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

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


                                   FORM 10-Q

 
   (Mark One)
    [X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934. For the quarterly period ended JUNE 30, 1998.
                 
                                      or

    [ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934. For the transition period from _______to _______.


                         Commission File Number 0-16611
                                                -------

                              GLOBAL SPORTS, INC.
                              -------------------
             (Exact name of registrant as specified in its charter)


           DELAWARE                                     04-2958132
  ------------------------------------------------------------------------------
  (State or other jurisdiction           (I.R.S. Employer Identification Number)
of incorporation or organization)


   555 S. HENDERSON ROAD, KING OF PRUSSIA, PA                     19406
  ------------------------------------------------------------------------------
  (Address of principal executive offices)                      (Zip Code)


                                 610-878-8600
                                 ------------
              (Registrant's telephone number, including area code)

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

      Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of August 10, 1998:

       Common Stock, $.01 par value                  11,923,711
       ----------------------------        -----------------------------
           (Title of each class)                  (Number of Shares)
<PAGE>
 
--------------------------------------------------------------------------------
                              GLOBAL SPORTS, INC.
                 FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1998
                               TABLE OF CONTENTS
--------------------------------------------------------------------------------

<TABLE> 
<CAPTION> 
                                                                                    PAGE
                                                                                   ------     
<S>           <C>                                                               <C>
PART I - FINANCIAL INFORMATION

Item 1.       Financial Statements:

              Condensed Consolidated Balance Sheets
              as of June 30, 1998 and December 31, 1997                               3

              Condensed Statements of Operations
              for the three-and six-month periods ended June 30, 1998 and 1997        4

              Condensed Statements of Cash Flows
              for the six-month periods ended June 30, 1998 and 1997                  5

              Notes to Condensed Financial Statements                            6 -  9

Item 2.       Management's Discussion and Analysis of Results of Operations
              and Financial Condition                                           10 - 14

Item 3.       Quantitative and Qualitative Disclosures About Market Risk             14
 
PART II - OTHER INFORMATION

Item 1.       Legal Proceedings                                                      15

Item 2.       Changes in Securities and Use of Proceeds                              15

Item 3.       Defaults on Senior Securities                                          15

Item 4.       Submission of Matters to a Vote of Security Holders                    15

Item 5.       Other Information                                                      15

Item 6.       Exhibits and Reports on Form 8-K                                       15

Signatures                                                                           16
 
</TABLE>

                                      -2-
<PAGE>
 
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS

                      GLOBAL SPORTS, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                             JUNE 30,     DECEMBER 31,
                                                                               1998           1997
                                                                         --------------  -------------
                                                                            (Unaudited)
<S>                                                                        <C>            <C> 
                                   ASSETS
    Current assets:
     Cash and cash equivalents                                              $   179,725    $    98,881
     Accounts receivable, net of allowance for doubtful
      accounts of $1,030,969 in 1998 and $743,223 in 1997                    30,492,475     16,060,911
     Inventory                                                               21,820,077     16,906,171
     Prepaid expenses and other current assets                                1,067,960        933,548
                                                                         --------------  -------------
       Total current assets                                                  53,560,237     33,999,511
    Property and equipment, net of accumulated depreciation                             
       and amortization                                                       4,448,507      3,282,712
    Goodwill and intangibles, net                                            12,521,917      6,147,282
    Other assets                                                                 26,473          2,404
                                                                         --------------  -------------
                                                                                        
       Total assets                                                         $70,557,134    $43,431,909
                                                                         ==============  ============= 
                                                                                        
                    LIABILITIES AND STOCKHOLDERS' EQUITY                                
                                                                                        
    Current liabilities:                                                                
     Current portion - notes payable, bank                                  $10,670,455    $ 2,000,000
     Current portion - note payable, other                                      400,000              -
     Current portion - capital lease obligation, related party                  121,901        116,124
     Accounts payable and accrued expenses                                   25,516,769     16,114,305
     Subordinated notes payable                                               3,821,085      2,068,652
                                                                         --------------  -------------
       Total current liabilities                                             40,530,210     20,299,081
    Notes payable, bank                                                      15,400,423     18,666,248
    Note payable, other                                                       1,400,000              -
    Capital lease obligation, related party                                   2,246,800      2,309,231
    Commitments and contingencies
    Stockholders' equity:
     Preferred stock, $0.01 par value, 1,000,000 shares
       authorized; none issued
     Common stock, $0.01 par value, 20,000,000 shares
      authorized, 12,987,797 and 11,487,197 shares issued in 1998 and 1997;
      11,918,711 and 10,418,111 shares outstanding in 1998 and 1997             129,881        114,875
    Additional paid in capital                                               14,453,271      8,001,132
    Cumulative translation adjustment                                           (33,804)       (35,520)
    Accumulated deficit                                                      (3,355,830)    (5,709,321)
                                                                         --------------  -------------
                                                                                        
                                                                             11,193,518      2,371,166
                                                                                        
   Less: Treasury stock, at cost                                                213,817        213,817
                                                                         --------------  -------------
                                                                                        
      Total stockholders' equity                                             10,979,701      2,157,349
                                                                         --------------  -------------
                                                                                        
      Total liabilities and stockholders' equity                            $70,557,134    $43,431,909
                                                                         ==============  ============= 

The accompanying notes are an integral part of these condensed financial statements.
</TABLE>

