deductions generated from the prior year restatement of
     certain prepaid assets. These adjustments increased beginning equity by
     $319,000 and further increased equity by $51,000 and $7,000 in fiscal 1999
     and fiscal 2000, respectively. The adjustments had no effect on the
     statements of operations for the years ending June 30, 2001, 2000 or 1999.

3.   ASSET IMPAIRMENTS:

     In 2001, the Company implemented a plan to purchase more finished goods and
     manufactured less goods. In addition, subsequent to year-end, the Company
     decided to cease operations at and sold substantially all the assets of its
     B&L subsidiary. As a result of these changes in circumstances, the Company
     analyzed certain assets for recoverability. The results indicated that
     expected future cash flows would not be sufficient to recover the assets
     net book value. As such, impairments were taken as of June 30, 2001, to
     reduce the assets to their fair value as follows:

<Table>
<S>                                                                                  <C>
              Component inventory                                                    $           800,000
              Finished goods inventory                                                            72,000
              Equipment                                                                          254,000
                                                                                     -------------------
                   Total impairment                                                  $         1,126,000
                                                                                     ===================
</Table>


     The impairment for inventories is reflected in the costs of goods sold.



                                      F-10
<Page>

                                SPORT-HALEY, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.   FAIR VALUE OF FINANCIAL INSTRUMENTS:

     The carrying value of all financial instruments risk, principally
     consisting of cash and cash equivalents, marketable securities, accounts
     receivable and accounts payable, approximate fair value due to their
     short-term maturities.


5.   CASH AND CASH EQUIVALENTS:

     Cash and cash equivalents consist of the following at June 30:


<Table>
<Caption>
                                                                   2001         2000
                                                                ----------   ----------
<S>                                                             <C>          <C>
Cash in banks                                                   $2,688,000   $1,583,000

Short-term securities with maturities of three months or less    1,725,000    5,093,000
                                                                ----------   ----------

                                                                $4,413,000   $6,676,000
                                                                ==========   ==========
</Table>


6.   INVENTORIES:

     Inventories consist of the following at June 30:

<Table>
<Caption>
                                                                                             2001             2000
                                                                                       --------------   ---------------

<S>                                                                                    <C>              <C>
              Component                                                                $    1,130,000   $     4,087,000
              Finished goods                                                                8,034,000         5,572,000
                                                                                       --------------   ---------------

                                                                                       $    9,164,000   $     9,659,000
                                                                                       ==============   ===============
</Table>


                                      F-11
<Page>

7.   PROPERTY AND EQUIPMENT:

     Property and equipment are recorded at cost and are comprised of the
     following at June 30:

<Table>
<Caption>
                                                                                              2001            2000
                                                                                        ---------------------------------
<S>                                                                                     <C>              <C>
              Plant equipment                                                           $    2,099,000   $    2,060,000
              Leasehold improvements                                                           417,000          416,000
              Furniture, fixtures and computer software                                      2,091,000        1,957,000
                   and equipment
              Other                                                                            126,000          119,000
                                                                                        --------------   --------------
                                                                                             4,733,000        4,552,000
              Less accumulated depreciation, amortization, and impairment                   (3,214,000)      (2,188,000)
                                                                                        ---------------  --------------

                                                                                        $    1,519,000   $    2,364,000
                                                                                        ==============   ==============
</Table>


     Depreciation and amortization expense at June 30, 2001, 2000, and 1999 was
     $774,000, $769,000, and $634,000, respectively.

8.   LINE-OF-CREDIT AGREEMENT:

     The Company has two separate revolving line-of-credit agreements with the
     same bank. These revolving line-of-credit agreements, which have been
     renewed through November 5, 2001, provide for interest at 1/2% below the
     bank's prime rate. One agreement provides for a maximum loan amount of $9.0
     million to Sport-Haley secured by a lien on substantially all of the
     Company's assets. The other agreement provides for a maximum loan amount of
     $1.0 million to Sport-Haley's subsidiary collateralized by a lien on
     substantially all of the subsidiary's assets and guaranteed by Sport-Haley,
     Inc. The Company generally maintains its line of credit solely to
     facilitate the issuance of letters of credit for inventory purchases from
     offshore suppliers and to fund any temporary working capital needs. The
     Company has no balance due, on its lines of credit at June 30, 2001 and
     2000, respectively.

