Family Golf Centers Inc · 424B1 · On 7/8/96

Confirming Copy   ·   Filed On 7/8/96   ·   SEC File 333-04541   ·   Accession Number 950136-96-569

Prospectus   ·   Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Definitive Materials                                 228  1,014K 

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Filed Pursuant to Rule 424(b)(1)        
Registration File Nos.        
File No. 333-4541 and File No. 333-7489         

PROSPECTUS                                                                      

3,000,000 SHARES    

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FAMILY GOLF CENTERS, INC.   

COMMON STOCK  

All of the 3,000,000 shares of common stock, par value $0.01 per share    
(the "Common Stock"), offered hereby (the "Offering"), are being sold by        
Family Golf Centers, Inc. (the "Company"). The Common Stock is quoted on the    
Nasdaq National Market under the symbol "FGCI." On July 2, 1996, the last       
sale price of the Common Stock as reported by the Nasdaq National Market was    
$28 1/8 per share. See "Price Range of Common Stock."                           

SEE "RISK FACTORS" BEGINNING ON PAGE 7 HEREIN FOR A DISCUSSION OF   
CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS.   

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND    
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES   
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE      
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY     
IS A CRIMINAL OFFENSE.  

                                                                · Download Table

                  PRICE TO      UNDERWRITING     PROCEEDS TO 
                   PUBLIC       DISCOUNT (1)     COMPANY (2) 
              --------------  --------------  ---------------
                                                             
Per Share  ..      $27.00          $1.89           $25.11    
Total(3) ....   $81,000,000      $5,670,000      $75,330,000 

(1) The Company and certain stockholders of the Company have agreed to    
 indemnify the several underwriters identified elsewhere herein (the
"Underwriters") against certain liabilities, including liabilities
  under the Securities Act of 1933, as amended (the "Securities Act").
See "Underwriting."                                               

 (2) Before deducting expenses payable by the Company estimated at $500,000.

(3) Certain stockholders of the Company (the "Selling Stockholders") have 
granted the Underwriters a 30-day option to purchase up to 450,000
   additional shares of Common Stock on the same terms and conditions as
set forth above, solely to cover over-allotments, if any. If the  
   Underwriters exercise this option in full, the total Price to Public,
    Underwriting Discount, Proceeds to Company and proceeds to the Selling
Stockholders will be $93,150,000, $6,520,500, $75,330,000 and     
$11,299,500, respectively. See "Principal Stockholders" and       
"Underwriting."                                                   

The shares of Common Stock are offered by the Underwriters, subject to    
prior sale, when, as and if issued to and accepted by the Underwriters and      
subject to approval of certain legal matters by counsel for the Underwriters.   
It is expected that delivery of the Common Stock will be made against payment   
therefor on or about July 9, 1996, in New York, New York.                       

JEFFERIES & COMPANY, INC.                                                       

                                            HAMPSHIRE SECURITIES CORPORATION

July 3, 1996                                                                    

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IMAGE OMITTED     
[Map depicting Locations of Family Golf Centers, Inc. Facilities      
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IMAGES OMITTED ON INSIDE FRONT COVER AND INSIDE BACKCOVER OF PROSPECTUS 
VARIOUS PHOTOGRAPHS DEPICTING FAMILY GOLF CENTERS, INC. FACILITIES

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IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK   
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH    
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE              
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE    
DISCONTINUED AT ANY TIME.                                                       

IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP   
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET    
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN        
ACCORDANCE WITH RULE 10b-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE      
"UNDERWRITING."                                                                 

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PROSPECTUS SUMMARY  

The following summary is qualified in its entirety by the more detailed   
information and financial statements, including the notes thereto, appearing    
elsewhere in this Prospectus. Unless otherwise indicated, the information in    
this Prospectus assumes that the Underwriters' over-allotment option is not     
exercised. As used in this Prospectus, the term "Company" means, unless the     
context requires otherwise, Family Golf Centers, Inc. and its subsidiaries.     
Prospective investors are urged to read this Prospectus in its entirety.        

THE COMPANY   

Family Golf Centers, Inc. operates golf centers designed to provide a wide
variety of practice opportunities, including facilities for driving,            
chipping, putting, pitching and sand play. In addition, the Company's golf      
centers typically offer golf lessons instructed by PGA-certified golf           
professionals, full-line pro shops and other amenities to encourage family      
participation. The Company currently owns, leases or manages 24 golf            
facilities, comprised of 17 golf centers and seven combination golf center      
and golf course facilities located in ten states. Of the golf centers, seven    
are currently operated under the name "Golden Bear Golf Centers," licensed      
from Jack Nicklaus' licensing company, Golden Bear Golf Centers, Inc. Of the    
seven combination golf center and golf course facilities, six include par-3     
golf courses, generally designed to facilitate the practice of golf, and one    
includes a regulation 18-hole golf course. The Company has experienced          
significant recent growth, primarily through the acquisition or opening of 20   
facilities since the Company's initial public offering in November 1994. The    
Company's total revenue increased from $1.9 million in 1992 to $12.4 million    
for the year ended December 31, 1995. During the same period, the Company's     
net income increased from a net loss of $22,000 to a net profit of $1.1         
million.                                                                        

The Company's strategy is to grow revenue and net income by (i) increasing
the number of golf centers it owns, leases or manages by (a) identifying and    
acquiring well-located ranges that have the potential for improvement under     
better management and with improved or expanded facilities, including the       
addition of enclosed hitting areas, full-line pro shops, miniature golf         
courses and other amenities and (b) building new centers in locations where     
suitable acquisition opportunities are not available and (ii) seeking to        
realize economies of scale through centralized purchasing, accounting,          
management information systems and cash management.                             

According to the National Golf Foundation (the "NGF"), there were         
approximately 25 million golfers in the United States in 1995. According to     
the Golf Range and Recreational Association, there are currently between        
1,900 and 2,300 stand-alone driving ranges in the United States. The NGF        
estimates that in 1993 92% of all stand-alone driving ranges were managed by    
owner-operators. The Company believes that many of these owner-operated         
ranges are managed by individuals who may lack the experience, expertise and    
financial resources to compete effectively. The Company believes this highly    
fragmented industry presents numerous opportunities for the Company to          
acquire, upgrade and renovate golf centers and driving ranges.                  

The Company believes that it attracts customers to its golf centers       
primarily due to the quality, convenience and comfort of its facilities and     
their appeal to the whole family. The Company's golf centers are designed       
around a driving range with target greens, bunkers and traps to simulate golf   
course conditions. The ranges are lighted to permit night play and the          
hitting tees are enclosed or sheltered from above and from the rear in a        
climate-controlled environment and, in three cases, all or a portion of the     
range is enclosed under an air inflated dome to permit all-weather play.        
There are approximately 80 to 100 hitting tees in facilities with the           
two-tier design and approximately 30 to 60 hitting tees at smaller golf         
centers. In addition to the driving range, the Company's golf centers include   
a number of amenities designed to appeal to golfers and their families, such    
as a 4,000-6,000 square foot clubhouse (including a full-line pro shop,         
locker facilities, a restaurant or snack bar and video games), PGA-certified    
golf instructors, landscaped 18-hole miniature golf courses and a short game    
practice area (with putting green and sand traps). The Company's pro shops      
are stocked with clubs, bags, shoes, apparel, videos and related accessories    
from a number of suppliers, including brand name manufacturers such as          
Karsten Manufacturing Corporation (Ping), Callaway Golf Company, Tommy Armour   
Golf, Wilson Golf Company,                                                      

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Mizuno Golf Company, Spalding Sports Worldwide, Titleist and Footjoy            
Worldwide (Division of American Brands, Inc.), Ashworth Clothing Company and    
Nicklaus Golf Equipment Company.                                                

The Company was incorporated in the State of Delaware on July 13, 1994.   
The Company operates through its wholly-owned subsidiaries, the first of        
which was incorporated on March 27, 1991. The Company's principal executive     
offices are located at 225 Broadhollow Road, Melville, New York 11747 and its   
telephone number is (516) 694-1666 and its World Wide Web address is            
http://www.familygolf.com.                                                      

THE OFFERING  

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Common Stock offered by the Company ...................  3,000,000 shares                                 
Common Stock to be outstanding after the Offering  .... 11,598,025 shares(1)                              
Use of proceeds ....................................... To repay approximately $6.6 million of bank       
                                                        indebtedness, for the acquisition, leasing,       
                                                        development and improvement of golf facilities and
                                                        for general working capital purposes. See "Use of 
                                                        Proceeds."                                        
Nasdaq National Market symbol ......................... FGCI                                              

---------------                                                                 
(1)    Does not include 760,705 shares of Common Stock issuable upon exercise   
of outstanding options and warrants. See "Description of Capital  
Stock--Outstanding Options and Warrants."                         

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA AND OTHER DATA  

The following table presents, for the periods and dates indicated, summary
historical and pro forma financial data and other data of the Company. The      
pro forma condensed statements of operations data for the year ended December   
31, 1995 and for the three months ended March 31, 1996 give effect to the       
acquisitions of Pelham Enterprises, Inc., the Hiland Park Golf Course, RFC      
Enterprises, Inc., Upper Hembree Partners, L.P., The Practice Tee, Inc.         
("TPT"), Golf Masters Limited Partnership and Air Dome Limited Partnership      
(collectively, "Valley View"), Owl's Creek Golf Center, Inc., Flemington Golf   
and Sports Center, LLC and associated land, 202 Golf Associates, Inc.           
("Yorktown Heights"), Indian River Golf-O-Rama, Inc. ("Indian River"), K.G.     
Golf, Inc. ("Fairfield"), Catalina Golf Center ("Tucson"), Tree Court Golf &    
Recreational Complex, Inc. ("St. Louis") and Golf & Sports Center of the Palm   
Beaches, Inc. and W.A.G.N. Partners (collectively, "West Palm Beach") as if     
they had been consummated as of January 1, 1995. The pro forma as adjusted      
statement of operations data for the three months ended March 31, 1996 also     
give effect to the sale of 199,124 shares of Common Stock offered hereby by     
the Company at an offering price of $27 per share and the application of the    
net proceeds therefrom to repay bank indebtedness of $5.0 million as            
described under "Use of Proceeds" as if such transaction had occurred as of     
January 1, 1996. The pro forma condensed balance sheet as of March 31, 1996     
gives effect to the acquisition of Yorktown Heights, Indian River, Fairfield,   
Tucson, St. Louis and West Palm Beach as if they had occurred on March 31,      
1996. The pro forma as adjusted balance sheet at March 31, 1996 also gives      
effect to the sale of 3,000,000 shares of Common Stock offered hereby by the    
Company at an offering price of $27 per share and the application of $5.0       
million of the net proceeds therefrom to repay bank indebtedness as described   
under "Use of Proceeds" (excluding $1.6 million borrowed in contemplation of    
a potential acquisition of a golf recreational facility in San Jose,            
California). This information should be read in conjunction with                
"Capitalization," "Selected Financial Data," "Management's Discussion and       
Analysis of Financial Condition and Results of Operations," Pro Forma           
Unaudited Condensed Financial Information and the Company's Financial           
Statements and the notes thereto, each included elsewhere herein. The pro       
forma data set forth below is not necessarily indicative of what the actual     
results of operations would have been had the transactions occurred at the      
dates referred to above, nor do they purport to indicate the results of         
future operations.                                                              

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                                                 YEAR ENDED DECEMBER 31,             THREE MONTHS ENDED MARCH 31,    
                                        ----------------------------------------  ---------------------------------  
                                                                                                          PRO FORMA  
                                                                           PRO                      PRO       AS     
                                                   HISTORICAL             FORMA     HISTORICAL     FORMA   ADJUSTED  
                                        -------------------------------  -------  --------------  ------   --------  
                                         1992     1993    1994    1995     1995    1995    1996    1996      1996    
                                        ------   ------  ------  ------  -------  --------------  ------   --------  
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)                      
                                                                                                                     
STATEMENT OF OPERATIONS DATA:                                                                                        
 Total revenue ........................ $1,887    $2,632  $6,362  $12,432  $18,979  $1,782  $3,362  $3,973    $3,973 
 Operating expenses ...................  1,128     2,247   4,215    6,614   12,750   1,061   2,252   2,755     2,755 
 Cost of merchandise sold .............    320       459     750    1,779    2,222     295     457     523       523 
 Selling, general and administrative                                                                                 
  expenses ............................    351       615     548    1,242    2,576     352     643     743       743 
                                        ------    ------  ------  -------  -------  ------  ------  ------    ------ 
 Operating income (loss) ..............     88      (689)    849    2,797    1,431      74      10     (48)      (48)
 Interest expense .....................   (111)     (192)   (313)    (939)  (2,188)    (92)   (100)   (176)      (51)
 Other income .........................      1       106      16       66       76      22     197     125       125 
                                        ------    ------  ------  -------  -------  ------  ------  ------    ------ 
 Income (loss) before income taxes,                                                                                  
  minority interest and extraordinary                                                                                
  item ................................    (22)     (775)    552    1,924     (681)      4     107     (99)      (26)
 Income tax expense (benefit) .........     --        --     (65)     669     (246)      2      38     (36)       (9)
                                        ------    ------  ------  -------  -------  ------  ------  ------    ------ 
Income (loss) before minority                                                                                        
  interest and extraordinary item  ....    (22)     (775)    617    1,255     (435)      2      69     (63)      (17)
 Minority interest in (income) loss  ..     --        12    (129)      --       --      --      --      --        -- 
 Extraordinary item (net of tax                                                                                      
  effect) .............................     --        --      --      181       --      --      --      --        -- 
                                        ------    ------  ------  -------  -------  ------  ------  ------    ------ 
 Net income (loss) .................... $  (22)   $ (763) $  488  $ 1,074  $  (435) $    2  $   69  $  (63)   $  (17)
                                        ======    ======  ======  =======  =======  ======  ======  ======    ====== 
 Net income (loss) per share before                                                                                  
  extraordinary item ..................           $(0.23) $ 0.13  $  0.24  $ (0.08) $ 0.00  $ 0.01  $(0.01)   $ 0.00 
 Extraordinary item ...................               --      --     (.04)      --      --      --      --        -- 
                                                  ------  ------  -------  -------  ------  ------  ------    ------ 
 Net income (loss) per share ..........           $(0.23) $ 0.13  $  0.20  $ (0.08) $ 0.00  $ 0.01  $(0.01)   $ 0.00 
                                                  ======  ======  =======  =======  ======  ======  ======    ====== 
 Weighted average number of common                                                                                   
  shares outstanding ..................            3,272   3,636    5,271    5,637   4,938   8,648   8,779     8,978 
                                                  ======  ======  =======  =======  ======  ======  ======    ====== 

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                                          AT DECEMBER 31, 1995              AT MARCH 31, 1996           
                                         --------------------  -----------------------------------------
                                                                                           PRO FORMA AS 
                                               HISTORICAL        HISTORICAL    PRO FORMA    ADJUSTED(1) 
                                         --------------------  -------------  -----------  -------------
                                                              (DOLLARS IN THOUSANDS)                    
                                                                                                        
BALANCE SHEET DATA:                                                                                     
 Cash and cash equivalents .............        $23,121           $11,147       $ 7,532       $ 77,362  
 Working capital .......................         20,598            12,950         4,373         79,203  
 Total assets ..........................         61,582            63,130        68,800        138,630  
 Short-term borrowings .................                                          5,000                 
 Total long-term debt, including                                                                        
  current maturities ...................          8,193             8,752         8,752          8,752  
 Total stockholders' equity ............         49,388            51,986        52,586        127,416  

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                                                                         THREE MONTHS    
                                            YEAR ENDED DECEMBER 31,     ENDED MARCH 31,  
                                        ------------------------------  ---------------  
                                          1992    1993    1994    1995    1995    1996   
                                        ------  ------  ------  ------  ------  -------  
                                                                                         
OTHER DATA:                                                                              
 Facilities open at beginning of                                                         
  period ..............................     0       1       2       5       5       14   
 Facilities built during period  ......     1       1       2       1       1        1   
 Facilities or management contracts                                                      
  acquired during period ..............     0       0       1       8       0        3   
                                        ------  ------  ------  ------  ------  ------   
 Facilities open at end of period  ....     1       2       5       14      6       18(2)
                                        ======  ======  ======  ======  ======  ======   

(1)    Assumes that as of March 31, 1996 the sale by the Company of 3,000,000   
    shares of Common Stock in the Offering at an offering price of $27 per
share and the application of the net proceeds therefrom to repay  
indebtedness of $5.0 million as set forth in "Use of Proceeds" had
occurred.                                                         

(2)    Subsequent to March 31, 1996, the Company acquired six golf facilities.  