                                      -3-
<PAGE>
 
                      GLOBAL SPORTS, INC. AND SUBSIDIARIES
                       CONDENSED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                        JUNE 30,                      JUNE 30,
                                                             ----------------------------  ---------------------------- 
                                                                  1998           1997           1998           1997
                                                             -------------  -------------  -------------  ------------- 
<S>                                                     <C>                  <C>                <C>            <C>
Net sales                                                      $28,320,457    $13,612,837    $56,468,835    $25,133,737
                                                             -------------  -------------  -------------  ------------- 
Costs and expenses:
   Cost of goods sold                                           21,006,045     10,364,277     41,029,944     19,965,114
   Selling, general and administrative expense                   5,514,850      3,032,732     10,895,573      6,269,386
                                                             -------------  -------------  -------------  -------------  
                                                                26,520,895     13,397,009     51,925,517     26,234,500
                                                             -------------  -------------  -------------  -------------  
Operating income (loss)                                          1,799,562        215,828      4,543,318     (1,100,763)
 
Other (income) expense:
   Interest expense, net                                           714,241        441,739      1,333,512        773,191
   Other, net                                                     (129,523)       (40,815)      (186,611)       (88,230)
                                                             -------------  -------------  -------------  -------------  
                                                                   584,718        400,924      1,146,901        684,961
                                                             -------------  -------------  -------------  -------------  
Income (loss) before equity in net loss of RYKA Inc.             1,214,844       (185,096)     3,396,417     (1,785,724)
Equity in net loss of RYKA Inc.                                          -        (20,407)             -        (87,129)
                                                             -------------  -------------  -------------  -------------  
Income (loss) before income taxes                                1,214,844       (205,503)     3,396,417     (1,872,853)
Provision for income taxes                                         392,926              -      1,042,926              -
                                                             -------------  -------------  -------------  -------------  
Net income (loss)                                              $   821,918    $  (205,503)   $ 2,353,491    $(1,872,853)
                                                             =============  =============  =============  =============  
Basic earnings per share                                              $.07                          $.22
                                                             =============                 =============                 
Diluted earnings per share                                            $.07                          $.21               
                                                             =============                 =============                 
Pro Forma Data: (See Note 5)
 
Loss before income taxes                                                      $  (205,503)                  $(1,872,853)
Pro forma provision for income taxes                                                    -                             -
                                                                            -------------                 -------------   
Pro forma net loss                                                            $  (205,503)                  $(1,872,853)
                                                                            =============                 =============    
Pro forma basic losses per share                                                    $(.07)                        $(.64)
                                                                            =============                 =============    
Pro forma diluted losses per share                                                  $(.07)                        $(.64)
                                                                            =============                 =============   

The accompanying notes are an integral part of these condensed financial statements.
</TABLE>

                                      -4-
<PAGE>
 
                      GLOBAL SPORTS, INC. AND SUBSIDIARIES
                       CONDENSED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED
                                                                     JUNE 30,
                                                            --------------------------
                                                               1998            1997
                                                            -----------    ----------- 
                                                          (Consolidated)   (Combined)
<S>                                                       <C>             <C>
Cash Flows from Operating Activities:
Net income (loss)                                           $ 2,353,491    $(1,872,853)
Adjustments to reconcile net income (loss) to net cash
   used in operating activities:
       Depreciation and amortization                            589,316         79,337
       Provision for losses on accounts receivable              (53,784)       (28,499)
       Equity in undistributed net loss of RYKA Inc.                  -         87,129
       Warrant expense                                                -        152,000
       Changes in operating assets and liabilities:
         Accounts receivable                                 (6,718,703)    (1,936,300)
         Inventory                                           (1,406,872)     1,303,129
         Prepaid expenses and other current assets              720,038        787,971
         Other assets                                          (153,754)        21,246
         Accounts payable and accrued expenses                3,974,419        239,536
                                                            -----------    ----------- 
 
         Net cash used in operating activities                 (695,849)    (1,167,304)
                                                            -----------    -----------  
 
Cash flows from investing activities:
   Capital expenditures                                        (163,170)       (29,546)
   Businesses acquired, net of cash                             357,773              -
   Investment in RYKA Inc.                                            -        448,943
                                                            -----------    -----------  
         Net cash provided by investing activities              194,603        419,397
                                                            -----------    -----------  
 
Cash flows from financing activities:
   Net borrowings under lines of credit                         870,108      1,303,823
   Repayments of capital lease obligation                       (56,654)       (55,797)
   Proceeds from issuance of common stock                        16,920              -
   Repayments on subordinated notes payable                    (250,000)      (376,414)
                                                            -----------    -----------  
 
         Net cash provided by financing activities              580,374        871,612
                                                            -----------    -----------  
 
Effect of exchange rate on cash and cash equivalents              1,716         18,087
                                                            -----------    -----------  
 
Net increase in cash and cash equivalents                        80,844        141,792
 
Cash and cash equivalents, beginning of period                   98,881        275,871
                                                            -----------    -----------  
 
Cash and cash equivalents, end of period                    $   179,725    $   417,663
                                                            ===========    ===========  

The accompanying notes are an integral part of these condensed financial statements.
</TABLE>

                                      -5-
<PAGE>
 
                     GLOBAL SPORTS, INC. AND SUBSIDIARIES
                         NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1 - BASIS OF PRESENTATION

Global Sports, Inc. ("Global" or the "Company"), a Delaware corporation,
designs, develops and markets branded footwear under the RYKA, YUKON and APEX
brand names as well as distributes off-price athletic footwear, apparel and
sporting goods worldwide, with primary distribution in the United States.