     At June 30, 2001, the Company had letters of credit outstanding totaling
     $659,000, which reduces the amount available for borrowing under the lines.

9.   ACQUISITION:

     On March 27, 1998, the Company closed on its purchase of 52% of the
     outstanding shares of capital stock of B&L Sportswear, Inc. ("B&L"). The
     acquisition was completed pursuant to the terms of a stock purchase
     agreement. The Company paid $165,000 in cash to acquire its 52% ownership
     interest of B&L. Effective


                                      F-12
<Page>

     July 1, 1999, the Company increased its ownership in B&L to a 93% interest
     by exchanging $290,000 of debt owed by B&L to Sport-Haley for additional
     equity in B&L. During fiscal 2000, the Company purchased the remaining 7%
     of the outstanding shares of capital stock of B&L for cash of $23,000 and
     by exchanging $250,000 of debt owed by B&L to Sport-Haley for additional
     equity in B&L. These transactions were accounted for using the purchase
     method of accounting. The operations of B&L have been included in the
     consolidated financial statements since the Company's purchase of its 52%
     interest in B&L. The Company and certain of the prior B&L shareholders
     entered into a buy-sell agreement restricting transfer of their shares of
     B&L and granted the other party a right of first refusal upon the
     occurrence of certain events. Additionally, these prior shareholders of B&L
     have an option to purchase; (i) all of the shares of common stock of B&L
     owned by Sport-Haley at the per share price paid for by Sport-Haley and/or,
     (ii) newly issued shares of common stock of B&L at $5.00 per share up to
     48% of the issued and outstanding shares of common stock after the
     purchase.

     Subsequent to June 30, 2001, the Company adopted a plan to shut down
     operations at B&L and dispose of all its assets. The Company has recorded
     an impairment of $254,000 to reduce fixed assets related to B&L to their
     net realizable value (Note 3).


                                      F-13
<Page>

10.  INCOME TAXES:

     The difference between the U.S. Federal statutory rate and the Company's
     effective rate is as follows at June 30:

<Table>
<Caption>
                                                                     2001           2000          1999
                                                                --------------- ----------------------------
<S>                                                             <C>             <C>           <C>
        U.S. Federal statutory rate                             $    (359,000)  $   584,000   $   239,000
        State income taxes                                            (32,000)        2,000        29,000
        Change in deferred tax valuation allowance                     52,000       (33,000)      196,000
        Equity interest in loss of subsidiary not consolidated
            for tax purposes                                                -             -       157,000
        Tax-exempt interest                                                 -       (22,000)      (12,000)
        Permanent Differences and Other                                48,000        26,000       (54,000)
                                                                -------------   -----------   -----------

        Total tax expense (benefit) (current and deferred)      $    (291,000)  $   557,000   $   555,000
                                                                ==============  ===========   ===========
</Table>

     The components of the net deferred tax asset and net deferred tax liability
     recognized in the accompanying balance sheets are as follows at June 30:

<Table>
<Caption>
                                                                            2001                         2000
                                                              ----------------------------------------------------------
                                                                                Long-                        Long-
                                                                 Current        Term         Current         Term
                                                              ----------------------------------------------------------
<S>                                                           <C>           <C>           <C>           <C>
           Deferred tax liability                             $           - $  (123,000)  $     (55,000)$    (215,000)
           Deferred tax asset                                       204,000     482,000         285,000       405,000
                                                              ------------- -----------   ------------- -------------
           Net deferred tax asset before valuation allowance        204,000     359,000         230,000       190,000

                   Valuation allowance                              (42,000)   (199,000)              -      (196,000)
                                                              --------------------------  ------------- --------------