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RISK FACTORS  

Prospective investors should carefully consider the specific factors set  
forth below, as well as the other information included in this Prospectus,      
before deciding to invest in the Common Stock offered hereby. This Prospectus   
contains forward-looking statements that involve risks and uncertainties. The   
Company's actual results could differ materially from the results discussed     
in the forward-looking statements. Factors that could cause or contribute to    
such differences include, but are not limited to, those discussed in "Risk      
Factors," as well as those discussed elsewhere in this Prospectus.              

LIMITED OPERATING HISTORY                                                       

The Company opened its first golf center in March 1992 and, accordingly,  
has only a limited history of operations. The Company generated net income of   
approximately $488,000 during the year ended December 31, 1994, approximately   
$1.1 million during the year ended December 31, 1995 and approximately          
$69,000 for the three months ended March 31, 1996. However, the Company         
experienced losses prior to 1994 and there can be no assurance that the         
Company will operate profitably in the future or that recent results of         
operations will be indicative of future results. See "Risk Factors--Expansion   
Strategy" and Pro Forma Unaudited Condensed Statement of Operations.            

EXPANSION STRATEGY                                                              

The Company's ability to significantly increase revenue, net income and   
operating cash flow over time depends in large part upon its success in         
acquiring or leasing and constructing additional golf facilities at suitable    
locations upon satisfactory terms. There can be no assurance that suitable      
golf facility acquisition or lease opportunities will be available or that      
the Company will be able to consummate acquisition or leasing transactions on   
satisfactory terms. The acquisition of golf facilities may become more          
expensive in the future to the extent that demand and competition increases.    
The likelihood of the success of the Company must be considered in light of     
the problems, expenses, difficulties, complications and delays frequently       
encountered in connection with the construction and opening of new golf         
facilities. See "Risk Factors--Additional Financing Requirements," "Risk        
Factors--Dependence Upon Key Employee; Recruitment of Additional Personnel,"    
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations" and "Business."                                                     

To successfully implement its expansion strategy, the Company must        
integrate acquired or newly- opened golf facilities into its existing           
operations. As the Company grows, there can be no assurance that additional     
golf facilities can be readily assimilated into the Company's operating         
structure. Inability to efficiently integrate golf facilities could have a      
material adverse effect on the Company's financial condition and results of     
operations. In addition, a number of the golf facilities which the Company      
has acquired have, and golf facilities it may acquire in the future may have,   
experienced losses. On a pro forma basis, as adjusted to give effect to the     
acquisitions consummated after January 1, 1995 as if they had occurred as of    
January 1, 1995, the Company had a net loss before extraordinary item of        
$435,000 (as compared to income before extraordinary item of $1.3 million on    
a historical basis) for the year ended December 31, 1995 and a net loss of      
$63,000 (as compared to net income of $69,000 on a historical basis) for the    
three months ended March 31, 1996. There can be no assurance that golf          
facilities recently acquired by the Company or those that the Company may       
acquire in the future will operate profitably and will not adversely affect     
the Company's results of operations. See "Business" and Pro Forma Unaudited     
Condensed Statement of Operations.                                              

TERMINATION OF LEASES                                                           

Although after giving effect to renewal options none of the Company's     
leases for its golf centers or facilities is expected to expire until 2007,     
the leases may be terminated prior to their scheduled expiration should the     
Company default in its obligations thereunder. Such obligations include the     
Company's timely payment of rent and maintenance of adequate insurance          
coverage. The termination of any of the Company's leases could have an          
adverse effect on the Company. If any of the Company's leases were to be        
terminated, there can be no assurance that the Company would be able to enter   
into leases for comparable properties on favorable terms, or at all. See        
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations."                                                                    

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TERMINATION OF MANAGEMENT AGREEMENTS                                            

The Company's management agreement with the City of New York (the "City") 
for the Douglaston, New York golf center, which expires on December 31, 2006,   
is terminable by the City at will. During the year ended December 31, 1995,     
the management agreement accounted for 17% of the Company's total revenue.      
Pursuant to the management agreement, as of March 31, 1996 the Company had      
made approximately $2.3 million of capital improvements to the Douglaston       
center. If the management agreement is terminated, the City may retain, and     
is not obligated to pay the Company for the value of, such capital              
improvements. Unless reimbursed, for accounting purposes the Company would      
immediately have to write off the undepreciated value of these capital          
improvements and the goodwill related to its purchase of the limited            
partners' minority interest (the "Minority Interest") in Alley Pond             
Associates, L.P., which are currently being depreciated and amortized over      
the life of the management agreement. Accordingly, termination of the           
management agreement with the City could have a material adverse effect on      
the Company. See "Business--Properties."                                        

The Company's management agreement with the City of El Segundo for the El 
Segundo golf facility terminates on June 30, 1998, unless earlier terminated    
by either party, with or without cause, as of the end of any operating year     
during the term of the agreement, upon at least 90 days prior written notice.   
Termination of the management agreement with the City of El Segundo may have    
an adverse effect on the Company. See "Business--Properties."                   

GOLDEN BEAR LICENSE                                                             

The Company operates seven of its golf centers, and intends to operate at 
least one additional golf center, under the name "Golden Bear Golf Center"      
pursuant to a non-exclusive license agreement (the "License Agreement"),        
expiring August 2002, with Golden Bear Golf Centers, Inc. (the "Licensor").     
The License Agreement is terminable by the Licensor prior to August 2002        
under certain circumstances, including if the current directors of the          
Company at any time constitute less than 50% of the Company's directors. In     
September 1995, the Company agreed to cure an alleged default of the License    
Agreement (principally by making certain capital improvements by November       
1996). Failure by the Company to take the agreed upon actions by such date      
could result in the termination of the License Agreement. Termination of the    
License Agreement could adversely affect the Company's Golden Bear Golf         
Centers and, possibly, the Company. The value of the "Golden Bear" name is      
dependent, in part, upon the continued popularity of Jack Nicklaus.             
Accordingly, the occurrence of any event which diminishes the reputation of     
Mr. Nicklaus and the related "Golden Bear" symbol could adversely affect the    
Company's Golden Bear Golf Centers. See "Risk Factors--Competition" and         
"Business--Golden Bear License."                                                

COMPETITION                                                                     

The golf center industry is highly competitive and includes competition   
from other golf centers, traditional golf ranges, golf courses and other        
recreational pursuits. The Company may face imitation and other forms of        
competition and the Company cannot prevent or restrain others from utilizing    
a similar operational strategy. Many of the Company's competitors and           
potential competitors have considerably greater financial and other             
resources, experience and customer recognition than does the Company. Until     
September 1995, the Company had the exclusive right to open Golden Bear Golf    
Centers in certain territories. As a result of a change in the License          
Agreement in September 1995, the Licensor now is permitted to establish, or     
license others to establish, "Golden Bear" golf centers that compete with the   
Company's golf centers, including its Golden Bear Golf Centers. Golden Bear     
Golf, Inc., an affiliate of the Licensor, has recently publicly indicated       
that it intends to focus its efforts on the direct ownership and operation of   
golf facilities through the acquisition or development of additional golf       
centers and to pursue new licensees and enter into additional territorial       
development agreements only in locations and territories where it and its       
affiliates do not intend to acquire or develop their own facilities. There      
can be no assurance that such competition will not adversely affect the         
Company's ability to acquire additional properties. See                         
"Business--Competition."                                                        

VULNERABILITY TO WEATHER CONDITIONS AND SEASONAL RESULTS                        

Historically, the second and third quarters of the year have accounted for
a greater portion of the Company's operating revenue than have the first and    
fourth quarters of the year. This is primarily due to an outdoor playing        
season limited by inclement weather. Although most of the Company's driving     
ranges are designed to be all-weather facilities (including the domed           
facilities), and although the Company has recently expanded its operations      
into territories where inclement weather may have less of an impact than        

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in the Northeast, portions of the Company's facilities, including the           
miniature golf courses, are outdoors and vulnerable to weather conditions.      
Also, golfers are less inclined to practice when weather conditions limit       
their ability to play golf on outdoor courses. This seasonal pattern, as well   
as the timing of new center openings and acquisitions, may cause the            
Company's results of operations to vary significantly from quarter to           
quarter. Accordingly, period-to-period comparisons are not necessarily          
meaningful and should not be relied on as indicative of future results. In      
addition, variability in the Company's results of operations could cause the    
Company's stock price to fluctuate following the release of interim results     
of operations or other information and may have a material adverse effect on    
the Company and its stock price. See "Management's Discussion and Analysis of   
Financial Condition and Results of Operations."                                 

ADDITIONAL FINANCING REQUIREMENTS                                               

As of March 31, 1996, the Company had working capital of approximately    
$13.0 million. The Company anticipates, based on its currently proposed         
expansion plans and assumptions relating to its operations, that the net        
proceeds of the Offering, together with availability under its primary credit   
facility and cash flow from operations, will be sufficient to permit the        
Company to conduct its operations and to carry on its contemplated expansion    
over at least the next 12 months. The Company also anticipates that it may      
need to raise substantial additional equity capital in the future to continue   
its longer term expansion plans. There can be no assurance that the Company     
will be able to obtain additional financing on favorable terms or at all. See   
"Use of Proceeds," "Capitalization" and "Management's Discussion and Analysis   
of Financial Condition and Results of Operations."                              

ENVIRONMENTAL REGULATION                                                        

Operations at the Company's golf facilities involve the use and limited   
storage of various hazardous materials such as pesticides, herbicides, motor    
oil, gasoline and paint. Under various federal, state and local laws,           
ordinances and regulations, an owner or operator of real property is            
generally liable for the costs of removal or remediation of hazardous           
substances that are released on or in its property regardless of whether the    
property owner or operator knew of, or was responsible for, the release of      
hazardous materials. The Company has not been informed by any governmental      
authority of any non-compliance or violation of any environmental laws,         
ordinances or regulations and the Company believes that it is in substantial    
compliance with all such laws, ordinances and regulations applicable to its     
properties or operations. However, the Company is aware of one notice of        
violation issued by the New York Department of Environmental Conservation       
(the "DEC") against the owner of the land leased by the Company in Elmsford,    
New York alleging that certain hazardous materials were placed on the site.     
The owner has taken remedial action and the Company does not believe it will    
be affected by the alleged violation. To date, the Company has not incurred     
material costs of remediation in relation to any of its golf facilities and     
the Company knows of no material environmental liability to which it may        
become subject. Although the Company usually hires environmental consultants    
to conduct environmental studies, including invasive procedures such as soil    
sampling or ground water analysis on golf facilities it owns, operates or       
intends to acquire, in some cases only limited invasive procedures are          
conducted on such properties. Even when invasive procedures are used,           
environmental studies may fail to discover all potential environmental          
problems. Accordingly, there may be potential environmental liabilities or      
conditions of which the Company is not aware. See "Business--Governmental       
Regulation."                                                                    

DEPENDENCE UPON KEY EMPLOYEE; RECRUITMENT OF ADDITIONAL PERSONNEL               

The Company is heavily dependent on the services of Dominic Chang, its    
Chairman of the Board, President and Chief Executive Officer. The loss of the   
services of Mr. Chang could materially adversely affect the Company. Mr.        
Chang has entered into an employment agreement with the Company which           
terminates on December 31, 1999. See "Management--Employment Agreements." The   
Company owns, and is the sole beneficiary of, key person life insurance in      
the amount of $1.5 million on the life of Mr. Chang. The Company will also be   
required to hire additional personnel and PGA-certified professionals to        
staff the golf centers it intends to acquire, lease or construct. There can     
be no assurance that the Company will be able to attract and retain qualified   
personnel. See "Business--Operations," "Business--Employees" and                
"Management."                                                                   

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DILUTION                                                                        

Purchasers in the Offering will experience immediate and substantial      
dilution of $16.02 in net tangible book value per share of the Common Stock.    

CONTROL BY CURRENT STOCKHOLDER                                                  

Following the completion of the Offering, Dominic Chang will beneficially 
own 2,822,750 shares of Common Stock, constituting approximately 24.3% of the   
outstanding shares (or if the Underwriters' over-allotment option is            
exercised in full, Mr. Chang will beneficially own 2,549,334 shares of Common   
Stock, constituting approximately 22.0% of the outstanding shares). Mr. Chang   
will, therefore, be able to exercise significant influence with respect to      
the election of the directors of the Company and all matters submitted to a     
vote of the stockholders of the Company, including the acquisition or           
disposition of material assets. See "Management" and "Principal                 
Stockholders."                                                                  

DEPENDENCE ON DISCRETIONARY CONSUMER SPENDING                                   

The amount spent by consumers on discretionary items, such as family and  
entertainment activities like those offered by the Company's golf facilities,   
have historically been dependent upon levels of discretionary income, which     
may be adversely affected by general economic conditions. A decrease in         
consumer spending on golf could have an adverse effect on the Company's         
financial condition and results of operations.                                  

BROAD DISCRETION IN USE OF PROCEEDS                                             

The Company intends to use substantially all of the net proceeds of the   
Offering for the acquisition, leasing, development and improvement of golf      
facilities and for general working capital purposes. Accordingly, the Company   
will have broad discretion as to the application of such proceeds. An           
investor will not have the opportunity to evaluate the economic, financial      
and other relevant information which will be utilized by the Company in         
determining the application of such proceeds in the acquisition, leasing,       
development and improvement of golf facilities. See "Use of Proceeds."          

DIVIDEND POLICY                                                                 

The Company has not paid any cash dividends on the Common Stock since     
inception and does not intend to pay any dividends to its stockholders in the   
foreseeable future. The Company currently intends to reinvest earnings, if      
any, in the development and expansion of its business. See "Dividend Policy."   

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS                            

The sale, or availability for sale, of substantial amounts of Common Stock
in the public market subsequent to the Offering pursuant to Rule 144 under      
the Securities Act ("Rule 144") or otherwise could materially adversely         
affect the market price of the Common Stock and could impair the Company's      
ability to raise additional capital through the sale of its equity securities   
or debt financing. In general, under Rule 144 as currently in effect, a         
person (or persons whose shares are aggregated), including a person who may     
be deemed to be an "affiliate" of the Company as that term is defined under     
the Securities Act, would be entitled to sell within any three month period a   
number of shares beneficially owned for at least two years that does not        
exceed the greater of (i) 1% of the then outstanding shares of Common Stock,    
or (ii) the average weekly trading volume in the Common Stock during the four   
calendar weeks preceding such sale. Sales under Rule 144 are also subject to    
certain requirements as to the manner of sale, notice and the availability of   
current public information about the Company. However, a person who is not      
deemed to have been an affiliate of the Company during the 90 days preceding    
a sale by such person and who has beneficially owned shares of Common Stock     
for at least three years may sell such shares without regard to the volume,     
manner of sale or notice requirements of Rule 144.                              