On December 15, 1997, the Company consummated a reorganization (the
"Reorganization"), among RYKA Inc. ("RYKA"), KPR Sports International, Inc.
("KPR"), Apex Sports International, Inc., MR Management, Inc. (the last three
companies collectively referred to as the "KPR Companies"), and Michael G.
Rubin, the Chairman and Chief Executive Officer of the Company.  After the
Reorganization, Mr. Rubin, the former sole shareholder of the KPR Companies,
then owned approximately 78.4% of the outstanding voting power of the Company.
Accordingly, the Reorganization was accounted for as a reverse purchase under
generally accepted accounting principles pursuant to which the KPR Companies
were considered to be the acquiring entity and the Company was the acquired
entity for accounting purposes, even though the Company was the surviving legal
entity. As a result of this reverse purchase accounting treatment, (i) the
historical financial statements presented for periods prior to the date of the
Reorganization are no longer the historical financial statements of RYKA; (ii)
the historical financial statements for periods prior to the date of the
Reorganization are those of the KPR Companies, (iii) all references to the
historical financial statements of the Company apply to the historical financial
statements of the KPR Companies prior to and subsequent to the Reorganization,
and (iv) any references to RYKA apply solely to that company and its financial
statements prior to the Reorganization.

The accompanying condensed financial statements of Global have been prepared in
accordance with generally accepted accounting principles for interim financial
information and in accordance with the instructions for Form 10-Q and Rule 10-01
of Regulation S-X.  Accordingly, they do not include all information and
footnotes required by generally accepted accounting principles for complete
financial statements.

The accompanying financial information is unaudited; however, in the opinion of
the Company's management, all adjustments (consisting solely of normal recurring
accruals) necessary for a fair presentation of the operating results of the
periods reported have been included. The results of operations for the periods
reported are not necessarily indicative of those that may be expected for a full
year.

This quarterly report should be read in conjunction with the financial
statements and notes thereto included  in the Company's audited financial
statements as of December 31, 1997 as presented in the Company's Annual Report
on Form 10-K.

NOTE 2 - ACQUISITION OF THE GEN-X COMPANIES

Effective May 12, 1998, the Company acquired Gen-X Holdings, Inc. and Gen-X
Equipment, Inc. (collectively, the "Gen-X Companies"). The Gen-X Companies were
privately-held companies based in Toronto, Ontario specializing in selling off-
price sporting goods and winter sports equipment (including ski and snowboard
equipment), in-line skates, sunglasses, skateboards and specialty footwear. For
their fiscal year ended September 30, 1997, the Gen-X Companies had revenues of
approximately $31 million and net income of $2 million. In consideration for
acquiring the stock of the Gen-X Companies, the Company issued 1.5 million
shares of its common stock and contingent consideration in the form of
noninterest-bearing notes and shares of mandatorily redeemable preferred stock
in the aggregate amount of $5 million. The notes and shares are payable or
redeemable at $1 million per year over a five-year period upon achieving certain
sales and gross profit targets. The total purchase price, including acquisition
expenses of approximately $380,000 but excluding the contingent consideration
described above, was $6,793,020.  This purchase price is based on the 10-day
average market price of the 1.5 million shares discounted by 35% to reflect that
these shares represent a large block of the Company's stock.  Purchase price
allocation has resulted in goodwill of $6,644,083 that will be amortized on a
straight line basis over 20 years.  If and when the contingent consideration is
issued, this goodwill will increase.

                                      -6-
<PAGE>
 
                     GLOBAL SPORTS, INC. AND SUBSIDIARIES
                         NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 3 - PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma financial information shows the results of the
Company's operations for the three- and six-month periods ended June 30, 1997 as
if the Reorganization (see Note 1) and acquisition of the Gen-X Companies (see
Note 2) had occurred on January 1, 1997. Adjustments have been made to record
the amortization of goodwill and intangibles, to eliminate intercompany rental
charges, to record interest expense on the post-Reorganization subordinated debt
and to eliminate the KPR Companies' equity in the net losses of RYKA recorded
prior to the Reorganization. All share and per share information has been
adjusted as if the 1-for-20 reverse stock split and the issuance of 7,100,000
shares of the Company's common stock, both of which were effected at the
Reorganization, and the issuance of 1,500,000 shares of the Company's common
stock effected in the acquisition of the Gen-X Companies had also occurred on
January 1, 1997. The pro forma information does not purport to be indicative of
the Company's results of operations had the Reorganization and acquisition
actually occurred on that date nor is it necessarily indicative of future
operating results.