                                                              $     162,000 $   160,000   $     230,000 $      (6,000)
                                                              ============= ===========   ============= ==============
</Table>

     The components of income tax expense (benefits) are as follows at June 30:

<Table>
<Caption>
                                                                   2001           2000            1999
                                                              ------------------------------ ----------------
<S>                                                           <C>            <C>             <C>
              Federal                                         $   (193,000)  $    270,000    $     463,000
              State                                                      -          2,000           29,000
              Deferred                                             (98,000)       285,000           63,000
                                                              -------------  ------------    -------------

                                                              $   (291,000)  $    557,000    $     555,000
                                                              =============  ============    =============
</Table>


                                      F-14
<Page>

     The types of temporary differences between the tax bases of assets and
     liabilities and their financial reporting amounts that give rise to a
     significant portion of the deferred tax asset and liability and their
     appropriate tax effects are as follows at June 30:

<Table>
<Caption>
                                                              2001                                      2000
                                                    --------------------------               ----------------------------
                                        Temporary                   Long-       Temporary                      Long-
                                       Difference     Current        Term       Difference      Current        Term
                                      -----------------------------------------------------------------------------------
                                      -----------------------------------------------------------------------------------
<S>                                   <C>           <C>          <C>          <C>            <C>           <C>
           Allowance for doubtful     $    61,000   $   23,000   $        -   $     62,000   $     23,000  $          -
               accounts
           Reserve for sales returns       94,000       35,000            -         68,000         25,000             -
           Prepaid expenses               262,000       97,000            -        501,000        186,000             -
           Accrued vacation                56,000       21,000            -         62,000         23,000             -
           Accumulated depreciation
               and impairment             310,000            -     (115,000)       488,000              -      (181,000)
           Stock options                  330,000            -      122,000        310,000              -       115,000
           Unrealized loss on
               investment                 234,000            -       87,000        234,000              -        87,000
           B&L net operating losses       666,000            -      247,000        545,000              -       203,000
           B&L accumulated
              depreciation and
              impairment                  227,000            -       26,000         90,000              -       (34,000)
           Inventory                       75,000       28,000            -         75,000         28,000             -
           State tax                      100,000            -       (8,000)       148,000        (55,000)            -
                                                    ----------   -----------                 ------------- ------------
           Net deferred tax asset
             before valuation allowance                204,000      359,000                       230,000       190,000

           Valuation allowance                         (42,000)    (199,000)                            -      (196,000)
                                                    -----------  -----------                 ------------  -------------

                                                    $  162,000   $  160,000                  $    230,000  $     (6,000)
                                                    ==========   ==========                  ============  =============
</Table>


     At June 30, 2001, B&L has a net operating loss carryforward of
     approximately $666,000 which can only be utilized by B&L on a stand-alone
     basis. A substantial amount of the B&L net operating loss may be subject to
     limitation as a result of a change in ownership, and may never be utilized
     based on management's decision to close down B&L subsequent to year-end.

     The valuation allowance for fiscal 2001, 2000, and 1999 increased $45,000,
     ($58,000), and $138,000, respectively.

11.  OPERATING LEASES:

     The Company leases its corporate offices, production and warehouse
     facilities under an operating lease, which expires in October 2001. Prior
     to June 30, 2001, the Company agreed in principle with the landlord to
     extend the lease on generally comparative terms, however this may change
     based on the final lease agreement. The table below excludes the effect of
     the agreement in principle as final terms have not yet been negotiated.


                                      F-15
<Page>

        During March 1995, the Company entered into a lease for a factory outlet
        store located in Laughlin, Nevada. The facility is leased for a term of
        seven years.

        In April 1998, B&L entered into a lease for its operating facilities
        with former minority shareholders of B&L. The leased facility has an
        initial term of 10 years and may be extended for two additional
        five-year periods following the initial term.

        Rent expense for the years ended June 30, 2001, 2000, and 1999 was
        $320,000, $321,000, and $312,000, respectively, of which $65,000,
        $65,000, and $65,000 pertained to the B&L lease.