Of the 11,598,025 shares of Common Stock outstanding after the Offering,  
7,980,075 shares will be freely tradeable without restrictions following        
completion of the Offering, unless held by "affiliates" of                      

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the Company who are subject to certain volume limitations and manner of sale    
restrictions, and 3,617,950 will be "restricted securities" as that term is     
defined in Rule 144. The two-year holding period for substantially all of the   
"restricted securities" will have been met by November 1996 and such            
securities may, subject to the agreements described below, be sold without      
registration under the Securities Act, subject to volume limitations and        
other restrictions. The holders of 3,161,950 shares of Common Stock (not        
including those shares to be sold if the Underwriters' over-allotment option    
is exercised) and the holders of options to purchase up to 169,000 shares of    
Common Stock will remain subject to an agreement entered into, in connection    
with the Company's public offering in December 1995 (the "Secondary             
Offering"), pursuant to which they cannot publicly sell or otherwise dispose    
of any securities of the Company until December 13, 1996 without the prior      
written consent of Jefferies & Company, Inc. ("Jefferies"). Mr. Chang has       
pledged 361,750 shares of Common Stock to two banks to secure personal loans,   
and may in the future pledge additional shares to secure additional personal    
loans, which shares are not, or would not be, subject to such agreements.       

The holders of warrants to purchase up to 300,000 shares of Common Stock  
issued to the representatives of the underwriters and their designees in the    
Secondary Offering have certain demand and "piggyback" registration rights      
commencing in December 1996. The holder of warrants to purchase up to 70,000    
shares of Common Stock issued to a consultant have certain "piggyback"          
registration rights and certain demand registration rights commencing one       
month after the closing of the Offering. In addition, as of the date of this    
Prospectus, the holders of an aggregate of 247,100 shares of Common Stock       
(including 76,584 shares to be registered and sold if the Underwriters'         
over-allotment option is exercised in full) have certain "piggyback"            
registration rights, which commence on various dates in 1996. Of these          
247,100 shares, approximately 64,351 are held in escrow, and will be            
released, subject to certain conditions, on various dates in 1996 and 1997.     
See "Description of Capital Stock--Outstanding Options and Warrants."           

PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER, BY-LAW      
AND CONTRACTUAL PROVISIONS                                                      

The Company's Certificate of Incorporation authorizes the Board of        
Directors to issue up to 2,000,000 shares of preferred stock, par value $.10    
per share. The preferred stock may be issued in one or more series, the terms   
of which may be determined at the time of issuance by the Board of Directors,   
without further action by stockholders. Although no preferred stock is          
currently outstanding and the Company currently has no plans for the issuance   
of any preferred stock, there can be no assurance that the Company will not     
do so in the future. The ability of the Board of Directors to issue preferred   
stock could have the effect of delaying, deferring or preventing a change of    
control of the Company or the removal of existing management and, as a          
result, could prevent the stockholders of the Company from being paid a         
premium over the market value for their shares of Common Stock. The Company's   
By-Laws contain provisions requiring advance notice of stockholder proposals    
and imposing certain procedural restrictions on stockholders wishing to call    
a special meeting of stockholders. In addition, the License Agreement may be    
terminated by the Licensor if the current members of the Company's Board of     
Directors do not constitute at least 50% of the Company's Board of Directors.   
Such provisions could discourage possible future attempts to gain control of    
the Company (which attempts, if stockholders were offered a premium over the    
market value of their Common Stock, might be viewed as beneficial to            
stockholders). See "Business--Golden Bear License" and "Description of          
Capital Stock."                                                                 

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USE OF PROCEEDS   

The net proceeds to be received by the Company from the sale of the       
3,000,000 shares of Common Stock being offered by the Company are estimated     
to be approximately $74.8 million, after deducting underwriting discounts and   
estimated offering expenses payable by the Company, based upon an offering      
price of $27 per share. Approximately $5.0 million of the net proceeds will     
be used to repay indebtedness outstanding under the Company's revolving line    
of credit with Chemical Bank, which expired on June 30, 1996 and which, as of   
June 27, 1996, bore interest at 8.5%. The Company has received a letter of      
intent from Chemical Bank to extend the line of credit to June 30, 1997. Such   
indebtedness was incurred to purchase the Tucson, Arizona, Fairfield, Ohio      
and St. Louis, Missouri golf centers and a portion of the West Palm Beach,      
Florida golf center. If the proposed acquisition of the golf recreational       
facility in San Jose, California is consummated, approximately $1.6 million     
of the net proceeds will be used to repay short-term indebtedness with          
Chemical Bank incurred in contemplation of that acquisition, which              
indebtedness matures on September 5, 1996 and bears interest at 8.5%. See       
"Business--Recently Opened or Acquired Facilities" and "--Other Potential       
Sites." The Company intends to use the balance of the net proceeds of the       
Offering for the acquisition, leasing, development and improvement of golf      
facilities and for general working capital purposes.                            

Pending the uses described above, the net proceeds from the Offering will 
be invested in investment-grade, short-term, interest-bearing securities. The   
Company will not receive any proceeds from the sale of Common Stock by the      
Selling Stockholders in connection with any exercise of the Underwriters'       
over-allotment option.                                                          

PRICE RANGE OF COMMON STOCK   

The Company's Common Stock is quoted on the Nasdaq National Market under  
the symbol "FGCI." The following table sets forth, for the periods indicated,   
the high and low last sale prices for the Common Stock as reported by the       
Nasdaq National Market.                                                         

                                                                · Download Table

                                                     STOCK PRICE      
                                                -------------------   
                                                    HIGH       LOW    
                                                ----------  -------   
                                                                      
CALENDAR YEAR 1994:                                                   
 Fourth Quarter (from November 17, 1994                               
  through December 31, 1994) ..................     $ 7 1/4    $ 5 3/4

CALENDAR YEAR 1995:                                                   
 First Quarter ................................     $ 7 7/8    $ 6    
 Second Quarter ...............................      11          5 1/2
 Third Quarter ................................      19 5/8     10 1/4
 Fourth Quarter ...............................      19         12 3/4

CALENDAR YEAR 1996:                                                   
 First Quarter ................................     $27 3/4    $17 1/8
 Second Quarter ...............................      29 3/4     25 5/8
 Third Quarter (through July 2, 1996)  ........      29 1/8     24 3/4

On July 2, 1996, the last reported sale price for the Company's Common    
Stock on the Nasdaq National Market was $28 1/8 per share. As of June 27,       
1996, there were 90 stockholders of record of the Common Stock.                 

DIVIDEND POLICY   

The Company has neither declared nor paid dividends on its Common Stock   
and does not intend to declare or pay any dividends in the foreseeable          
future. The Company currently intends to retain earnings, if any, for the       
development and expansion of its business. The declaration of dividends in      
the future will be at the election of the Board of Directors and will depend    
upon the earnings, capital requirements and financial position of the           
Company, general economic conditions and other pertinent factors.               

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CAPITALIZATION  

The following table sets forth, at March 31, 1996, the actual short-term  
debt and capitalization of the Company, and the pro forma short-term debt and   
capitalization of the Company as if the acquisitions of Yorktown Heights,       
Indian River, Fairfield, Tucson, St. Louis and West Palm Beach had been         
consummated as of such date and as adjusted to give effect to the sale of       
3,000,000 shares of Common Stock offered hereby by the Company at an offering   
price of $27 per share. This table should be read in conjunction with           
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations," Pro Forma Unaudited Condensed Balance Sheet and notes thereto      
and the Company's Financial Statements and notes thereto, each included         
elsewhere herein.                                                               

                                                        · Enlarge/Download Table

                                                                         AT MARCH 31, 1996          
                                                               -------------------------------------
                                                                                        PRO FORMA AS
                                                                 ACTUAL    PRO FORMA      ADJUSTED  
                                                               ---------  -----------  -------------
                                                                       (DOLLARS IN THOUSANDS)       
                                                                                                    
Current portion of long-term obligations and short-term debt     $ 1,523     $ 6,523      $  1,523  
                                                               =========  ===========  =============
Long-term obligations ........................................   $ 7,229     $ 7,229      $  7,229  
Stockholders' equity (1):                                                                           
 Preferred stock, $0.10 par value, 1,000,000 shares                                                 
  authorized; as adjusted, 2,000,000 shares authorized (2),                                         
  none outstanding ...........................................        --          --            --  
 Common stock, $0.01 par value, 10,000,000 shares authorized;                                       
  as adjusted, 50,000,000 shares authorized (2), 8,489,325                                          
  issued and outstanding (8,520,225 pro forma, 11,520,225 pro                                       
  forma as adjusted) .........................................        85          85           115  
 Additional paid-in capital ..................................    50,909      51,509       126,309  
 Retained earnings ...........................................     1,027       1,027         1,027  
 Treasury stock ..............................................       (35)        (35)          (35) 
                                                               ---------  -----------  -------------
  Total stockholders' equity .................................    51,986      52,586       127,416  
                                                               ---------  -----------  -------------
   Total capitalization ......................................   $59,215     $59,815      $134,645  
                                                               =========  ===========  =============

------------                                                                    
 (1) Does not include any shares issuable upon exercise of outstanding stock
options or warrants.                                              

(2) Gives effect to the increase in the Company's authorized number of    
    shares of preferred stock from 1,000,000 to 2,000,000 and the increase
   in the authorized number of shares of Common Stock from 10,000,000 to
50,000,000 subsequent to March 31, 1996.                          

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SELECTED FINANCIAL DATA   

The following table presents, for the periods and dates indicated, summary
historical and pro forma financial data and other data of the Company. The      
pro forma condensed statements of operations data for the year ended December   
31, 1995 and the three months ended March 31, 1996 give effect to the           
acquisitions of Pelham Enterprises, Inc., the Hiland Park Golf Course, RFC      
Enterprises, Inc., Upper Hembree Partners, L.P., TPT, Valley View, Owl's        
Creek Golf Centers, Inc., Flemington Golf and Sports Center, LLC and            
associated land, Yorktown Heights, Indian River, Fairfield, Tucson, St. Louis   
and West Palm Beach as if they had been consummated as of January 1, 1995.      
The pro forma as adjusted statement of operations data for the three months     
ended March 31, 1996 also give effect to the sale of 199,124 shares of Common   
Stock offered hereby by the Company at an offering price of $27 per share and   
the application of the net proceeds therefrom to repay bank indebtedness of     
$5.0 million as described under "Use of Proceeds" as if such transaction had    
occurred as of January 1, 1996. The pro forma condensed balance sheet as of     
March 31, 1996 gives effect to the acquisition of Yorktown Heights, Indian      
River, Fairfield, Tucson, St. Louis and West Palm Beach as if they had          
occurred on March 31, 1996. The pro forma as adjusted balance sheet at March    
31, 1996 also gives effect to the sale of 3,000,000 shares of Common Stock      
offered hereby by the Company at an offering price of $27 per share and the     
application of $5.0 million of the net proceeds therefrom to repay bank         
indebtedness as described under "Use of Proceeds" (excluding $1.6 million       
borrowed in contemplation of a potential acquisition of a golf recreational     
facility in San Jose, California). This information should be read in           
conjunction with "Capitalization," "Selected Financial Data," "Management's     
Discussion and Analysis of Financial Condition and Results of Operations,"      
Pro Forma Unaudited Condensed Financial Information and the Company's           
Financial Statements and the notes thereto, each included elsewhere herein.     
The pro forma data set forth below is not necessarily indicative of what the    
actual results of operations would have been had the transactions occurred at   
the dates referred to above, nor do they purport to indicate the results of     
future operations.                                                              

                                                        · Enlarge/Download Table


                                                 YEAR ENDED DECEMBER 31,             THREE MONTHS ENDED MARCH 31,    
                                        ----------------------------------------  ---------------------------------  
                                                                                                          PRO FORMA  
                                                                           PRO                      PRO       AS     
                                                   HISTORICAL             FORMA     HISTORICAL     FORMA   ADJUSTED  
                                        -------------------------------  -------  --------------  ------   --------  
                                         1992     1993    1994    1995     1995    1995    1996    1996      1996    
                                        ------   ------  ------  ------  -------  --------------  ------   --------  
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)                      
                                                                                                                     
STATEMENT OF OPERATIONS DATA:                                                                                        
 Total revenue ........................ $1,887    $2,632  $6,362  $12,432  $18,979  $1,782  $3,362  $3,973    $3,973 
 Operating expenses ...................  1,128     2,247   4,215    6,614   12,750   1,061   2,252   2,755     2,755 
 Cost of merchandise sold .............    320       459     750    1,779    2,222     295     457     523       523 
 Selling, general and administrative                                                                                 
  expenses ............................    351       615     548    1,242    2,576     352     643     743       743 
                                        ------    ------  ------  -------  -------  ------  ------  ------    ------ 
 Operating income (loss) ..............     88      (689)    849    2,797    1,431      74      10     (48)      (48)
 Interest expense .....................   (111)     (192)   (313)    (939)  (2,188)    (92)   (100)   (176)      (51)
 Other income .........................      1       106      16       66       76      22     197     125       125 
                                        ------    ------  ------  -------  -------  ------  ------  ------    ------ 
 Income (loss) before income taxes,                                                                                  
  minority interest and extraordinary                                                                                
  item ................................    (22)     (775)    552    1,924     (681)      4     107     (99)      (26)
 Income tax expense (benefit) .........     --        --     (65)     669     (246)      2      38     (36)       (9)
                                        ------    ------  ------  -------  -------  ------  ------  ------    ------ 
Income (loss) before minority                                                                                        
  interest and extraordinary item  ....    (22)     (775)    617    1,255     (435)      2      69     (63)      (17)
 Minority interest in (income) loss  ..     --        12    (129)      --       --      --      --      --        -- 
 Extraordinary item (net of tax                                                                                      
  effect) .............................     --        --      --      181       --      --      --      --        -- 
                                        ------    ------  ------  -------  -------  ------  ------  ------    ------ 
 Net income (loss) .................... $  (22)   $ (763) $  488  $ 1,074  $  (435) $    2  $   69  $  (63)   $  (17)
                                        ======    ======  ======  =======  =======  ======  ======  ======    ====== 
 Net income (loss) per share before                                                                                  
  extraordinary item ..................           $(0.23) $ 0.13  $  0.24  $ (0.08) $ 0.00  $ 0.01  $(0.01)   $ 0.00 
 Extraordinary item ...................               --      --     (.04)      --      --      --      --        -- 
                                                  ------  ------  -------  -------  ------  ------  ------    ------ 
 Net income (loss) per share ..........           $(0.23) $ 0.13  $  0.20  $ (0.08) $ 0.00  $ 0.01  $(0.01)   $ 0.00 
                                                  ======  ======  =======  =======  ======  ======  ======    ====== 
 Weighted average number of common                                                                                   
  shares outstanding ..................            3,272   3,636    5,271    5,637   4,938   8,648   8,779     8,978 
                                                  ======  ======  =======  =======  ======  ======  ======    ====== 