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED                SIX MONTHS ENDED            
                                                                June 30,                        June 30,              
                                                      ---------------------------     ----------------------------
                                                         1998            1997            1998             1997    
                                                      -----------     -----------     -----------      -----------
<S>                                                   <C>             <C>             <C>              <C>
    Net sales                                         $31,094,399     $26,053,144     $66,070,503      $50,023,390
                                                      -----------     -----------     -----------      -----------
    Costs and expenses:                                                                         
    Cost of goods sold                                 23,745,090      20,170,938      49,124,004       38,922,162
    Selling, general and administrative expense         5,994,117       5,245,969      12,486,546       10,304,975
                                                      -----------     -----------     -----------      ----------- 
                                                       29,739,207      25,416,907      61,610,550       49,227,137
                                                      -----------     -----------     -----------      ----------- 
    Operating income                                    1,355,192         636,237       4,459,953          796,253
    Other expense, net                                    653,400         612,171       1,395,468        1,203,768
                                                      -----------     -----------     -----------      -----------
    Income (loss) before income taxes                     701,792          24,066       3,064,485         (407,515)
    Provision for income taxes                            239,003         133,598         870,451          563,307
                                                      -----------     -----------     -----------      -----------
    Net income (loss)                                  $  462,789      $ (109,532)     $2,194,034       $ (970,822)
                                                      ===========     ===========     ===========      ===========
    Income (losses) per share-basic and diluted        $      .04      $     (.01)     $      .18       $     (.09)
                                                      ===========     ===========     ===========      ===========
    Weighted average common and common equivalent                                               
    shares outstanding-basic and diluted               11,918,711      11,527,920      11,918,456       11,432,595
                                                      ===========     ===========     ===========      ===========
</TABLE>
NOTE 4 - DEBT

NOTES PAYABLE, BANK

On November 20, 1997, the KPR Companies and RYKA entered into a Loan and
Security Agreement (the "Loan Agreement") with a new lender pursuant to which
their prior lender was repaid in full on November 21, 1997.  Under the Loan
Agreement, as amended, the Company has access to a combined credit facility of
$40,000,000, which is comprised of the KPR Companies' credit facility of
$35,000,000 and RYKA's credit facility of $5,000,000. The term of the Loan
Agreement is five years. The KPR Companies and RYKA have an interest rate choice
of prime plus 1/4% or LIBOR (Adjusted Eurodollar Rate) plus two hundred seventy-
five basis points (8 3/4% at December 31, 1997 and June 30, 1998).  Under the
Loan Agreement, both the KPR Companies and RYKA may borrow up to the amount of
their revolving line based upon 85% of their eligible accounts receivable and
65% of their eligible inventory, as those terms are defined in the Loan
Agreement.  The Loan Agreement also includes 50% of outstanding letters of
credit as collateral for borrowing.  In addition to the revolving lines of
credit described above, the new lender will over-advance to the Company a
combined additional total of $3,000,000, comprised of the KPR Companies'
additional $2,000,000 and RYKA's additional $1,000,000, over the collateral for
additional letters of credit needed for seasonal production of new merchandise
for the Fall 1998, Spring 1999 and Fall 1999 seasons. At June 30, 1998, the
aggregate amount outstanding under this line was $17,933,087. The Company has
classified $2,840,879 of the amount outstanding as a current liability based on
the Company's expectation of the amounts which will be satisfied within the next
year. Of this amount $840,879 was related to the seasonal overadvance. At June
30, 1998, based on available collateral, an additional $222,164 was available on
this line for borrowing.

                                      -7-
<PAGE>
 
                     GLOBAL SPORTS, INC. AND SUBSIDIARIES
                         NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

The total interest incurred in connection with this facility was $496,731 and
$961,683 for the three-and six-month periods ending June 30, 1998, respectively.
Closing and other fees incurred at the inception of the new facilities in the
amount of approximately $266,000 have been included on the balance sheet and are
being amortized over the term of the Loan Agreement. Additional fees of $80,000
were incurred during 1998 related to line increases and over-advance activation
have also been capitalized.  As of June 30, 1998, the unamortized balance of
such fees was $294,402.

The Company has an additional line of credit of approximately $14,600,000 for
use by the Gen-X Companies, which is available for either direct borrowing or
for import letters of credit.  The loan bears interest at prime plus one half
percent and is secured by a general  security agreement covering all of the Gen-
X Companies' assets. At June 30, 1998, approximately $7,800,000 was outstanding
under this line and, based on available collateral, an additional $3,111,000 was
available for borrowing. 

Notes payable, bank also includes a mortgage payable secured by land and
building in Ontario, Canada  of $337,791, of which $29,576 is classified as
current, bearing interest at the bank's cost of funds plus 2.5% and maturing on
August 15, 2009.

NOTES PAYABLE, OTHER

Other debt related to the Gen-X Companies includes a loan payable to Ride Inc.
for $1,800,000, of which $400,000 is classified as current.  This loan is
repayable in equal quarterly installments of $100,000 which commenced on  March
31, 1998 and bears interest at the prime lending rate.

SUBORDINATED NOTES PAYABLE

At June 30, 1998, the Company had $1,822,020 in subordinated notes payable held
by its Chairman and CEO, which included accrued interest on such notes of
$16,178.  This debt consisted primarily of a note representing undistributed
Subchapter S corporation retained earnings previously taxed to him as the sole
shareholder of the KPR Companies prior to the Reorganization (see Note 1).
Interest accrues on such notes at the Company's choice of prime plus  1/4% or
LIBOR (Adjusted Eurodollar Rate) plus two hundred seventy-five basis points.
The interest rate at June 30, 1998 was 8 3/4% and interest recorded during the
six-month period was $98,536.  Based on its Loan Agreement (see Note 3), the
Company is permitted to make continued regular payments of interest on the
subordinated debt and to further reduce principal on a quarterly basis,
commencing subsequent to the first quarter of 1998, in an amount up to 50% of
the cumulative consolidated net income of the Company.  Through June 30, 1998,
aggregate payments of $250,000 were made to the note holder to reduce principal.

Upon closing the Gen-X transaction on May 12, 1998, several subordinated notes
payable were executed with the former shareholders of the Gen-X Companies for an
aggregate of $1,999,047 which is payable upon the earlier of the Company raising
certain additional capital or in four equal consecutive quarterly payments
beginning March 31, 1999.  This note bears interest at 7% until December 31,
1998 and the prime lending rate thereafter.