        The future minimum lease payments under non-cancelable leases with
        initial terms of one year or more as of June 30, 2001 are as follows:

<Table>
<Caption>
                  Years Ending
                    June 30,                                                              Amount
               -------------------                                                    ---------------
<S>                                                                                   <C>
                      2002                                                                   166,000
                      2003                                                                    65,000
                      2004                                                                    65,000
                      2005                                                                    65,000
                      2006                                                                    65,000
                   Thereafter                                                                114,000
                                                                                      --------------
                                                                                      $      540,000
                                                                                      ==============
</Table>

12.  COMMITMENTS AND CONTINGENCIES:

     POTENTIAL CLAIM - In the fiscal year ending June 30, 2000, the Company
     restated previously issued financial statements. The Company's counsel has
     advised it that such restatement may lead to claims or assessments from
     various parties. No such claim has yet been asserted. The Company cannot
     make an estimate of any possible losses from any unasserted claims.

     TOURING PROFESSIONAL - In conjunction with a marketing agreement with a
     Golf Touring Professional, the Company agreed to issue the individual
     10,000 stock options with an exercise price of $3.00 for each tour victory
     he achieves before December 31, 2001. Pursuant to these terms, 10,000
     options were issued in fiscal year 2001.

     EMPLOYMENT AGREEMENTS - The Company has entered into several employment and
     non-compete agreements with officers and key employees of the Company. The
     agreements are subject to automatic one-year extensions. Employment and
     non-compete agreements provide for minimum salary levels totaling $930,000
     per year excluding bonuses, as well as severance payments upon termination
     of employment without cause.


                                      F-16
<Page>

13.  SHAREHOLDERS' EQUITY:

     REPURCHASE OF COMMON STOCK - As of June 30, 2001, the Company's Board of
     Directors authorized the repurchase of up to 2,140,000 shares of the
     Company's issued and outstanding common stock. Subsequent to year-end, the
     Company authorized the repurchase of an additional 300,000 shares. The
     shares may be purchased from time to time in open market transactions at
     prevailing market prices or privately negotiated transactions. The Company
     has no commitment or obligation to purchase all or any portion of the
     shares. All shares purchased by the Company will be canceled and returned
     to the status of authorized but unissued common stock. Through June 30,
     2001, the Company has repurchased a total of 1,684,400 shares of its common
     stock at a cost of approximately $10,835,000.

     PREFERRED STOCK - Articles of Incorporation of the Company authorize
     issuance of a maximum of 1,500,000 shares of preferred stock. The Articles
     of Incorporation vest the Board of Directors of the Company with authority
     to divide the class of preferred stock into series and to fix and determine
     the relative rights and preferences of the shares of any such series so
     established to the full extent permitted by the laws of the State of
     Colorado and the Articles of Incorporation. As of June 30, 2001, the
     Company had no preferred stock issued or outstanding.

     COMMON STOCK OPTIONS - In March 1993, the Company adopted a Stock Option
     Plan (the "Plan"). The Plan, as originally adopted, provided for the
     reservation of 750,000 shares of the Company's common stock for issuance
     pursuant to the Plan. As a result of shareholder approvals, the number of
     shares reserved for issuance under the Plan was increased approximately
     1,850,000 shares. As a result of the Board electing not to obtain
     shareholder approval, all options granted as a result of the 1999 increase
     will be granted as non-qualified options. Under the Plan, the Company may
     grant options to purchase common stock to employees, directors and
     consultants of the Company and any subsidiary thereof. Generally, the
     options vest over three years, are granted at fair market value on the date
     of grant, expire 10 years from that date, are non-transferrable and cannot
     be exercised for a period of six months from the date granted. The Plan, as
     restated, is administered by the Compensation Committee, which, at its
     discretion, determines the optionees, number of options granted and
     exercise periods.