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                                                        · Enlarge/Download Table

                                                      AT DECEMBER 31, 1995              AT MARCH 31, 1996           
                                                     --------------------  -----------------------------------------
                                                                                                        PRO FORMA AS
                                                          HISTORICAL        HISTORICAL    PRO FORMA      ADJUSTED(1)
                                                     --------------------  ------------  -----------  --------------
                                                                          (DOLLARS IN THOUSANDS)                    
                                                                                                                    
BALANCE SHEET DATA:                                                                                                 
 Cash and cash equivalents .........................        $23,121           $11,147       $ 7,532       $ 77,362  
 Working capital ...................................         20,598            12,950         4,373         79,203  
 Total assets ......................................         61,582            63,130        68,800        138,630  
 Short-term borrowings .............................                                          5,000                 
 Total long-term debt, including current maturities           8,193             8,752         8,752          8,752  
 Total stockholders' equity ........................         49,388            51,986        52,586        127,416  

                                                        · Enlarge/Download Table


                                                                               THREE MONTHS    
                                                  YEAR ENDED DECEMBER 31,     ENDED MARCH 31,  
                                              ------------------------------  ---------------  
                                                1992    1993    1994    1995    1995    1996   
                                              ------  ------  ------  ------  ------  -------  
                                                                                               
OTHER DATA:                                                                                    
 Facilities open at beginning of period  ....     0       1       2       5       5       14   
 Facilities built during period .............     1       1       2       1       1        1   
 Facilities or management contracts acquired                                                   
  during period .............................     0       0       1       8       0        3   
                                              ------  ------  ------  ------  ------  ------   
 Facilities open at end of period ...........     1       2       5       14      6       18(2)
                                              ======  ======  ======  ======  ======  ======   

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

(1) Assumes that as of March 31, 1996 the sale by the Company of 3,000,000
    shares of Common Stock in the Offering at an offering price of $27 per
share and the application of the net proceeds therefrom to repay  
indebtedness of $5.0 million as set forth in "Use of Proceeds" had
occurred.                                                         

 (2) Subsequent to March 31, 1996, the Company acquired six golf facilities.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF   
FINANCIAL CONDITION AND RESULTS OF OPERATIONS   

The following discussion and analysis should be read in conjunction with  
the Company's Financial Statements and the notes thereto appearing elsewhere    
in this Prospectus. This Prospectus contains forward-looking statements that    
involve risks and uncertainties. The Company's actual results could differ      
materially from the results discussed in the forward-looking statements.        
Factors that could cause or contribute to such differences include, but are     
not limited to, those discussed in "Risk Factors," as well as those discussed   
elsewhere in this Prospectus.                                                   

GENERAL                                                                         

The Company's strategy is to grow revenue and net income by (i) increasing
the number of golf centers it owns, leases or manages by (a) identifying and    
acquiring well-located ranges that have the potential for improvement under     
better management and with improved or expanded facilities, including the       
addition of enclosed hitting areas, full-line pro shops, miniature golf         
courses and other amenities and (b) building new centers in locations where     
suitable acquisition opportunities are not available and (ii) seeking to        
realize economies of scale through centralized purchasing, accounting,          
management information and cash management systems. The Company currently       
owns, leases or manages 24 golf facilities, comprised of 17 golf centers and    
seven combination golf center and golf course facilities. Of the seven          
combination golf center and golf course facilities, six include par-3 golf      
courses, generally designed to facilitate the practice of golf, and one         
includes a regulation 18-hole golf course. The following table sets forth       
certain information as to the Company's golf facilities:                        

                                                        · Enlarge/Download Table


                                                                   OWNED      LEASED      MANAGED      TOTAL  
                                                                 ---------  ----------  -----------  ---------
                                                                                                              
AT JANUARY 1, 1992 .............................................    --          --          --           0    
 Facilities built during 1992 ..................................    --           1          --           1    
 Facilities or management contracts acquired during 1992  ......    --          --          --           0    
                                                                 ---------  ----------  -----------  ---------
AT JANUARY 1, 1993 .............................................    --           1          --           1    
 Facilities built during 1993 ..................................    --           1          --           1    
 Facilities or management contracts acquired during 1993  ......    --          --          --           0    
                                                                 ---------  ----------  -----------  ---------
AT JANUARY 1, 1994 .............................................    --           2          --           2    
 Facilities built during 1994 ..................................    --           1           1           2    
 Facilities or management contracts acquired during 1994  ......    --           1          --           1    
                                                                 ---------  ----------  -----------  ---------
AT JANUARY 1, 1995 .............................................    --           4           1           5    
 Facilities built during 1995 ..................................    --           1          --           1    
 Facilities or management contracts acquired during 1995  ......     6           1           1           8    
                                                                 ---------  ----------  -----------  ---------
AT JANUARY 1, 1996 .............................................     6           6           2          14    
 Facilities built during the first three months of 1996  .......    --           1          --           1    
 Facilities or management contracts acquired during the first                                                 
  three months of 1996 .........................................     2           1          --           3    
 Facilities or management contracts acquired after                                                            
  March 31, 1996 ...............................................     3           3          --           6    
                                                                 ---------  ----------  -----------  ---------
AT JULY 2, 1996 ................................................    11          11          2           24    
                                                                 =========  ==========  ===========  =========

The Company's golf facilities have opened at varying times over the past  
several years. As a result of changes in the number of golf centers open from   
period to period, the seasonality of operations, the completion of the          
Company's initial public offering in November 1994 (the "IPO") and the          
Secondary Offering in December 1995, results of operations for any particular   
period may not be indicative of the results of operations in the future.        

Most of the Company's revenues from its golf centers are derived from     
selling tokens for use in automated range-ball dispensing machines, pro shop    
merchandise sales, charging for rounds of miniature golf, golf lessons and      
management fees. The Company also derives revenues at its golf centers from     
food                                                                            

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and beverage sales, video games and the use of batting cages. The Company       
derives revenues from its golf courses from club membership fees, fees for      
rounds of golf and golf lessons, pro shop merchandise sales and from food and   
beverage sales at the clubhouse. See "Business--The Golf Centers."              

RESULTS OF OPERATIONS                                                           

The following table sets forth selected operations data of the Company    
expressed as a percentage of total revenue (except for operating expenses       
which is expressed as a percentage of operating revenue and cost of             
merchandise sold which is expressed as a percentage of merchandise sales) for   
the periods indicated below:                                                    

                                                        · Enlarge/Download Table

                                                                       THREE MONTHS  
                                               YEAR ENDED                 ENDED      
                                              DECEMBER 31,              MARCH 31,    
                                     -----------------------------  ---------------- 
                                        1993       1994      1995     1995     1996  
                                     ---------  --------  --------  -------  ------- 
                                                                                     
Operating revenues .................     75.7%     84.0%     78.8%     76.3%    80.0%
Merchandise sales ..................     24.3      16.0      21.2      23.7     20.0 
Total revenue ......................    100.0     100.0     100.0     100.0    100.0 
Operating expenses .................    112.8      78.9      67.5      78.0     83.7 
Cost of merchandise sold ...........     71.7      73.5      67.5      69.9     68.1 
Selling, general and administrative                                                  
 expenses ..........................     23.4       8.6      10.0      19.8     19.1 
Income (loss) from operations  .....    (26.2)     13.3      22.5       4.2      0.3 
Interest expense ...................     (7.3)     (4.9)     (7.6)     (5.2)    (3.0)
Other income .......................      4.0       0.3       0.6       1.2      5.9 
Income (loss) before income taxes,                                                   
 minority interest and                                                               
 extraordinary item ................    (29.5)      8.7      15.5       0.2      3.2 
Income tax expense (benefit)  ......       --      (1.0)      5.4       0.1      1.1 
Income (loss) before minority                                                        
 interest and extraordinary item  ..    (29.5)      9.7      10.1       0.1      2.1 
Minority interest in (income) loss        0.5      (2.0)       --        --       -- 
Extraordinary item (net of tax                                                       
 effect) ...........................       --        --      (1.5)       --       -- 
Net income (loss) ..................    (29.0)%     7.7%      8.6%      0.1%     2.1%

Three Months Ended March 31, 1996 Compared to Three Months Ended March 31,      
1995                                                                            

Results for the three months ended March 31, 1996 reflect the operations  
of nine golf centers (Farmingdale, Elmsford and Syracuse, New York, Wayne,      
New Jersey, Greenville, South Carolina, Duluth, Georgia, El Segundo and         
Gilroy, California and Valley View, Ohio) for the full period, operations of    
the Douglaston, New York and Alpharetta, Georgia golf centers (which were       
undergoing renovation for one month) and the Henrietta, New York and Mesa,      
Arizona golf centers for approximately two months, operations of the            
Richmond, Virginia golf center (which was undergoing renovation for two         
months) and the Virginia Beach, Virginia golf center for approximately one      
month, operations of the Flemington, New Jersey golf center for less than one   
month, and the pro shop and food service operations only of the Utica and       
Queensbury, New York facilities. Results for the three months ended March 31,   
1995 reflect the operations of the Farmingdale, Wayne and Elmsford golf         
centers for the full period, operations of the indoor portion of the Syracuse   
golf center for approximately two and one-half months, operations of the        
Douglaston golf center for approximately half of the period, and pro shop       
revenues only for the Utica golf center. As a result of the change in the       
number of golf centers open from period to period, the comparison between the   
1996 and 1995 periods may not necessarily be meaningful.                        

Total revenue for the three months ended March 31, 1996 was $3.4 million  
as compared to $1.8 million for the same period in 1995, an increase of $1.6    
million (89.0%). Total revenue for the four golf centers operating for the      
three months ended March 31, 1996 and 1995 (Farmingdale, Wayne, Elmsford        

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and Syracuse) decreased 12.5% to $1.4 million in the 1996 period from $1.6      
million in the 1995 period. The overall increase in revenue is attributable     
to having additional golf centers in operation during the 1996 period, as       
described above, partially offset by a decrease in revenue at those             
facilities open in both periods caused by severe winter conditions in the       
Northeast region in 1996, relative to milder winter conditions in 1995.         

Operating revenues, consisting of all sales except merchandise sales,     
amounted to $2.7 million for the three months ended March 31, 1996, as          
compared to $1.4 million for the comparable 1995 period, an increase of $1.3    
million (98.0%). The increase in operating revenues was primarily               
attributable to having additional golf centers in operation during the 1996     
period.                                                                         

Merchandise sales, consisting of golf clubs, balls, bags, gloves, videos, 
apparel and related accessories, amounted to $671,000 for the three months      
ended March 31, 1996 as compared to $422,000 for the comparable 1995 period,    
an increase of $249,000 (59.0%). The increase in merchandise sales was          
primarily due to the contribution of new locations added during 1995.           

Operating expenses, consisting of operating wages and employee costs, land
rent, depreciation of golf driving range facilities and equipment, utilities    
and all other facility operating costs, increased to $2.3 million (83.7% of     
operating revenue) in the 1996 period from $1.1 million (78.0% of operating     
revenue) in the 1995 period, an increase of $1.2 million (112.0%). The          
increase in operating expenses was primarily due to the operating costs of      
locations that were not operated by the Company during the 1995 period.         
Operating expenses as a percentage of operating revenues increased to 83.7%     
in 1996 from 78.0% in 1995 primarily due to a decrease in revenues as a         
result of severe winter conditions in 1996 relative to 1995.                    

The cost of merchandise sold increased to $457,000 (68.1% of merchandise  
sales) in the 1996 period from $295,000 (69.9% of merchandise sales) in the     
comparable 1995 period. The overall increase in this cost of $162,000 (54.9%)   
was primarily due to the higher level of merchandise sales. The decrease in     
this cost as a percentage of merchandise sales was due to improved buying       
techniques and volume discounts.                                                

Selling, general and administrative expenses for the three months ended   
March 31, 1996 amounted to $643,000 (19.1% of total revenue) compared to        
$352,000 (19.8% of total revenue) in the comparable 1995 period, an increase    
of $291,000 (83.0%), primarily due to the expenses associated with operating    
additional golf centers.                                                        

Interest expense increased to $100,000 for the three months ended March   
31, 1996 from $92,000 in the comparable 1995 period. Other income, primarily    
interest income, increased to $197,000 in the 1996 period from $22,000 in the   
1995 period. The increase in interest income is attributable to the receipt     
and investment of proceeds from the Secondary Offering.                         

The Company had income before income taxes for the three months ended     
March 31, 1996 of $107,000 as compared to income of $4,000 in the comparable    
1995 period. Net income for the three months ended March 31, 1996 amounted to   
$69,000 as compared to $2,000 for the comparable 1995 period.                   

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994           

Results for the year ended December 31, 1995 reflect the operations of the
Farmingdale and Elmsford, New York and the Wayne, New Jersey golf centers for   
the full period, operations of the Douglaston, New York golf center (which      
was undergoing renovation and was operating in a limited capacity for           
approximately four of the 12 months), operations of the Syracuse, New York      
golf center for approximately 12 months (although the outdoor portion of the    
golf center was open for only six months), operations of the Utica, New York    
golf center for approximately nine months, operations of the Greenville,        
South Carolina golf center and the Queensbury, New York golf facility for       
approximately eight months each, operations of the Richmond, Virginia and       
Duluth and Alpharetta, Georgia golf centers for approximately five months,      
four months and five months, respectively, and operations of El Segundo and     
Gilroy, California and Valley View, Ohio for two months each. Results for the   
year ended December 31, 1994 reflect the operations of the Farmingdale and      
Wayne golf centers for the full period, operations of the Douglaston golf       
center (which was undergoing renovation and was operating in a                  

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limited capacity for four months) and operations of the Elmsford golf center    
for approximately five months. As a result of the change in the number of       
facilities open from period to period, the comparison between 1995 and 1994     
periods may not necessarily be meaningful. Revenue from the Farmingdale and     
Wayne golf centers, which were the only golf centers open and not undergoing    
substantial renovations for the full December 31, 1994 and 1995 periods,        
increased from $3.7 million to $4.1 million during such periods, an increase    
of 10.8%.                                                                       

Total revenue for the year ended December 31, 1995 was $12.4 million as   
compared to $6.4 million in 1994, an increase of $6.0 million (93.8%). The      
overall increase in revenue was primarily attributable to having additional     
golf centers in operation during the 1995 period.                               

Operating revenues amounted to $9.8 million as compared to $5.3 million,  
an increase of $4.5 million (84.9%) for this period. The increase in            
operating revenues was primarily attributable to having additional golf         
centers in operation during the 1995 period.                                    

Merchandise sales amounted to $2.6 million for 1995 as compared to $1.0   
million for 1994. The increase in merchandise sales of $1.6 million (160.0%)    
was due to the contribution of new locations to the 1995 period and the         
increased emphasis placed by the Company on improving pro shop sales in the     
1995 period, improved purchasing procedures and increased promotion.            

Operating expenses increased to $6.6 million in 1995 from $4.2 million in 
1994. The overall increase of $2.4 million (57.1%) was primarily due to the     
operating costs of locations that were not open for all or part of 1994.        
However, operating expenses as a percentage of operating revenues declined to   
67.5% in 1995 from 78.9% in 1994 primarily due to the substantial increase in   
revenues and relatively low corresponding incremental increases in certain      
fixed or partially fixed costs, such as rent.                                   