NOTE 5 - RELATED PARTIES

The Company is located in King of Prussia, Pennsylvania where it conducts its
operations and warehouses inventory in a facility leased from the Company's
Chairman and CEO. The lease has been accounted for as a capital lease, which
resulted in $59,519 and $118,411 recorded to interest expense for the three-and
six-month periods ended June 30, 1998. At June 30, 1998, the Company's
investment in the capital lease was $2,109,610, which is included in property
and equipment.

The Company also has subordinated notes payable with its Chairman and CEO, as
referred to in Note 4 above.

                                      -8-
<PAGE>
 
                     GLOBAL SPORTS, INC. AND SUBSIDIARIES
                         NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 6 - EARNINGS (LOSSES) PER SHARE

Earnings (losses) per share for all periods have been computed in accordance
with SFAS No. 128, Earnings Per Share. Basic earnings (losses) per share is
computed by dividing net income (loss) by the weighted average number of shares
of common stock outstanding during the year. Diluted earnings (losses) per share
is computed by dividing the net income (loss) by the weighted average number of
shares outstanding during the year, assuming dilution by outstanding common
stock options and warrants.

Pro forma basic earnings (losses) per share represents pro forma net income
(loss) (after a pro forma provision for income taxes in 1997 as if the Company
had been subject to federal and state income taxation as a C corporation since
inception) divided by the weighted average number of common shares outstanding
during the period. Pro forma diluted earnings (losses) per share is computed by
dividing pro forma net income (loss) by the weighted average number of common
shares outstanding during the period, assuming dilution by outstanding common
stock options and warrants.

The amounts used in calculating earnings (losses) per share data are as follows:

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED            SIX MONTHS ENDED
                                                         JUNE 30,                      JUNE 30,
                                               ---------------------------   -------------------------
                                                   1998            1997         1998          1997
                                               -----------     -----------   -----------   -----------
<S>                                           <C>              <C>          <C>          <C>
Net income.................................... $   821,918                   $ 2,353,491
                                               ===========                   ===========               
Pro forma net loss............................                  $ (205,503)                $(1,872,853)
                                                               ===========                 ===========
Weighted average shares
   outstanding - basic........................  11,226,403       2,880,109    10,824,533     2,927,920
                                               ===========     ===========   ===========   ===========
Weighted average shares
   outstanding - diluted......................  11,537,668       2,880,109    11,057,701     2,927,920
                                               ===========     ===========   ===========   ===========
Outstanding common stock options having no
   dilutive effect............................     271,692         199,463       196,736       201,188
                                               ===========     ===========   ===========   ===========
Outstanding common stock warrants having no
   dilutive effect............................     188,816         106,186       211,448       106,186
                                               ===========     ===========   ===========   ===========
</TABLE>
The Company's pro forma net loss in 1997 results in an antidilutive effect in
the calculation of pro forma diluted earnings (losses) per share.


NOTE 7 - CONTINGENCIES

As of June 30, 1998, outstanding purchase commitments exist totaling $9,697,169,
for which commercial letters of credit have been issued.


NOTE 8 - COMPREHENSIVE INCOME

Comprehensive income for the three-and six-month periods ended June 30, 1998 and
1997 was as follows:

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED             SIX MONTHS ENDED
                                                        JUNE 30,                      JUNE 30,
                                               ---------------------------   -------------------------
                                                  1998            1997          1998          1997
                                               -----------     -----------   -----------   -----------
<S>                                           <C>             <C>            <C>          <C>   
Net income (loss)                              $   821,918     $(205,503)    $ 2,353,491   $(1,872,853)
Foreign currency translation adjustment               (955)         (1,636)        1,716        23,778
                                               -----------     -----------   -----------   ----------- 
Comprehensive income (loss)                    $   820,963     $  (207,139)  $ 2,355,207   $(1,849,075)
                                               ===========     ===========   ===========   ===========
</TABLE>

                                      -9-
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION

FORWARD LOOKING STATEMENTS

Certain information contained in this Form 10-Q contains forward looking
statements (as such term is defined in the Securities Exchange Act of 1934 and
the regulations thereunder), including without limitation, statements as to the
Company's financial condition, results of operations and liquidity and capital
resources and statements as to management's beliefs, expectations or options.
Such forward looking statements are subject to risks and uncertainties and may
be affected by various factors which may cause actual results to differ
materially from those in the forward looking statements. Certain of these risks,
uncertainties and other factors, as and when applicable, are discussed in the
Company's filings with the Securities and Exchange Commission, including its
most recent Form 10-K, a copy of which may be obtained from the Company upon
request and without charge (except for the exhibits thereto).

STRATEGIC BUSINESS DEVELOPMENTS AFFECTING COMPARABILITY

On December 15, 1997, the Company consummated the Reorganization. As a result,
Mr. Rubin, as sole shareholder of the KPR Companies, received RYKA shares which
gave him voting control over the combined companies. Accordingly, for accounting
purposes, the KPR Companies are considered the continuing entity and the
transaction has been accounted for as a Reorganization of the KPR Companies
followed by the issuance of new shares of common stock of the KPR Companies for
the net assets of RYKA.