     At June 30, 2001, the Company has outstanding options to purchase 529,881
     shares of common stock at prices ranging from $2.50 to $10.63 with
     expiration dates between fiscal 2003 and fiscal 2010. During fiscal years
     2000, and 1999, option holders exercised and purchased 12,833 and 9,340
     shares of the Company's common stock and the Company realized gross
     proceeds of approximately $32,000 and $61,000, respectively. No options
     were exercised in fiscal 2001.

     During October 1998, the Compensation Committee of the Board of Directors
     authorized the re-pricing of certain stock options, previously granted
     under the Company's stock option plan, that were deemed to be "out of the
     money" based upon the prevailing quoted market prices of the Company's
     common stock.


                                      F-17
<Page>

     The activity under the Company's Plan is set forth below:

<Table>
<Caption>

                                                                           Employee Options Outstanding       Weighted
                                                                           ----------------------------        Average
                                                                              Number of       Range        Exercise Price
                                                                               Options      Per Share         Per Share
                                                                            ----------  ---------------    ---------------
<S>                                                                         <C>         <C>                <C>
           BALANCES, July 1, 1998                                             259,500   $ 9.25 - 14.25          $11.86

                   Options granted                                             20,000             8.50            8.50
                   Options canceled                                           (37,500)   10.63 - 12.75           11.05
                   Options canceled related to repricing                     (194,500)   10.25 - 14.25           12.34
                   Options issued related to repricing                        194,501             8.63            8.63
                                                                           ----------
           BALANCES, June 30, 1999                                            242,001     8.50 - 10.63            8.73

                   Options granted                                            166,000             3.00            3.00
                   Options canceled                                            (7,500)            8.63            8.63
                                                                           ----------

           BALANCES, June 30, 2000                                            400,501     3.00 - 10.63          $ 6.36

                   Options granted                                             25,000             3.00            3.00
                   Options canceled                                           (53,000)    3.00 -  9.25            6.42
                                                                           ----------

           BALANCES, June 30, 2001                                            372,501   $ 3.00 - 10.63          $ 6.13
                                                                           ==========   ==============          ======
</Table>


                                      F-18
<Page>

     Employees options vest as follows:

<Table>
<Caption>
                                                                                                              Weighted
                                                                                                               Average
                                                                                              Number of       Exercise
           Amounts vested at:                                                                  Options          Price
           -----------------                                                              --------------- -----------
<S>                                                                                       <C>             <C>
           June 30, 2001                                                                        252,000   $       6.98
           June 30, 2002                                                                         56,169           2.79
           June 30, 2003                                                                         55,999           3.03
           June 30, 2004                                                                          8,333           3.00
                                                                                          -------------

                                                                                                372,501   $       6.13
                                                                                          =============   ============
</Table>


<Table>
<Caption>
                                                                                    Non-Employee Options Outstanding
                                                                              ------------------------------------------
                                                                                                              Weighted
                                                                                                               Average
                                                                                                              Exercise
                                                                               Number of        Range           Price
                                                                                Options       Per Share       Per Share
                                                                              -----------     ---------       ----------
<S>                                                                          <C>             <C>              <C>
           BALANCES, July 1, 1998                                                162,498     $2.50 - 12.13      $ 9.15

                   Options granted                                                 9,000              9.78        9.78
                   Options canceled                                               (1,945)             7.75        7.75
                   Options canceled related to repricing                         (87,500)    10.63 - 12.13       12.00
                   Options issued related to repricing                            87,500              8.63        8.63
                   Options exercised                                              (9,340)      2.50 - 7.50        6.49
                                                                           -------------

           BALANCES, June 30, 1999                                               160,213       2.50 - 9.78        7.52

                   Options exercised                                             (12,833)             2.50        2.50
                                                                           -------------

           BALANCES, June 30, 2000                                               147,380       2.50 - 9.78        7.95

                   Options granted                                                10,000              3.00        3.00
                                                                           -------------

           BALANCES, June 30, 2001                                               157,380  $    2.50 - 9.78      $ 7.64
                                                                           =============  ================   =========
</Table>