The cost of merchandise sold increased to $1.8 million (67.5% of          
merchandise sales) in 1995 from $750,000 (73.5% of merchandise sales) in        
1994. The overall increase in this cost of $1.05 million (140.0%) was           
primarily due to the higher level of merchandise sales. The decrease in this    
cost as a percentage of merchandise sales was due to improved buying            
techniques and volume discounts.                                                

Selling, general and administrative expenses in 1995 amounted to $1.2     
million (10.0% of total revenue) as compared to $548,000 (8.6% of total         
revenue) in 1994, an increase of $652,000 (119.0%), primarily due to an         
increase in corporate staff, advertising and other expenses resulting from      
the increase in the number of golf centers operating during 1995.               

Interest expense increased to $939,000 in 1995 from $313,000 in 1994. The 
increase was attributable to increased borrowings to fund the Company's         
expansion, as well as a higher prime lending rate during 1995 as compared to    
1994.                                                                           

The Company had income, before income tax expense (benefit), an           
extraordinary item and the Minority Interest, of $1.9 million for 1995 as       
compared to $552,000 in 1994. The Company recognized an extraordinary charge    
of $181,000 (net of taxes) in the fourth quarter of 1995. This extraordinary    
item reflects the write-off of debt acquisition costs, net of income taxes,     
arising from the repayment of certain bank debt using the proceeds of the       
Secondary Offering. The Minority Interest in 1994 represents limited            
partnership interests in Alley Pond Associates, L.P., a partnership which       
operated the Douglaston, New York golf center. The Minority Interest was        
acquired by the Company in December 1994. Net income, after income tax          
expense (benefit), the extraordinary item and the Minority Interest, rose to    
$1.1 million in 1995 as compared to $488,000 in 1994.                           

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993           

Results for 1994 reflect the operations of the Farmingdale, New York and  
Wayne, New Jersey golf centers for the full year, operations of the             
Douglaston, New York golf center (which was operating in a limited capacity     
for approximately five months of the year) and operations of the Elmsford,      
New York golf center for approximately five months of 1994. Results for 1993    
reflect the operations of the Farmingdale golf center for the full year and     
approximately five months of operations of the Wayne golf center. As a result   
of the change in the number of golf centers open from period to period, the     
comparison between 1994 and 1993 may not necessarily be meaningful.             

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Total revenue for 1994 was $6.4 million as compared to $2.6 million for   
1993, an increase of 141.7%. Operating revenues for 1994 amounted to $5.3       
million as compared to $2.0 million for 1993. The overall increase in revenue   
was primarily attributable to having additional golf centers in operation       
during 1994, as described above, partially offset by the impact of severe       
winter weather in the first three months of 1994.                               

Merchandise sales amounted to $1.0 million for 1994 as compared to        
$639,000 for 1993. The increase in merchandise sales of $381,000 (59.6%) was    
primarily due to strong pro shop sales at the Wayne golf center in 1994 and     
the new locations added during 1994.                                            

Operating expenses increased to $4.2 million in 1994 from $2.2 million in 
1993. The increase of $2.0 million (87.6%) was primarily due to the             
operations of the Wayne, Elmsford and Douglaston golf centers, which were not   
open for most of 1993. However, operating expenses as a percentage of           
operating revenues declined to 78.9% in 1994 from 112.8% in 1993 due to the     
substantial increase in revenue and relatively low corresponding incremental    
increases in certain fixed or partially fixed costs, such as rent. In 1993,     
pre-opening expenses for the Wayne center, which had a delayed opening in       
August of that year, resulted in a higher percentage of operating expenses to   
operating revenues.                                                             

Cost of merchandise sold for 1994 increased to $750,000, representing     
73.5% of merchandise sales in 1994 from $459,000, representing 71.7% of         
merchandise sales in 1993. The increase of $291,000 was primarily due to the    
higher merchandise sales, as well as a slight increase in the average cost of   
goods sold. No single factor accounted for the change in gross margins from     
1993 to 1994. Gross margins on merchandise sales were affected by local price   
competition and the product mix of sales.                                       

Selling, general and administrative expenses in 1994 amounted to $548,000 
(8.6% of total revenue) as compared to $615,000 (23.4% of total revenue) in     
1993, a decrease of $67,000, primarily due to the re-allocation of personnel    
from corporate staff in 1993 to new operating locations in 1994. Interest       
expense increased to $313,000 in 1994 from $192,000 in 1993. The increase was   
attributable to borrowings to fund the Wayne, Elmsford and Douglaston golf      
centers ($2.25 million, $2.5 million and $250,000, respectively), and           
increases in the prime lending rate upon which most of the Company's bank       
loans are based.                                                                

In 1994, the Company had net income of $617,000 before the Minority       
Interest as compared to a loss of $775,000 in 1993. After giving effect to      
the Minority Interest, the Company had net income of $488,000 for 1994 as       
compared to a loss of $763,000 for 1993. A portion of the proceeds of the       
IPO, which was completed on November 23, 1994, was used to purchase the         
Minority Interest in December 1994.                                             

LIQUIDITY AND CAPITAL RESOURCES                                                 

At March 31, 1996, the Company had working capital of $13.0 million       
compared to $20.6 million at December 31, 1995, which decrease was              
principally due to the acquisition of golf facilities and capital               
expenditures during the three months ended March 31, 1996.                      

The cash requirements of funding the Company's expansion have historically
exceeded cash flow from operations. Accordingly, the Company has satisfied      
its capital needs primarily through debt and equity financings. The Company     
currently anticipates that it will continue to satisfy its capital needs        
through additional debt or equity financing until the Company has established   
an adequate number of profitable golf centers to support its growth through     
internal cash flow.                                                             

The Company's outstanding indebtedness as of June 10, 1996 of $13.75      
million bears interest at fixed and variable rates currently ranging from       
5.25% to 10.5%. The Company has an agreement with TaipeiBank, New York Agency   
for a construction loan of up to $1.7 million for the development of the golf   
facility at Henrietta, New York. This loan bears interest at the prime rate     
plus 2% per annum, and is due May 14, 1997. As of June 27, 1996, the Company    
had drawn down an aggregate amount of $1.5 million under this loan.             

The Company has a $5.0 million revolving line of credit with Chemical Bank
which expired on June 30, 1996. As of June 27, 1996, the Company had drawn      
down the entire $5.0 million under this line of credit. Amounts outstanding     
under this credit line, as of June 27, 1996, bear interest at 8.5%. The         

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Company has received a letter of intent from Chemical Bank to extend the line   
of credit to June 30, 1997. After the application of the net proceeds of the    
Offering, the Company will have no amounts outstanding under this line of       
credit. On June 20, 1996 the Company borrowed an additional $1.6 million from   
Chemical Bank at an interest rate of 8.5% under a short-term note due           
September 5, 1996.                                                              

The Company anticipates making substantial additional expenditures in     
connection with the acquisition and opening of new golf facilities and          
capital improvements to existing facilities. Golf center opening expenditures   
primarily relate to projected golf center construction and opening costs,       
associated marketing activities and the addition of personnel. From time to     
time, the Company acquires, rather than leases, the land on which its golf      
centers are located, which entails additional expenditures. Based on the        
Company's experience with its existing golf centers, the Company believes       
that the cost of opening or acquiring a golf center generally will not exceed   
$3.5 million (exclusive of land costs). However, there can be no assurance      
that golf center opening or acquisition costs will not exceed $3.5 million.     
Golf center acquisition costs vary substantially depending on the location      
and status of the acquired property (i.e., whether significant capital          
improvements are necessary) and whether the Company acquires or leases the      
related land. Land acquisition costs vary substantially depending on a number   
of factors, including principally location. To the extent that the Company      
acquires any golf courses, the Company may be required to make capital          
improvements to these courses, depending again upon the location and status     
of the acquired property. The cost of golf course acquisitions depends, to a    
large extent, upon the price of the land and may substantially exceed the       
anticipated cost of golf center acquisitions. The Company intends to make       
capital improvements, estimated to aggregate approximately $3.5 million over    
the next 12 months, including $3.0 million on recently acquired facilities.     
The Company intends to utilize substantially all the net proceeds of the        
Offering in connection with the acquisition and opening of golf facilities.     
See "Use of Proceeds." In addition, in connection with the acquisition of       
TPT, up to $2.0 million of additional purchase price will be payable if         
certain operating income targets are achieved in 1996 and 1997. See "Business   
-- Recently Opened or Acquired Facilities -- The El Segundo and Gilroy Golf     
Facilities" for a description of such contingent payments.                      

The Company believes that the net proceeds from the Offering, cash flow   
from operations and its revolving credit facility with its primary lender       
will be sufficient to finance the Company's currently contemplated expansion    
plans for at least the next 12 months.                                          

Management does not believe that recently issued accounting standards will
have a material impact on the Company's financial statements when adopted by    
the Company.                                                                    

EFFECT OF RECENTLY ACQUIRED FACILITIES                                          

On a pro forma basis, as adjusted to give effect to acquisitions          
consummated after January 1, 1995 as if they had occurred as of January 1,      
1995, the Company had a net loss before extraordinary item of $435,000 (as      
compared to income before extraordinary item of $1.3 million on a historical    
basis) for the year ended December 31, 1995 and a net loss of $63,000 (as       
compared to net income of $69,000 on a historical basis) for the three months   
ended March 31, 1996. Although the recently acquired facilities have            
adversely affected income on a pro forma basis, the Company believes that it    
will be able to (i) enhance revenues at such facilities by adding amenities     
including enclosed hitting areas, token-based automated range-ball dispensing   
machines, full-line pro shops, miniature golf courses and par-3 golf courses    
and (ii) reduce expenses by economies of scale achieved through centralized     
purchasing, accounting, management information systems and cash management.     
There can be no assurance, however, that the Company will be able to improve    
the performance of newly-acquired facilities. See "Risk Factors--Expansion      
Strategy."                                                                      

The Company expects to spend approximately $3.0 million over the next 12  
months on recently acquired facilities for capital improvements. Of such        
amount, the Company expects that approximately $1.0 million will be used at     
the Duluth, Georgia facility to build a par-3 golf course, shelter the          
driving range, add a miniature golf course and expand the clubhouse to add a    
pro shop. An aggregate of approximately $2.0 million is expected to be used     
for facility improvements at the Valley View, Ohio, Greenville, South           
Carolina, Glen Allen, Virginia, Alpharetta, Georgia, Virginia Beach,            
Virginia, Mesa, Arizona, Flemington, New Jersey, Yorktown Heights, New York     
golf centers.                                                                   

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SEASONALITY                                                                     

Historically, the second and third quarters have accounted for a greater  
portion of the Company's operating income than have the first and fourth        
quarters of the year. This is primarily due to an outdoor playing season        
limited by inclement weather. Although most of the Company's facilities are     
designed to be all-weather, portions of the facilities, such as miniature       
golf courses which are outdoors, tend to be vulnerable to weather conditions.   
One of the Company's golf centers and one golf course are closed during a       
portion of the winter. Also, golfers are less inclined to practice when         
weather conditions limit their ability to play golf on outdoor courses. The     
Company believes that its recent expansion of operations into areas (Arizona,   
California, Florida, Georgia, Virginia) where inclement weather may have less   
of an impact on the outdoor playing season than in the Northeast may mitigate   
to some extent this seasonal pattern. Nonetheless, this seasonal pattern, as    
well as the timing of new golf facility acquisitions and openings, may cause    
the Company's results of operations to vary significantly from                  
quarter-to-quarter. Accordingly, period-to-period comparisons are not           
necessarily meaningful and should not be relied on as indicative of future      
results.                                                                        

INFLATION                                                                       

There was no significant impact on the Company's operations as a result of
inflation during 1993, 1994, 1995 or the three months ended March 31, 1996.     

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BUSINESS  

GENERAL                                                                         

The Company operates golf centers designed to provide a wide variety of   
practice opportunities, including facilities for driving, chipping, putting,    
pitching and sand play. In addition, the Company's golf centers typically       
offer golf lessons instructed by PGA-certified golf professionals, full-line    
pro shops and other amenities to encourage family participation. The Company    
currently owns, leases or manages 24 golf facilities, comprised of 17 golf      
centers and seven combination golf center golf course facilities located in     
ten states. Of the golf centers, seven are currently operated under the name    
"Golden Bear Golf Centers." Of the seven combination golf center and golf       
course facilities, six include par-3 golf courses, generally designed to        
facilitate the practice of golf, and one includes a regulation 18-hole golf     
course. The Company has experienced significant recent growth, primarily        
through the opening or acquisition of 20 facilities since the IPO in November   
1994. The Company's total revenue increased from $1.9 million in 1992 to        
$12.4 million for the year ended December 31, 1995. During the same period,     
the Company's net income increased from a net loss of $22,000 to a net profit   
of $1.1 million.                                                                

The Company believes that it attracts customers to its golf centers       
primarily due to the quality, convenience and comfort of its facilities and     
their appeal to the whole family. The Company's golf centers are designed       
around a driving range with target greens, bunkers and traps to simulate golf   
course conditions. The ranges are lighted to permit night play, the hitting     
tees are enclosed or sheltered from above and from the rear in a                
climate-controlled environment and, in three cases, all or a portion of the     
range is enclosed under an air inflated dome to permit all-weather play.        
There are approximately 80 to 100 hitting tees in facilities with the           
two-tier design and approximately 30 to 60 hitting tees at smaller golf         
centers. In addition to the driving range, the Company's golf centers include   
a number of amenities designed to appeal to golfers and their families, such    
as a 4,000-6,000 square foot clubhouse (including a full-line pro shop,         
locker facilities, a restaurant or snack bar and video games), PGA-certified    
golf instructors, landscaped 18-hole miniature golf courses and a short game    
practice area (including putting green and sand traps). The Company's pro       
shops are stocked with clubs, bags, shoes, apparel, videos and related          
accessories from a number of suppliers, including brand name manufacturers      
such as Karsten Manufacturing Corporation (Ping), Callaway Golf Company,        
Tommy Armour Golf, Wilson Golf Company, Mizuno Golf Company, Spalding Sports    
Worldwide, Titleist and Footjoy Worldwide (Division of American Brands,         
Inc.), Ashworth Clothing Company and Nicklaus Golf Equipment Company.           