Effective May 12, 1998, the Company acquired Gen-X Holdings, Inc. and Gen-X
Equipment, Inc. (collectively, the "Gen-X Companies") in a purchase transaction
(the "Acquisition").  The Company's reported results of operations for 1998
include those of the Gen-X Companies from the date of acquisition through the
end of the period.  For the period May 12, 1998 through June 30, 1998, the Gen-X
Companies reported net sales of $7,668,639 and net income of $534,641.

The Reorganization and Acquisition affect comparability of second quarter and
year-to-date 1998 results with reported results for the comparable 1997 periods.
A more meaningful analysis can be made by comparing 1998 pro forma results with
the 1997 pro forma results as if the Reorganization and Acquisition had occurred
on January 1, 1997.  The 1997 and 1998 pro forma information does not purport to
be indicative of the Company's results of operations had the transactions
described above actually occurred on the dates presented nor is it necessarily
indicative of future operating results. The 1997 and 1998 pro forma information
does not include the effects of cost savings and sales synergies expected to be
realized as a result of the Reorganization and the Acquisition. The following
"Results of Operations" discussion describes the comparison of the second
quarter and year-to-date periods of 1998 on a pro forma basis to the comparable
1997 periods on a pro forma basis, unless otherwise noted.

                                      -10-
<PAGE>
 
RESULTS OF OPERATIONS (THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 1998 ON A
                       PRO FORMA BASIS VERSUS COMPARABLE 1997 PERIODS ON A 
                       PRO FORMA BASIS)

The following table sets forth, for the periods indicated, the relative
percentages that certain items in the Company's Statements of Operations bear to
net sales:

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED JUNE 30,
                             --------------------------------------------------------------------------------------------------
                                       1998                     1998                     1997                     1997
                             -----------------------  -----------------------  -----------------------  -----------------------
                                  $           % OF         $          % OF         $           % OF          $          % OF
                                             SALES                    SALES                    SALES                    SALES
                             ------------  ---------  ------------  ---------  ------------  ---------  ------------  ---------
                                    (As Reported)             (Pro Forma)             (As Reported)             (Pro Forma)
<S>                          <C>           <C>        <C>           <C>        <C>           <C>        <C>           <C>       
Net sales................... $ 28,320,457    100.0%   $ 31,094,399    100.0%   $ 13,612,837    100.0%   $ 26,053,144    100.0%
                             ------------  ---------  ------------  ---------  ------------  ---------  ------------  ---------
 
Cost & expenses:
   Cost of goods sold.......   21,006,045      74.2%    23,745,090      76.4%    10,364,277      76.1%    20,170,938      77.4% 
SG&A expense................    5,514,850      19.5%     5,994,117      19.3%     3,032,732      22.3%     5,245,969      20.1% 
                             ------------  ---------  ------------  ---------  ------------  ---------  ------------  --------- 
Operating income............    1,799,562       6.3%     1,355,192       4.3%       215,828       1.6%       636,237       2.5% 
Other expense, net..........      584,718       2.0%       653,400       2.0%       421,331       3.0%       612,171       2.4% 
                             ------------  ---------  ------------  ---------  ------------  ---------  ------------  --------- 
Income (loss)
before income taxes.........    1,214,844       4.3%       701,792       2.3%      (205,503)     (1.4%)       24,066       0.1%
Provision for income taxes..      392,926       1.4%       239,003       0.8%            -          -        133,598       0.5% 
                             ------------  ---------  ------------  ---------  ------------  ---------  ------------  --------- 
Net income (loss)........... $    821,918       2.9%  $    462,789       1.5%  $   (205,503)     (1.4%) $   (109,532)     (0.4%)
                             ============  =========  ============  =========  ============  =========  ============  =========


                                                                    SIX MONTHS ENDED JUNE 30,
                             --------------------------------------------------------------------------------------------------
                                       1998                     1998                     1997                     1997
                             -----------------------  -----------------------  -----------------------  -----------------------
                                  $           % OF         $          % OF         $           % OF          $          % OF
                                             SALES                    SALES                    SALES                    SALES
                             ------------  ---------  ------------  ---------  ------------  ---------  ------------  ---------
                                    (As Reported)             (Pro Forma)             (As Reported)             (Pro Forma)

Net sales                    $ 56,468,835     100.0%  $ 66,070,503     100.0%  $ 25,133,737     100.0%  $ 50,023,390     100.0%
                             ------------  ---------  ------------  ---------  ------------  ---------  ------------  ---------
Cost & expenses:
   Cost of goods sold.......   41,029,944      72.7%    49,124,004      74.4%    19,965,114      79.4%    38,922,162      77.8% 
SG&A expense................   10,895,573      19.3%    12,486,546      18.9%     6,269,386      24.9%    10,304,975      20.6% 
                             ------------  ---------  ------------  ---------  ------------  ---------  ------------  --------- 
Operating income............    4,543,318       8.0%     4,459,953       6.7%    (1,100,763)     (4.3%)      796,253       1.6% 
Other expense, net..........    1,146,901       2.0%     1,395,468       2.1%       772,090       3.1%     1,203,768       2.4% 
                             ------------  ---------  ------------  ---------  ------------  ---------  ------------  --------- 
Income (loss)
before income taxes.........    3,396,417       6.0%     3,064,485       4.6%    (1,872,853)     (7.4%)     (407,515)     (0.8%) 
Provision for income taxes..    1,042,926       1.8%       870,451       1.3%            -          -        563,307       1.1% 
                             ------------  ---------  ------------  ---------  ------------  ---------  ------------  --------- 
Net income (loss)........... $  2,353,491       4.2%  $  2,194,034       3.3%  $ (1,872,853)     (7.4%) $   (970,822)     (1.9%)
                             ============  =========  ============  =========  ============  =========  ============  =========
</TABLE> 

                                      -11-
<PAGE>
 
NET SALES

Net sales for the second quarter of 1998 on a pro forma basis increased
$5,041,255, or 19.3%, over the same period in 1997 on a pro forma basis.  Net
sales for the six month period ended June 30, 1998 on a pro forma basis
increased $16,047,114, or 32.1%, over the same period in 1997 on a pro forma
basis.  These increases were primarily attributable to the on-going expansion of
the Company's off-price business, reflecting the continued excess availability
of off-price merchandise in the marketplace.