     All non-employee options are fully vested at June 30, 2001. Included in the
     Company's net income (loss) for the year ended June 30, 2001, 2000, and
     1999 are charges of approximately $20,000, $26,000, and $339,000,
     respectively, which are a result of applying the SFAS No. 123, ACCOUNTING
     FOR STOCK-BASED COMPENSATION, to non-employees. In accordance with a new
     accounting pronouncement, $574,000 of previously recognized


                                      F-19
<Page>

     SFAS No. 123 expense was reversed in fiscal 2000 as a result of accounting
     for stock options issued to outside directors under APB Opinion 25, instead
     of SFAS No. 123.

     The weighted average fair value of options granted during fiscal 2001,
     2000, and 1999 was $1.69, $2.71, and $5.98, per share, respectively. All
     options were granted at an exercise price that approximated the market
     price.

     The Company follows the provisions of SFAS No. 123, ACCOUNTING FOR STOCK
     BASED COMPENSATION, effective for fiscal year 1997 for all issuances of
     stock options to non-employees of the Company. The Company follows APB
     Opinion No. 25 (Opinion 25), ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES for
     all issuances stock options to its employees. Generally, all stock options
     issued to the Company's employees, pursuant to the Plan, are not
     compensatory. No compensation cost has been recognized for stock options
     granted to employees under the Plan. Had compensation cost for the Plan
     been determined based upon the fair value at the grant date for options
     granted consistent with the provisions of SFAS 123, the Company's net
     income (loss) and net income (loss) per share would have been reduced to
     the pro forma amounts indicated below:

<Table>
<Caption>
                                                                    2001           2000             1999
                                                               -------------  -------------   ----------
<S>                                                            <C>            <C>             <C>
              Net income (loss) - as reported                  $ (766,000)    $   1,015,000   $     148,000
              Net income (loss) - pro forma                      (869,000)          731,000        (197,000)
              Earnings (loss) per share - as reported:
                             Basic and Diluted                 $    (.23)     $         .27    $       .03
              Earnings (loss) per share - pro forma:
                             Basic and Diluted                 $    (.26)     $         .19    $      (.04)
</Table>

     The fair value of each option grant under the Plan is estimated on the date
     of grant using the Black-Scholes option-pricing model with the following
     assumptions:

<Table>
<S>                                                                                          <C>
              Risk-free interest                                                             $ 5.5% - 6.5%
              Expected life                                                                   5-10 years
              Expected volatility                                                              32% - 54.5%
              Expected dividend                                                                  $-0-
</Table>

     The expected life was determined based on the Plan's vesting period and
     exercise behavior of the employees.


                                      F-20
<Page>

     If not exercised earlier, options outstanding as of June 30, 2001 will
     expire as follows:

<Table>
<Caption>
                                                Employees                                  Non-Employees
                                ------------------------------------------- ---------------------------------------------
                                                  Weighted                                   Weighted
                                                  Average       Range of                      Average        Range of
                                  Number of       Exercise      Exercise      Number of      Exercise        Exercise
                                   Options         Price         Price         Options         Price          Price
                                -------------- -------------   ------------ -------------  --------------  --------------
<S>                                 <C>       <C>            <C>                <C>        <C>             <C>
           2003                           -          -              -             1,760    $    2.50       $    2.50
           2004                           -          -              -            12,250         2.50            2.50
           2005                           -          -              -            21,870         7.75            7.75
           2006                      12,500    $     8.63     $     8.63         10,000         9.25            9.25
           2007                      72,500          8.63           8.63         85,000         8.50        6.50-8.63
           2008                      99,501          8.78     8.63-10.63         16,500         9.26        8.63-9.78
           2009                      20,000          8.50           8.50              -         -               -
           2010                     143,000          3.00           3.00              -         -               -
           2011                      25,000          3.00           3.00         10,000         3.00            3.00
</Table>


14.  NET INCOME (LOSS) PER SHARE:

     In the reconciliation of basic to diluted earnings per share, there were no
     reconciling items affecting the numerator in any year presented. The only
     items offsetting the denominator were the effects of stock options, which
     increased the basic weighted average shares by 29,000, and 44,000 in 2000
     and 1999, respectively. These additional dilutive securities had no
     material effect on 2000 or 1999 earnings per share.