INDUSTRY OVERVIEW                                                               

According to the NGF, there were approximately 25 million golfers in the  
United States in 1995. The average age of the golf driving range user was       
37.1 years old, with an average household income of $55,700 per year. Those     
with household income in excess of $75,000 (approximately 35% of all            
stand-alone range users), were the most likely to visit a stand-alone range,    
visiting 3.7 times more frequently than those with household income of less     
than $30,000 (19% of all stand-alone range users) and 1.5 times more            
frequently than those with household incomes between $30,000 and $75,000 (46%   
of all stand-alone range users).                                                

According to the Golf Range and Recreational Association there are        
currently between 1,900 and 2,300 stand-alone driving ranges in the United      
States. Most of the Company's golf centers, the smallest of which has 20 tee    
stations, are larger than those generally found in the industry. The average    
number of tee stations per range in the industry in 1993, as estimated by the   
NGF, was 40, with 50% of all stand-alone ranges offering 35 or fewer tee        
stations. Large stand-alone ranges, defined as ranges with more than 50 tee     
stations, accounted for approximately 21% of all facilities. The stand-alone    
range industry is highly fragmented. The NGF estimates that in 1993 92% of      
stand-alone ranges were managed by owner- operators. The Company believes       
that many of these owner-operated ranges are managed by individuals who may     
lack the experience, expertise and financial resources to compete               
effectively.                                                                    

BUSINESS STRATEGY                                                               

The Company's business strategy is to grow revenue and net income by (i)  
increasing the number of golf centers it owns, leases or manages through (a)    
identifying and acquiring well-located ranges that have                         

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the potential for improvement under better management and with improved or      
expanded facilities, including the addition of enclosed hitting areas,          
full-line pro shops, miniature golf courses and other amenities and (b)         
building new centers in locations where suitable acquisition opportunities      
are not available and (ii) seeking to realize economies of scale through        
centralized purchasing, accounting, management information systems and cash     
management.                                                                     

Acquire Existing Ranges and Centers. The Company believes the highly      
fragmented driving range industry presents numerous opportunities for it to     
acquire, upgrade and renovate golf centers and driving ranges. The Company's    
acquisition strategy is to target well-located, underperforming stand-alone     
ranges or golf centers in stable communities with favorable demographics,       
generally in close proximity to upscale urban and suburban areas which          
generally contain the highest concentration of golfers. The Company             
anticipates that it will purchase the land and facilities of the properties     
it acquires but may from time to time enter into long-term leases or            
contracts to manage sites where the Company determines ownership to be          
uneconomical or where the facilities are not for sale, such as those owned by   
municipalities. In determining which facilities may be suitable acquisition     
candidates, management conducts demographic and competitive analyses and        
considers such factors as ease of access, visibility from major thoroughfares   
and potential for improvement in revenue and operating cash flow through        
capital improvements. The Company has three full-time acquisition and           
development professionals who are responsible for strategic planning and        
project management. These professionals work together with various outside      
consultants who are familiar with the Company's demographic requirements and    
are knowledgeable about the current opportunities in the various real estate    
markets.                                                                        

After taking operating control of an acquired range, the Company may      
commence various capital improvements to conform the acquired range to the      
Company's individually tailored development plan for that site. Capital         
improvements may include increasing the number of tee stations, sheltering      
the hitting stations or enclosing the driving range, installing lights to       
permit night play, adding or expanding pro shop and clubhouse facilities and    
constructing miniature golf courses and other amenities to encourage family     
participation. The Company trains the staff of newly acquired golf centers in   
accordance with the standards of existing facilities, and directs the general   
manager of the site to report to one of the Company's five Regional Managers.   
The Company also usually installs operational controls, including a             
token-based system for dispensing range balls, centralized cash management      
and management information systems, which allow the Company to centrally        
track the operations of each facility from its headquarter offices.             

Develop New Centers. In locations where suitable acquisition opportunities
are not available or where the Company determines ownership is not              
economically feasible, the Company intends to lease land on which it will       
build new golf centers similar to those currently operated by the Company. To   
date, the Company has built five of its facilities. Based upon its              
experience, the Company anticipates that under normal conditions construction   
of a facility will take approximately four months to complete and can be        
achieved at a total cost of less than $3.5 million, exclusive of the cost of    
land. However, there can be no assurance that the Company will be able to       
continue to construct its facilities in such time periods or for such cost.     
The Company has the expertise and the personnel to act as its own general       
contractor and intends to subcontract the construction of its centers to        
third parties.                                                                  

Economies of Scale. The Company believes that by virtue of its size, the  
Company will continue to take advantage of quantity discounts on equipment      
and golf merchandise sold through its pro shops. All accounting, insurance,     
cash management, finance and human resource functions are monitored centrally   
at the Company's headquarters. In markets where the Company has or attains a    
substantial presence, the Company believes that it will be able to take         
advantage of various advertising media to promote attendance at its             
facilities.                                                                     

The Company believes that the net proceeds from the Offering and its      
revolving credit facility with its primary lender will afford the Company       
greater financial flexibility and access to capital resources to pursue its     
business strategy.                                                              

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GOLF FACILITIES                                                                 

The Company currently owns, leases or manages 24 golf facilities in ten   
states. Set forth below is information concerning each of them:                 

                                                        · Enlarge/Download Table

                                              SIZE OF                                                                    
                                              PROPERTY        PGA            MINIATURE   NO.OF    OWNED,         DATE    
                                             APPROXIMATE   CERTIFIED   PRO     GOLF     HITTING  LEASED OR    OPENED OR  
LOCATION OF FACILITY   TYPE OF FACILITY         ACRES)    INSTRUCTORS  SHOP   COURSES    TEES     MANAGED     ACQUIRED(1)
--------------------   -------------------   -----------  -----------  ----  ---------  -------  ---------    -----------
                                                                                                                         
FARMINGDALE, NY       GOLDEN BEAR GOLF CENTER     13           X         X      ONE       80       LEASED      MARCH 1992
WAYNE, NJ             GOLDEN BEAR GOLF CENTER     16           X         X      TWO       80       LEASED      JULY 1993 
DOUGLASTON, NY        GOLDEN BEAR GOLF CENTER     12           X         X      ONE       70      MANAGED(2)   DEC. 1993 
ELMSFORD, NY          GOLDEN BEAR GOLF CENTER     27           X         X      TWO       80       LEASED      JULY 1994 
UTICA, NY             FAMILY GOLF CENTER          18           X         X      ONE       60       LEASED      DEC. 1994 
CLAY, NY              GOLDEN BEAR GOLF CENTER     23           X         X      ONE      132       LEASED      JAN. 1995 
 (NEAR SYRACUSE)                                                                                                         
QUEENSBURY, NY        FAMILY GOLF CENTER  AND    200           X         X      --        40        OWNED      MAY 1995  
 (NEAR ALBANY)         18-HOLE GOLF COURSE                                                                               
GREENVILLE, SC        FAMILY GOLF CENTER          24           X         X      ONE(3)   100        OWNED      MAY 1995  
GLEN ALLEN, VA        FAMILY GOLF CENTER          10           X         X      ONE       50        OWNED      AUG. 1995 
 (NEAR RICHMOND)                                                                                                         
DULUTH, GA            FAMILY GOLF CENTER(4)       56           X         X      ONE(3)    60        OWNED      AUG. 1995 
 (NEAR ATLANTA)                                                                                                          
ALPHARETTA, GA        FAMILY GOLF CENTER          26           X         X      TWO       60        OWNED      AUG. 1995 
 (NEAR ATLANTA)                                                                                                          
EL SEGUNDO, CA        GOLDEN BEAR GOLF CENTER     28           X         X       --       58      MANAGED(5)   NOV. 1995 
                       AND PAR-3 GOLF COURSE                                                                             
GILROY, CA            FAMILY GOLF CENTER AND      36           X         X       --       20        LEASED     NOV. 1995 
                       PAR-3 GOLF COURSE                                                                                 
VALLEY VIEW, OH       FAMILY GOLF CENTER          19           X         X      ONE(3)   130(6)  OWNED/LEASED  NOV. 1995 
 (NEAR CLEVELAND)                                                                                                        
HENRIETTA, NY         GOLDEN BEAR GOLF CENTER     28           X         X      ONE(3)   132(7)     LEASED     JAN. 1996 
MESA, AZ              FAMILY GOLF CENTER AND      39           X         X       --       80        OWNED      FEB. 1996 
                       PAR-3 GOLF COURSE                                                                                 
VIRGINIA BEACH, VA    FAMILY GOLF CENTER AND      81           X         X       --       36        LEASED     MARCH 1996
                       PAR-3 GOLF COURSE                                                                                 
FLEMINGTON, NJ        FAMILY GOLF CENTER          17           X         X      TWO       67        OWNED      MARCH 1996
YORKTOWN HEIGHTS, NY  FAMILY GOLF CENTER          14           X         X       --       54        OWNED      APRIL 1996
INDIAN RIVER, VA      FAMILY GOLF CENTER          14           X         X      ONE       60        LEASED     MAY 1996  
 (NEAR NORFOLK)                                                                                                          
TUCSON, AZ            FAMILY GOLF CENTER          18           X         X(3)   ONE(3)    50        OWNED      JUNE 1996 
FAIRFIELD, OH         FAMILY GOLF CENTER          24           X         X      ONE       68        LEASED     JUNE 1996 
 (NEAR CINCINNATI)                                                                                                       
ST. LOUIS, MO         FAMILY GOLF CENTER AND      42           X         X      ONE      100        LEASED     JUNE 1996 
                       PAR-3 GOLF COURSE                                                                                 
WEST PALM BEACH, FL   FAMILY GOLF CENTER AND      32           X         X      ONE       40        OWNED      JUNE 1996 
                       PAR-3 GOLF COURSE                                                                                 

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

(1) Represents the first month that the facility generated revenue for the
Company.                                                          

 (2) The Company manages the facility pursuant to a management contract with
   the City of New York. The management agreement terminates on December
31, 2006, but is terminable by the City of New York at will.      

(3) Under development.                                                    

(4) The Company has commenced construction of an par-3 executive golf     
   course adjacent to its golf center which it intends to have completed
by November 1996.                                                 

(5) The Company manages the facility pursuant to a management agreement   
with the City of El Segundo, California. The management agreement 
    terminates on June 30, 1998 but is terminable earlier by either party,
 with or without cause, at the end of each operating year during the
   term of the management agreement, upon at least 90 days prior written
notice.                                                           

(6) The Company owns a 5-acre parcel which includes an enclosed dome with 
   50 hitting tees and leases the adjacent 14-acre parcel on which it is
    constructing an outdoor driving range consisting of 80 hitting tees, a
miniature golf course and short game practice area.               

(7) In January 1996, the Company opened the domed portion of this golf    
center which encloses 50 hitting tees. The Company has commenced  
     construction of an outdoor driving range consisting of 82 hitting tees,
a minature golf course and short game practice area.              

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The Golf Centers                                                              

The Company's typical golf center is designed around a driving range      
landscaped with target greens, bunkers and traps to simulate golf course        
conditions. The Company's larger centers, such as the ones in Elmsford,         
Syracuse, Henrietta and Farmingdale, New York and Wayne, New Jersey include     
approximately 80 to 100 hitting tees in a two-tier design. Smaller golf         
centers include approximately 30 to 60 hitting tees. The ranges are generally   
open from 8:00 a.m. to 11:00 p.m. and are lighted to permit night play. The     
hitting tees are enclosed or sheltered from above and from the rear in a        
climate-controlled environment and, in three cases, all or a portion of the     
range is enclosed under an air inflated dome, to permit all-weather play.       
Tokens are sold to driving range customers at each of the Company's golf        
centers. These tokens are deposited by customers in machines which dispense     
precise amounts of golf balls, thus allowing the Company to monitor closely     
its cash receipts for buckets of balls and provides inventory assessment        
information.                                                                    

In addition to the driving range, the Company's golf centers generally    
include a 4,000-6,000 square foot clubhouse, including a full-line pro shop     
and locker facilities, landscaped 18-hole miniature golf courses, and a short   
game practice area (with putting green and sand traps) and PGA-certified golf   
instructors. As part of the Company's strategy to encourage family              
participation, the Company's golf centers include amenities such as miniature   
golf courses, restaurants and snack bars (three of which are operated by        
Friendly Ice Cream Corporation under the "Friendly's" name), video games and    
batting cages.                                                                  

Most of the Company's recently acquired golf centers are undergoing or    
expected to undergo capital improvement programs to add certain amenities.      
Golf center design is affected by the size, shape and other characteristics     
of available site locations, weather patterns, zoning requirements,             
availability of capital and market conditions.                                  

The Company's pro shops are stocked with clubs, bags, shoes, apparel,     
videos and related accessories from a number of suppliers, including brand      
name manufacturers such as Karsten Manufacturing Corporation (Ping), Callaway   
Golf Company, Tommy Armour Golf, Wilson Golf Company, Mizuno Golf Company,      
Spalding Sports Worldwide, Titleist and Footjoy Worldwide (Division of          
American Brands, Inc.), Ashworth Clothing Company and Nicklaus Golf Equipment   
Company. Each pro shop is staffed with at least one sales person and one of     
the Company's PGA-certified instructors.                                        

The Golf Courses                                                              

Since the IPO in November 1994, the Company has acquired one regulation   
18-hole golf course (Queensbury, New York) and six par-3 practice golf          
courses (Mesa, Arizona, Virginia Beach, Virginia, El Segundo and Gilroy,        
California, St. Louis, Missouri and West Palm Beach, Florida). The Company      
has commenced construction of a par-3 golf course, adjacent to a driving        
range at its Duluth, Georgia facility.                                          

The 200-acre, 18-hole regulation golf course at Queensbury, New York,     
known as the Hiland Golf Club, has a restaurant and catering facility to        
accommodate large parties and weddings, a clubhouse, a full-line pro shop, a    
driving range and PGA-certified golf instructors on site.                       

Each of the par-3 golf courses at Mesa, Arizona, St. Louis, Missouri and  
West Palm Beach, Florida has a clubhouse, a full-line pro shop and a driving    
range. The par-3 golf course in Virginia Beach, Virginia known as the "Owl's    
Creek Golf Course," has a clubhouse, a pro shop, a driving range and a          
putting course. Each of these golf courses have PGA-certified golf              
instructors on site.                                                            

Each of the par-3 practice golf courses in California, one of which is    
part of a Golden Bear Golf Center, has a clubhouse, a pro shop, a driving       
range and PGA-certified golf instructors on site.                               

The Company's strategy is to acquire golf courses in areas where it owns  
or operates or, intends to own or operate, golf centers so that it has          
available a golf course on which to: (i) train its golf instructors so that     
they may become PGA-certified and (ii) provide full golf packages and           
complete instruction to driving range customers.                                

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OPERATIONS                                                                      

The Company currently has golf facilities located in five regions (the New
York City region, the Northern region, the Southeast region, Mid-Atlantic       
region and the Western region), each of which is managed by a Regional          
Manager. Each golf facility has a general manager who reports to a Vice         
President-Regional Manager, one to two assistant managers, a head golf          
professional, up to four PGA-certified professionals who instruct golfers,      
approximately five full-time staff members and approximately 13 to 20           
part-time employees, depending on the season.                                   

Day-to-day responsibility for operation of the Company's golf centers     
resides with the general managers. General managers have overall                
administrative responsibility for golf center operations, including the         
driving range, miniature golf courses, short game practice area, pro shop and   
snack bar concession, as well as the condition of the facilities. In            
addition, general managers work with the Vice President-Regional Managers to    
prepare monthly and annual budgets and marketing plans.                         

The Company places great importance on recruiting and training skilled    
personnel. A majority of the golf instructors are PGA-certified. In addition,   
a majority of the general managers have managed or were assistant managers at   
other golf centers or courses prior to being hired by the Company. Regional     
managers and general managers, as well as other management personnel, are       
provided performance incentives such as stock options and bonuses.              

The Company emphasizes customer service. Employees undergo a comprehensive
training program where they are instructed, among other things, to be           
courteous, wear standardized clothing and display a professional attitude.      
The Company believes that excellent customer service is second in importance    
only to the quality of the golf facilities.                                     

By virtue of operating a number of golf facilities, the Company believes  
it achieves economies of scale not available to smaller operators. Typically,   
the Company can acquire artificial turf, range balls, pro shop merchandise      
and other golf center supplies and equipment at lower prices than could an      
individual operator. The Company can also purchase insurance coverage at a      
lower premium rate than would be charged for an individual golf center. The     
Company's corporate policies relating to personnel, labor, cash management      
and budgets are formulated at the Company's headquarters and provided to each   
of the Company's golf facilities. The Company's accounting, legal, insurance    
and finance functions and management information systems are also               
centralized. This centralization enables personnel at a golf center to focus    
on matters relating to the performance of the particular golf center.           