COST OF GOODS SOLD/GROSS MARGIN

Cost of goods sold for the second quarter of 1998 on a pro forma basis increased
$3,574,152, or 17.7%, over the same period in 1997 on a pro forma basis.  Cost
of goods sold for the six month period ended June 30, 1998 on a pro forma basis
increased $10,201,842, or 26.2%, over the same period in 1997 on a pro forma
basis.  Gross margin (as a percentage of sales) increased in the second quarter
of 1998 on a pro forma basis to 23.6% from 22.5% in the same period in 1997 on a
pro forma basis.  For the six months ended June 30, 1998 on a pro forma basis,
gross margin increased to 25.7% from 22.2% in the same period in 1997 on a pro
forma basis.  The first quarter of 1997 on a pro forma basis experienced
unusually low gross margins as a result of the lack of substantial off-price
purchases and management's desire to reduce off-price inventories.  This trend
did not continue into the second quarter of 1997.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

Selling, general and administrative ("SG&A") expense for the second quarter of
1998 on a pro forma basis increased $748,148, or 14.3%, over the same period in
1997 on a pro forma basis. SG&A expense for the six month period ending June 30,
1998 on a pro forma basis increased $2,181,571, or 21.2%, over the same period
in 1997 on a pro forma basis. Exclusive of the Gen-X Companies, the Company's
SG&A expenses were relatively flat across the three-month periods ended June 30,
1998 and 1997 on a pro forma basis. Of the increase for the six-month period,
approximately $1,046,000 relates to the base Global Sports business exclusive of
the Gen-X Companies. This reflects the Company's increased warehousing cost in
support of the higher sales volumes in the off-price business and greater
promotional and advertising expenditures in support of the Company's commitment
to market and develop the products of the branded business.  These increases
were partially offset by a decrease in the legal and other professional fees
related to the 1997 Reorganization and debt refinancing.  The remaining increase
from 1997 to 1998 for the three- and six-month periods ended June 30 of
approximately $731,000 and $1,172,000 represent increases in the SG&A
expenditures of the Gen-X Companies due to a relatively substantial growth in
business experienced in the latter half of 1997 and throughout 1998.  Large
headcount increases resulted in increased salary expenses from period to period
and selling and marketing expenses grew as the sales force grew and migrated the
customer base from primarily house accounts to commissioned sales agent
accounts.  In addition, the Gen-X Companies increased their attendance at
industry trade shows in order to increase the new company's exposure.

OTHER EXPENSE, NET

Other expense, net for the second quarter of 1998 on a pro forma basis increased
$41,229, or 6.7%, over the same period on a pro forma basis in 1997.  Other
expense, net for the six-month period on a pro forma basis ending June 30, 1998
increased $191,700, or 15.9%, over the same period on a pro forma basis in 1997.
The increase for the six-month period reflects greater interest expense as a
result of increased borrowing to support the growth in inventories.

                                      -12-
<PAGE>
 
FINANCIAL CONDITION

CASH FLOWS

Prior to the Reorganization, the operations of the KPR Companies had been
financed by a combination of internally generated resources and annual increases
in the size of the bank credit facility. The operations of RYKA were financed by
equity transactions, subordinated borrowings and annual increases in the size of
RYKA's bank credit facility. Increases in the bank credit facilities for the KPR
Companies and RYKA were required to fund the Company's increased investment in
accounts receivable and inventory necessary to support the increases in revenue.
As of June 30, 1998, the Company had working capital of $13,030,027. The
Company used $695,849 in cash flows from operating activities for the six months
ended June 30, 1998, whereas in the same period of the prior year the Company
used $1,167,304  in cash flows from operating activities.

LIQUIDITY

On November 20, 1997, the KPR Companies and RYKA entered into the Loan Agreement
with a new lender pursuant to which their prior lender was repaid in full on
November 21, 1997.  Under the Loan Agreement, the Company has access to a
combined credit facility of  $25,000,000, which is comprised of the KPR
Companies' credit facility of  $20,000,000 and RYKA's credit facility of
$5,000,000.  The term of the Loan Agreement is five years.  The KPR Companies
and RYKA have an interest rate choice of prime plus  1/4% or LIBOR (Adjusted
Eurodollar Rate) plus two hundred seventy-five basis points.  The Company's
aggregate credit facility was subsequently increased to $30,000,000 on February
20, 1998 and to $40,000,000 on June 3, 1998 by increasing the line of credit
available to the KPR Companies to $35,000,000.  Under this new credit facility,
both the KPR Companies and RYKA may borrow up to the amount of their revolving
line based upon 85% of their eligible accounts receivable and 65% of their
eligible inventory, as those terms are defined in the Loan Agreement. In
addition to the revolving lines of credit described above, the new lender will
over-advance to the Company a combined additional total of $3,000,000, comprised
of the KPR Company's additional $2,000,000 and RYKA's additional $1,000,000 over
the collateral for additional letters of credit needed for seasonal production
of new merchandise for the Fall 1998, Spring 1999 and Fall 1999 seasons. The
aggregate outstanding under this line at June 30, 1998 was $17,933,087, of which
$840,879 was related to the seasonal overadvance. At June 30, 1998, based on
available collateral, an additional $222,164 was available on this line for
borrowing.