     In 2001, due to the Company's net loss, all options, amounting to 529,881,
     were antidilutive and excluded from the earnings (loss) per share
     calculation.

     Options to purchase 547,881 shares of common stock were outstanding at June
     30, 2000. Of that total, 166,000 options had a dilutive effect on the 2001
     earnings per share calculation. For purposes of calculating diluted EPS,
     outstanding options resulted in 29,000 incremental shares determined using
     the treasury stock method. The remaining 381,881 options had an
     anti-dilutive effect and were therefore excluded from the calculation of
     diluted EPS.

     Options to purchase 402,214 shares of common stock were outstanding at June
     30, 1999. Of that total, 386,881 options had a dilutive effect on the 2001
     earnings per share calculation. For purposes of calculating diluted EPS,
     outstanding options resulted in 44,000 incremental shares determined using
     the treasury stock method. The remaining 15,333 options had an
     anti-dilutive effect and were therefore excluded from the calculation of
     diluted EPS.


                                      F-21
<Page>

15.  RETIREMENT PLAN:

     In January 1996, the Company adopted a defined contribution savings plan
     (the "401(k) Plan") to provide retirement income to employees of the
     Company. The 401(k) plan is funded by voluntary pre-tax contributions from
     employees up to a maximum amount equal to 15% of annual compensation and
     through matching contributions by the Company of $0.25 on the dollar for
     employee contributions on the first 5% of the employee annual compensation.
     For the years ended June 30, 2001, 2000, and 1999, the Company contributed
     $11,000, $15,000, and $14,000, respectively, to the 401(k) Plan on behalf
     of Company employees.

16.  DISCONTINUED OPERATIONS:

     On May 28, 1999, the Company adopted a formal plan to discontinue its
     headwear product line and cease headwear production operations. The assets
     of the headwear segment to be sold consisted primarily of inventory and
     property and equipment.

     The Company's headwear operations incurred an operating loss of
     approximately $113,000 in fiscal 1999 and recognized a $479,000 write-down
     to finished goods inventories and fixed assets. Net sales of the headwear
     division for fiscal year 1999 were $420,000. This amount is not included in
     net sales in the accompanying income statements.


                                      F-22
<Page>

                                   SCHEDULE II

                                SPORT-HALEY, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
<Table>
<Caption>
     COLUMN A                         COLUMN B                        COLUMN C                COLUMN D        COLUMN E
-------------------            --------------------   ----------------------------------- --------------   ------------
                                                                    ADDITIONS
                                                      -----------------------------------
                                     Balance at             Charged to       Charged to                       Balance
                                    Beginning of       Revenues, Costs and     Other                          at End
                                      Period                 Expenses         Accounts      Deductions       of Period
                               --------------------   -------------------- -------------- --------------   ------------
<C>                                <C>                    <C>               <C>         <C>                 <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS

June 30,
1999                               $  155,000             $    120,000      $    -      $    (188,000) (1)  $   87,000
2000                                  $87,000             $    199,000      $    -      $    (224,000) (1)  $   62,000
2001                                  $62,000             $     65,000      $    -      $     (47,000) (1)  $   80,000

ALLOWANCE FOR SALES RETURN

June 30,
1999                           $      107,000             $    917,000      $    -      $    (928,000) (2)  $   96,000
2000                                 $ 96,000             $    670,000      $    -      $    (698,000) (2)  $   68,000
2001                                 $ 68,000             $  1,115,000      $           $  (1,089,000) (2)  $   94,000
</Table>

------------------------
(1)  Writeoff of uncollectible accounts, net of recoveries of previously
     written-off uncollectible accounts.
(2)  Actual sales return.


                                      F-23