Management information services are important to the successful operation 
of the Company's golf centers. The Company's management information system      
provides for a centralized purchasing program, financial performance and        
other key operating data for all golf facilities. This system allows the        
Company to review data on a regular basis and enables the identification of     
potential problems.                                                             

The Company advertises in newspapers and on radio and cable television and
uses direct mailings and other promotions, including sponsoring certain         
charitable events, holding contests and giving free clinics and equipment       
demonstrations, to increase consumer awareness of its golf facilities. The      
Company incurred advertising expenses of $73,000 and $207,000 for the years     
ended December 31, 1994 and 1995, respectively. The Company believes            
advertising plays an important role in attracting golfers to its facilities     
and, in this connection, recently hired a director of marketing to direct the   
Company's marketing efforts. Pursuant to the License Agreement, the Licensor    
retains the right to approve advertising and other material using the "Golden   
Bear" name and logo.                                                            

RECENTLY OPENED OR ACQUIRED FACILITIES                                          

Since the IPO in November 1994, the Company has opened or acquired 20 golf
facilities, including one regulation 18-hole golf course and six combination    
golf center and par-3 golf course facilities. The newly opened or acquired      
centers are located in Syracuse, Henrietta, Yorktown Heights and Utica, New     
York, Flemington, New Jersey, Greenville, South Carolina, Glen Allen,           
Virginia (near Richmond), Indian River, Virginia (near Norfolk), Alpharetta     
and Duluth, Georgia (both of which are near Atlanta) Tucson, Arizona, and       
Valley View (near Cleveland), and Fairfield (near Cincinnati), Ohio. The        
regulation golf                                                                 

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course is located in Queensbury, New York, the par-3 golf course is located     
in Virginia Beach, Virginia and the combination golf center and par-3 golf      
course facilities are located in Mesa, Arizona, El Segundo and Gilroy,          
California, St. Louis, Missouri and West Palm Beach, Florida. The Company has   
commenced construction of a par-3 golf course on land adjacent to the Duluth,   
Georgia golf center which it intends to have completed by November 1996.        

The consideration paid by the Company to acquire each golf facility has   
been based on a number of factors, including appraisals of the acquired         
facility, the location and demographics of the facility and the Company's       
evaluation of the prospects of improving the facility's performance. None of    
the proceeds of the Offering are being used to finance any of the               
acquisitions described below.                                                   

The Syracuse Golf Center                                                      

On October 18, 1994, the Company entered into a long-term lease for       
approximately 23 acres of vacant land in Clay, New York (near Syracuse). The    
Company immediately commenced construction of a Golden Bear Golf Center         
consisting of an indoor domed driving range, an outdoor driving range, a        
miniature golf course, pro shop, clubhouse and restaurant. The Company          
completed and opened the domed driving range in January 1995 and the outdoor    
range and other amenities in July 1995.                                         

The Utica Golf Center                                                         

On December 7, 1994, the Company entered into a long-term lease for       
approximately 18 acres of land in Utica, New York on which there was an         
existing golf center. The Utica golf center was opened in March 1995.           

The Greenville Golf Center                                                    

On May 1, 1995, the Company acquired Pelham Enterprises, Inc. ("Pelham"), 
an entity that owned a 24-acre golf center in Greenville, South Carolina. The   
purchase price consisted of: (i) $512,000 in cash to satisfy certain debts of   
Pelham, all of which was derived from the Company's line of credit with         
Chemical Bank, (ii) a promissory note in favor of the sole stockholder of       
Pelham in the principal amount of $230,727 and (iii) 90,000 shares of Common    
Stock of the Company, which as of May 1, 1995 had an aggregate market value     
of $573,750, based on the last sale price of $6 3/8 per share as reported by    
the Nasdaq National Market. The note and the $818,000 mortgage of the land      
upon which the Greenville golf center is located, which bore interest at the    
prime rate and 7.5% (as of May 1, 1995), respectively, were repaid using a      
portion of the net proceeds of the Secondary Offering.                          

The Queensbury Golf Facility                                                  

On May 16, 1995, the Company acquired certain assets located in           
Queensbury, New York, from Evergreen Bank, N.A. for $3.75 million in cash, of   
which $750,000 was derived from the Company's line of credit with its primary   
lender and $3.0 million was loaned to the Company by Orix USA Corporation and   
secured by a mortgage on the property on which the Queensbury golf facility     
is located. The acquired assets included (i) all of the real property used      
and operated as the "Hiland Golf Club," consisting of a 200-acre, 18-hole       
regulation golf course and clubhouse and (ii) certain equipment, fixtures and   
personal property used in connection with the operation of Hiland Golf Club,    
including the use of the name "Hiland Golf Club."                               

The Glen Allen Golf Center                                                    

On August 25, 1995, the Company consummated the purchase of RFC           
Enterprises, Inc. ("RFC"), an entity that owned a golf center located on 10     
acres in Glen Allen, Virginia (near Richmond). The purchase price consisted     
of: (i) $454,000 in cash to satisfy certain debts of RFC, of which $4,000 was   
derived from the Company's working capital and $450,000 was derived from the    
Company's line of credit with its primary lender and (ii) 7,500 shares of       
Common Stock of the Company (3,750 of which have been placed in escrow for      
one year to satisfy indemnification claims of the Company, if any) which as     
of August 25, 1995 had an aggregate market value of $131,250, based on the      
last sale price of $17 1/2 per share as reported                                

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by the Nasdaq National Market. At August 25, 1995, the land upon which the      
Richmond golf center is located was subject to a $170,000 mortgage, due         
December 12, 1996, and bearing interest at 10% per annum. The mortgage was      
repaid with a portion of the net proceeds from the Secondary Offering. Under    
certain circumstances, the Company may have to pay additional consideration     
if the market price of the Company's Common Stock is less than $10.00 per       
share on August 25, 1997.                                                       

The Duluth Golf Center                                                        

On August 28, 1995, the Company consummated the purchase of 56 acres of   
land in Duluth, Georgia (near Atlanta) on which it has begun construction of    
a par-3 golf course adjacent to the existing driving range, which it intends    
to complete by November 1996. The purchase price consisted of: (i) $500,000     
in cash, all of which was derived from the Company's line of credit with its    
primary lender, (ii) a mortgage note in the principal amount of $1.6 million,   
bearing interest at the prime rate, payable on August 28, 2000, and (iii) a     
promissory note in the principal amount of $1.0 million, due on August 28,      
1997 in cash or Common Stock, at the Company's option, and bearing interest     
at 8% per annum.                                                                

The Alpharetta Golf Center                                                    

On September 28, 1995, the Company consummated the purchase from Upper    
Hembree Partners, L.P. of 26 acres of land in Alpharetta, Georgia (near         
Atlanta) on which there is an existing golf center. The purchase price          
consisted of: (i) 85,000 shares of the Common Stock of the Company (which as    
of September 28, 1995 had an aggregate market value of approximately $1.52      
million, based on the last sale price of $17 7/8 per share as reported by the   
Nasdaq National Market), (ii) an option to purchase up to 8,500 shares of the   
Company's Common Stock (which was subsequently reduced to an option for 8,280   
shares of Common Stock, in accordance with the terms of the purchase            
agreement) at an exercise price of $25.00 per share and (iii) $53,000 in        
cash, all of which was derived from the Company's working capital. The option   
expires on September 28, 2000. At September 28, 1995, the property was          
subject to a $1.8 million mortgage, due November 1, 1996, and bearing           
interest at 9.8% per annum. The Company also loaned the seller $35,000, which   
loan was repaid in February 1996 by the transfer by the seller to the Company   
of 2,200 shares of Common Stock, in accordance with the terms of the purchase   
agreement.                                                                      

The Valley View Golf Center                                                   

On November 8, 1995, the Company consummated the purchase from Golf       
Masters Limited Partnership and Air Dome Limited Partnership of a five-acre     
property in Valley View, Ohio (near Cleveland) (the "Valley View Golf           
Center") on which there is a domed indoor driving range. The purchase price     
consisted of: (i) 101,800 shares of the Common Stock of the Company, (33,934    
of which have been placed in escrow for one year to satisfy indemnification     
claims of the Company, if any), which as of November 8, 1995 had an aggregate   
market value of approximately $1.4 million, based on the last sale price of     
$14.00 per share as reported by the Nasdaq National Market, (ii) an option to   
purchase up to 10,000 shares of the Company's Common Stock at an exercise       
price of $25.00 per share and (iii) $299,000 in cash, all of which was          
derived from funds made available to the Company by its primary lender. The     
option expires on November 8, 2000. At November 1, 1995, the property was       
subject to a $342,000 mortgage, due September 1997, and bearing interest at     
the greater of 8% per annum and 1% over National City Bank's base rate. The     
mortgage was repaid using a portion of the net proceeds of the Secondary        
Offering. On November 8, 1995, the Company entered into a 15-year lease with    
two five-year renewal options for 14 acres of land adjacent to the five-acre    
Valley View property. The Company has commenced construction of an outdoor      
driving range, miniature golf course and short game practice area on such       
leased property.                                                                

The El Segundo and Gilroy Golf Facilities                                     

On November 8, 1995, the Company acquired TPT. TPT operates a combination 
Golden Bear Golf Center and golf course facility in El Segundo, California      
and a combination golf center and par-3 golf course facility in Gilroy,         
California pursuant to a management contract and a lease, respectively. The     
purchase price consisted of $4.0 million (payable in the form of a note which   
became due and was paid                                                         

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upon the closing of the Secondary Offering) and up to $2.0 million of           
additional purchase price payable upon the achievement of certain operating     
income targets. The contingent purchase price in respect of the year ending     
December 31, 1996 will be determined by multiplying $1.0 million by the         
lesser of (i) 1.0 and (ii) the number obtained by dividing the OIBITA (as       
defined below) during such year by $500,000 (the "1996 Multiplier"). The        
contingent purchase price in respect of the year ending December 31, 1997       
will be determined by multiplying $1.0 million by the lesser of (i) 1.0 and     
(ii) the number obtained by dividing the OIBITA during such year by $1.0        
million (the "1997 Multiplier"). If the 1997 Multiplier is higher than the      
1996 Multiplier, then the former TPT shareholders will also be entitled to      
receive an amount equal to (a) the amount which they would have been entitled   
to receive in respect of 1996 if the 1996 Multiplier had been as high as the    
1997 Multiplier less (b) the contingent amount, if any, that they received in   
respect of 1996.                                                                

For purposes of the preceding paragraph, "OIBITA" for any year shall mean 
the operating income before interest, taxes and depreciation or amortization,   
determined in accordance with generally accepted accounting principles          
consistently applied, generated by all golf facilities owned by the Company     
and located west of the Mississippi River. Dominic Chang and Krishnan Thampi,   
officers and directors of the Company, owned 65% and 5% of TPT, respectively,   
and received 65% and 5% of the consideration, respectively, from the            
acquisition of TPT. The Company received an opinion from the investment         
banking firm of Houlihan Lokey Howard & Zukin ("Houlihan Lokey") that the       
consideration to be paid by the Company for TPT was fair from a financial       
point of view. The acquisition of TPT was approved unanimously by the           
disinterested members of the Company's Board of Directors. In addition to the   
opinion of Houlihan Lokey, such Board members also considered a number of       
factors, including (i) the elimination of potential conflicts of interest,      
(ii) the opportunity to expand operations to the West Coast, (iii) the          
location and prospects of the golf facilities operated by TPT, (iv) the cost    
of establishing golf facilities comparable to those operated by TPT, (v) the    
operating history of TPT compared with the operating history of the Company's   
East Coast facilities at a comparable stage of development, (vi) the            
potential improvement in TPT's performance due to the elimination of            
duplicative administrative expenses, (vii) TPT's current financial condition    
and (viii) the opportunity to acquire TPT for less than the Company believed    
it would pay if it exercised its option to purchase TPT in 1998. Such option    
gave the Company the right to acquire TPT, commencing on January 1, 1998 or     
earlier if TPT had at least $1.0 million of net income, for 12.5 times TPT's    
after tax income, payable in Common Stock. See "Certain Relationships and       
Related Transactions."                                                          

The Henrietta Golf Center                                                     

On October 10, 1995, the Company entered into a 25-year lease with three  
five-year renewal options for 28 acres of land in Henrietta, New York on        
which the Company is constructing a Golden Bear Golf Center. Pursuant to the    
lease, the rental cost will be $110,000 per year for the first five years of    
the lease, $125,000 per year for the sixth through tenth year of the lease      
and thereafter would increase 15% every five years. The Company opened the      
domed portion of the golf center in January 1996.                               

The Mesa Golf Center                                                          

On February 20, 1996, the Company consummated the purchase from Rowley    
Properties Limited Partnership, an Arizona limited partnership, of a 39-acre    
parcel of property in Mesa, Arizona on which there is an existing golf          
recreational facility, including a par-3 golf course.                           

The Virginia Beach Golf Facility                                              

On March 6, 1996, the Company acquired from Owl's Creek Golf Center, Inc. 
its long-term leasehold interests in an 81-acre parcel of property in           
Virginia Beach, Virginia on which there is an existing golf recreational        
facility, including a par-3 golf course.                                        

The Flemington Golf Center                                                    

On March 7, 1996, the Company consummated the purchase from Flemington    
Equities VII of a 17-acre parcel of property in Flemington, New Jersey on       
which there is an existing golf recreational                                    

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facility. Concurrently, the Company consummated the purchase from Flemington    
Golf and Sports Center, LLC of certain equipment, fixtures and other property   
used in connection with the operation of this golf center.                      

The Yorktown Heights Golf Center                                              

On April 8, 1996, the Company consummated the purchase from 202 Golf      
Associates, Inc., of approximately 14 acres of land in Yorktown Heights, New    
York on which there is an existing golf recreational facility. The Company      
intends to build a miniature golf course and batting cages on this property.    

The Indian River Golf Center                                                  

On May 20, 1996, the Company consummated the purchase from Indian River   
Golf-O-Rama, Inc. of its long-term leasehold interests in a 14-acre parcel of   
property in Indian River, Virginia (near Norfolk) on which there is an          
existing golf recreational facility.                                            

The Fairfield Golf Center                                                     

On June 7, 1996, the Company consummated the purchase from three          
individuals of K.G. Golf, Inc., an entity that has a long term leasehold        
interest in a 24-acre parcel of property in Fairfield, Ohio (near Cincinnati)   
on which there is an existing golf recreational facility.                       

The Tucson Golf Center                                                        

On June 7, 1996, the Company consummated the purchase from four           
individuals of an 18-acre parcel of property in Tucson, Arizona on which        
there is an existing golf recreational facility.                                

The St. Louis Golf Center                                                     

On June 7, 1996, the Company consummated the purchase from Tree Court Golf
& Recreational Complex, Inc. of its long-term leasehold interests in a          
42-acre parcel of property in St. Louis, Missouri on which there is an          
existing golf recreational facility, including a par-3 golf course.             

The West Palm Beach Golf Center                                               

On June 10, 1996, the Company consummated the purchase from W.A.G.N.      
Partners of a 32-acre parcel of property in West Palm Beach, Florida on which   
there is an existing golf recreational facility, including a par-3 golf         
course.                                                                         

The Company acquired the Mesa, Arizona, the Virginia Beach, Virginia, the 
Indian River, Virginia, the Yorktown Heights, New York, the Flemington, New     
Jersey, the Tucson, Arizona, the Fairfield, Ohio, the St. Louis, Missouri and   
the West Palm Beach, Florida golf facilities for the aggregate purchase price   
of approximately $18.1 million, consisting of cash, Common Stock (based on      
the value of the Common Stock as reported by the Nasdaq National Market on      
the date of the respective acquisition), notes or assumption of liabilities,    
or a combination thereof. All of these acquisitions were consummated after      
the Secondary Offering was completed in December 1995.                          