The Company has an additional line of credit of $14,600,000 for use by the Gen-X
Companies, which is available for either direct borrowing or for import letters
of credit. The loan bears interest at prime plus one half percent and is secured
by a general security agreement covering all of the Gen-X Companies' assets. At
June 30, 1998, approximately $7,800,000 was outstanding under this line and
based on available collateral an additional $3,111,000 was available for
borrowing.

As of the closing of the Loan Agreement, the KPR Companies owed Michael Rubin,
its Chairman and CEO, subordinated debt of $3,055,841 which is comprised of (i)
a loan from Mr. Rubin to the KPR Companies in the principal amount of $851,440,
plus accrued and unpaid interest on such loan of $180,517 through October 31,
1997 and (ii) a note in the principal amount of $2,204,401 representing
undistributed Subchapter S corporation retained earnings previously taxed to him
as the sole shareholder of the KPR Companies. No interest accrued on the note
representing Subchapter S corporation earnings until December 15, 1997, the
effective date of the Reorganization, at which time the interest began to accrue
on such note at a choice of prime plus 1/4% or LIBOR (Adjusted Eurodollar Rate)
plus two hundred seventy-five basis points. The Loan Agreement and the related
Subordination Agreement allowed the Company to repay Mr. Rubin $1,000,000 of the
subordinated debt principal and the accrued interest of $180,517 at the time of
the closing of the Loan Agreement or within five days thereafter, subject to
there being $2,000,000 of availability under the KPR Companies' credit line
after taking into account such payments. Such payments were made to Mr. Rubin on
November 26, 1997. In addition, the Loan Agreement and the Subordination
Agreement permit the KPR Companies to make continued regular payments of
interest on the subordinated debt and to further reduce principal on a quarterly
basis, commencing with the first quarter of 1998, in an amount up to 50% of the
cumulative consolidated net income of both borrowers, reduced by net losses of
the borrowers during such period. Through June 30, 1998, aggregate payments of
$250,000 were made to the note holder to reduce principal.

Management believes that they have adequate financing to allow the Company to
continue its operations and meet its obligations as they mature, during the
foreseeable future. In addition, the Company is currently exploring various
alternatives for raising additional capital.

                                      -13-
<PAGE>
 
YEAR 2000

The Company is currently enhancing its current information systems to make them
Year 2000 compliant.  The Company has created a Year 2000 project team which
will coordinate efforts to evaluate, identify, correct or reprogram, and test
the Company's existing systems for Year 2000 compliance.  The Company will take
the required steps to make its existing systems Year 2000 compliant prior to the
end of 1998 and does not expect the costs of such steps to have a material
impact on the Company's results of operations, financial position, liquidity or
capital resources.  However, if such efforts are not completed on a timely
basis, the Year 2000 issue could have a material adverse impact on the
operations of the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


                                      -14-
<PAGE>
 
PART II - OTHER INFORMATION
 
ITEM 1.    LEGAL PROCEEDINGS
           Not Applicable.
 
ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS

    (c)    Effective May 12, 1998, the Company issued 1,500,000 shares of 
           common stock (par value $.01 per share) and 10,000 shares of
           preferred stock in addition to other contingent consideration, to DMJ
           Financial, Inc., James J. Selter, Kenneth J. Finkelstein and various
           other entities and individuals in exchange for all of the issued and
           outstanding shares of capital stock of Gen-X Equipment Inc. and Gen-X
           Holdings Inc. The issuance of the common stock and preferred stock
           was exempt from registration pursuant to section 4(2) of the
           Securities Act.
           
ITEM 3.    DEFAULTS ON SENIOR SECURITIES
           Not Applicable.
 
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
           Not Applicable.
 
ITEM 5.    OTHER INFORMATION
           Not Applicable.
 
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K
 
    (a)    Exhibits
 
  10.1     Consent and Amendment No. 3 to the Loan Documents by and among KPR
           Sports International, Inc., RYKA Inc. and Foothill Capital
           Corporation.
  10.2     Amendment No. 4 to the Loan Documents by and among KPR Sports
           International, Inc., RYKA Inc. and Foothill Capital Corporation.
  27.1     Financial data schedule for the six-month period ended
           June 30, 1998 (electronic filing only).
 
    (b)    Reports on Form 8-K
 
           The Company filed a Current Report on Form 8-K on May 27, 1998
           related to the acquisition of Gen-X Holdings, Inc. and Gen-X
           Equipment, Inc. 

                                      -15-
<PAGE>
 
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.



                                                 GLOBAL SPORTS, INC.
 
 
 
   DATE:    August 14, 1998                By:   /s/ Michael G. Rubin
                                                ----------------------
                                                    Michael G. Rubin
                                                Chairman of the Board &
                                                Chief Executive Officer
 

   DATE:    August 14, 1998                By:   /s/  Steven A. Wolf 
                                                ---------------------- 
                                                    Steven A. Wolf
                                               Chief Financial Officer

                                      -16-