OTHER POTENTIAL SITES                                                           

On November 21, 1995, the Company was orally advised by the City of       
Seattle, Washington that it had selected the Company's bid to negotiate a       
20-year lease with the City for a 40-acre parcel of land located in downtown    
Seattle. The Company intends to construct and operate a Golden Bear Golf        
Center on this property, including an 80 station two-tier design driving        
range, par-3 golf course, miniature golf course and clubhouse with a            
full-line pro shop and restaurant. The lease is subject to the successful       
negotiation and execution of definitive agreements with the City of Seattle     
and the Company's right to                                                      

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develop this golf facility as a Golden Bear Golf Center is subject to           
negotiation and execution of definitive agreements with the Licensor. There     
can be no assurance that a lease with the City of Seattle or an agreement       
with the Licensor will be executed with respect to the location.                

The Company has engaged in negotiations to purchase, for approximately    
$4.8 million in cash, 35 acres of land in Fairfield, Connecticut, on which      
the Company intends to build a golf center. Although the Company had entered    
into a letter of intent relating to this transaction, this letter of intent     
expired while the Company was awaiting the results of an environmental study    
of the property being conducted by an environmental consulting firm. If the     
environmental report is satisfactory, the Company intends to continue such      
negotiations. Although the Company is conducting the environmental study        
referred to above and continues to discuss the possibility of acquiring the     
land, the owner of the property has no obligation to sell it to the Company     
and there can be no assurance that this purchase will be consummated on the     
terms contemplated by the original letter of intent or at all.                  

The Company is in an advanced stage of negotiations to purchase a         
California corporation which owns a golf recreational facility located on 25    
acres of leased land in San Jose, California (the "San Jose Corp."). The        
consideration is expected to consist of cash and promissory notes convertible   
into shares of Common Stock at the option of the holder. The acquisition of     
the San Jose Corp. is subject to the negotiation and execution of definitive    
agreements with the owners of the San Jose Corp. and there can be no            
assurance that this purchase will be consummated on the terms currently         
contemplated or at all. The proposed acquisition would not be deemed            
significant under applicable accounting rules and, accordingly, would not       
require separate financial statements to be included in this Prospectus.        

The Company continually seeks to acquire or lease new golf facilities and 
has had discussions with a number of parties as to the acquisition or lease     
of golf facilities or land. Except as described above, the Company has no       
commitments or agreements to acquire or lease golf facilities or land.          

GOLDEN BEAR LICENSE                                                             

Under the License Agreement, the Company is licensed to use the trademark 
"Golden Bear" and related trademarks and tradenames in the operation of         
certain of its golf facilities. The License Agreement expires in August 2002,   
subject to earlier termination under certain circumstances. Unless terminated   
by written notice 90 days prior to the end of its initial term or renewal       
term, as the case may be, it will be automatically extended for additional      
five-year periods. The License Agreement is also terminable if the current      
directors of the Company, at any time, constitute less than 50% of the          
Company's directors.                                                            

The Company paid the Licensor a one-time fee of up to $25,000 facility    
development fee for each Golden Bear Golf Center and, in most cases, pays the   
Licensor an ongoing royalty fee ranging between 3% and 5% of Adjusted Gross     
Revenues, as defined in the License Agreement, subject to a minimum             
guaranteed royalty of at least $50,000 per year per site. For two of the        
sites, the Company pays a fixed annual fee ranging between $35,000 and          
$45,000, however, at one of such sites this amount is subject to increase for   
increases in the consumer price index. The value of the "Golden Bear" name is   
dependent, in part, upon the continued popularity of Jack Nicklaus.             
Accordingly, the occurrence of any event which diminishes the reputation of     
Mr. Nicklaus and the related "Golden Bear" symbol could adversely affect the    
Company's Golden Bear Golf Centers.                                             

On September 13, 1995, following discussion between the Company and the   
Licensor, the Company's exclusive rights to open Golden Bear Golf Centers in    
defined territories were terminated and the Company gained the right to         
develop golf centers under its own name in such territories. The Company has    
no right to open additional Golden Bear Golf Centers. In September 1995, the    
Licensor also agreed to the Company's proposal to cure an alleged default       
under the License Agreement (principally by making certain capital              
improvements to its Golden Bear Golf Centers by November 1996). Failure by      
the Company to take the agreed upon actions by such date could result in        
termination of the License Agreement. Termination of the License Agreement      
could adversely affect the Company's Golden Bear Golf Centers and, possibly,    
the Company.                                                                    

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Most of the Company's recently acquired golf centers are not intended to  
be Golden Bear Golf Centers. Golf centers operated by the Company under names   
other than "Golden Bear" do not have the benefit of the goodwill generated by   
such name and, accordingly, may not perform as well as Golden Bear Golf         
Centers. The Company believes that the disadvantages of operating golf          
centers under another name would be at least partially offset by the            
elimination of the obligation to pay royalties and other fees for the use of    
the "Golden Bear" name as well as the elimination of certain capital and        
operating expenditures required by the Licensor.                                

COMPETITION                                                                     

The golf center industry is highly competitive and includes competition   
from other golf centers, traditional golf ranges, golf courses and other        
recreational pursuits. The Company may face imitation and other forms of        
competition and the Company cannot prevent or restrain others from utilizing    
a similar operational strategy. Until September 1995, the Company had the       
exclusive right to open Golden Bear Golf Centers in certain territories. As a   
result of a recent change in the License Agreement, the Licensor now is         
permitted to establish, or license others to establish, Golden Bear Golf        
Centers that compete with the Company's golf centers, including its Golden      
Bear Golf Centers. Golden Bear Golf, Inc., an affiliate of the Licensor, has    
recently publicly indicated that it intends to focus its efforts on the         
direct ownership and operation of golf facilities through the acquisition or    
development of additional golf centers and to pursue new licensees and enter    
into additional territorial development agreements only in locations and        
territories where it and its affiliates do not intend to acquire or develop     
their own facilities. The Company's pro shop business faces competition from    
pro shops at golf courses and other golf centers, specialty retailers devoted   
to golf equipment and apparel, sporting goods stores and department stores.     
One advantage that the Company's pro shops have over certain of its             
competitors is that the customer may try golf clubs on the driving ranges       
before purchasing them. Many of the Company's competitors and potential         
competitors have considerably greater financial and other resources,            
experience and customer recognition than does the Company.                      

EMPLOYEES                                                                       

As of April 30, 1996, the Company had 406 employees, of which 169 were    
full-time employees and 237 of which were part-time employees. Each golf        
center is staffed with approximately 10 full-time employees, including up to    
four full-time PGA-certified professionals who instruct golfers of all skill    
levels, and approximately 13 to 20 part-time employees depending on the         
season. None of the employees are represented by a collective bargaining        
agreement. The Company has never experienced a strike or work stoppage. The     
Company believes that its relationship with its employees is good.              

GOVERNMENTAL REGULATION                                                         

Operations at the Company's golf facilities involve the use and limited   
storage of various hazardous materials such as pesticides, herbicides, motor    
oil, paint and gasoline. Under various federal, state and local laws,           
ordinances and regulations (which are administered, in the case of federal      
laws and regulations, primarily by the United States Environmental Protection   
Agency), an owner or operator of real property is generally liable for the      
costs of removal or remediation of hazardous substances that are released on    
or in its property regardless of whether the property owner or operator knew    
of, or was responsible for, the release of hazardous materials. The Company     
has not been informed by any governmental authority or instrumentality of any   
non-compliance or violation of any environmental laws, ordinances or            
regulations. However, the Company is aware of one notice of violation issued    
by the DEC against the owner of the land leased by the Company in Elmsford,     
New York alleging that certain hazardous materials were placed on the site.     
The owner has taken remedial action and the Company does not believe it will    
be affected by the alleged violation. To date, the Company has not incurred     
material costs of remediation in relation to any of its golf facilities and     
the Company knows of no material environmental liability to which it may        
become subject. Although the Company usually hires environmental consultants    
to conduct environmental studies, including invasive procedures such as soil    
sampling or ground water analysis, on golf facilities it owns, operates or      
intends to acquire, in some cases only limited invasive procedures are          
conducted on                                                                    

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such properties. Even when invasive procedures are used, environmental          
studies may fail to discover all potential environmental problems.              
Accordingly, there may be potential environmental liabilities or conditions     
of which the Company is not aware.                                              

The Company is subject to the Fair Labor Standards Act and various state  
laws governing such matters as minimum wage requirements, overtime and other    
working conditions and citizenship requirements. The restaurants at the         
Company's golf facilities in Queensbury, New York, Virginia Beach, Virginia     
and Gilroy, El Segundo, California serve alcoholic beverages and are subject    
to certain state "dram-shop" laws, which provide a person injured by an         
intoxicated individual the right to recover damages from an establishment       
that wrongfully served such beverages to the intoxicated individual.            

PROPERTIES                                                                      

The Company maintains its executive offices in approximately 5,292 square 
feet of space in Melville, New York pursuant to a lease expiring in October     
1999. The Company owns the land, subject to mortgages, on which its             
Queensbury, New York golf course (approximately 200 acres), its Yorktown        
Heights, New York golf center (approximately 14 acres), its Flemington, New     
Jersey golf center (approximately 17 acres), its Greenville, South Carolina     
golf center (approximately 24 acres), its Duluth, Georgia (near Atlanta) golf   
center (approximately 56 acres), its Alpharetta, Georgia (near Atlanta) golf    
center (approximately 26 acres), its Glen Allen, Virginia (near Richmond)       
golf center (approximately 10 acres), its Mesa, Arizona golf center             
(approximately 39 acres), its Valley View, Ohio (near Cleveland) golf center    
(approximately five acres), its Tucson, Arizona golf center (approximately 18   
acres) and its West Palm Beach, Florida golf center (approximately 32 acres)    
are located. The Company also leases the land on which ten of its golf          
facilities are located as well as the land adjacent to its Valley View, Ohio    
golf center on which it has commenced construction of additional golf           
facilities. None of such leases are with affiliates of the Company.             

After giving effect to renewal options, none of the Company's current     
leases for its golf centers or facilities is scheduled to expire until 2007.    
However, the leases may be terminated prior to their scheduled expiration       
should the Company default in its obligations thereunder. The termination of    
any of the Company's leases could have an adverse effect on the Company. If     
any of the Company's leases were to be terminated, there can be no assurance    
that the Company would be able to enter into leases for comparable properties   
on favorable terms, or at all.                                                  

The Company manages the Douglaston, New York golf center pursuant to a    
management agreement with the City of New York, which provides for annual       
payments to the City of the greater of $900,000 or 50% of the revenues from     
this golf center. The City owns the land on which such facility is located.     
The Company's management agreement with the City terminates on December 31,     
2006, but is terminable by the City at will.                                    

The Company manages the El Segundo, California golf course and golf center
pursuant to a management agreement with the City of El Segundo which provides   
for monthly payments to the Company of $10,417, subject to annual adjustments   
based on the Consumer Price Index, and an annual bonus based on the             
facility's annual gross revenue, which bonus may not exceed the total amount    
of monthly fees for such operating year. The City of El Segundo owns the land   
on which the facility is located. Such management agreement terminates on       
June 30, 1998, unless earlier terminated by either party, with or without       
cause, as of the end of any operating year during the term of the agreement,    
upon at least 90 days prior written notice.                                     

LEGAL PROCEEDINGS                                                               

The Company knows of no material litigation or proceeding pending,        
threatened or contemplated to which the Company is or may become a party.       

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MANAGEMENT  

EXECUTIVE OFFICERS AND DIRECTORS                                                

The following table sets forth certain information concerning the         
executive officers and directors of the Company:                                

                                                                · Download Table


 NAME                   AGE  POSITION                                          
 ----                   ---  --------                                          
                                                                               
Dominic Chang(1)(2)  .. 46   Chairman of the Board, President and Chief        
                             Executive Officer                                 
Krishnan P. Thampi  ... 47   Chief Financial Officer, Chief Operating Officer, 
                             Executive Vice President, Secretary, Treasurer and
                             Director                                          
Richard W. Hasslinger   46   Vice President--Regional Manager                  
Garrett J. Kelleher  .. 59   Vice President--Finance                           
Robert J. Krause ...... 50   Vice President--Strategic Planning and Development
Rodger P. Potocki  .... 52   Vice President--Regional Manager                  
Margaret Santorufo  ... 30   Controller                                        
James Ganley(1)(3)  ... 60   Director                                          
Jimmy C.M. Hsu(2)  .... 46   Director                                          
Yupin Wang(1)(2)(3)  .. 63   Director                                          

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

(1) Member of Audit Committee                                             

(2) Member of Compensation Committee                                      

(3) Member of Stock Option Committee                                      

Dominic Chang has been the Chairman of the Board, President and Chief     
Executive Officer of the Company and its predecessors since 1991. From 1989     
to 1992, Mr. Chang was a Senior Vice President and Sector Executive for         
Corporate Real Estate and General Services for The Bank of New York. He was     
responsible for the acquisition, management and disposition of The Bank of      
New York's properties worldwide, facilities design and construction, security   
and centralized administrative services. Mr. Chang previously had over 15       
years banking experience with Bankers Trust and Irving Trust Company. He has    
a Masters Degree in Industrial Engineering from New York University and a       
Bachelors Degree from the State University of New York at Stonybrook.           

Krishnan P. Thampi has been the Chief Financial Officer, Executive Vice   
President, Chief Operating Officer, Secretary and Treasurer of the Company      
and its predecessors since 1992. He became a director of the Company in 1994.   
From 1989 to 1992, he was a Senior Vice President for Administrative Services   
at The Bank of New York. From 1988 to 1989, he was a Senior Vice President      
for Systems Services at Irving Trust Company. He also performed controller      
and personnel management functions while at Irving Trust Company. Mr. Thampi    
has a Masters Degree in Business Administration from Columbia University and    
a Bachelors Degree in Engineering from McGill University.                       

Richard W. Hasslinger joined the Company's predecessor in November 1992 as
a Site Manager and has been Vice President-Regional Manager for the New York    
City region since January 1995. From May 1992 to November 1992, he served as    
a consultant to the Company. From May 1988 until May 1992, he was Vice          
President and Division Head for Facilities Management at The Bank of New        
York. His responsibilities there included leasing and acquisitions, design      
and construction, and property management. From 1973 to 1988, he managed        
several operational activities at Irving Trust Company. Mr. Hasslinger has a    
Bachelors Degree in Business Administration from Hope College.                  

Garrett J. Kelleher, a certified public accountant, joined the Company's  
predecessor in July 1993 as a Site Manager and served as Controller from        
January 1994 to June 1995. He has been the Vice President--Finance since July   
1995. From 1980 to September 1990, Mr. Kelleher was Group Controller for Bank   
Operations at The Bank of New York. He has held a variety of accounting and     
financial                                                                       

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management positions at The Bank of New York, and previously in public          
accounting. Mr. Kelleher acted as an independent consultant from September      
1990 to July 1993. Mr. Kelleher has a Masters Degree in Finance from St.        
Johns University and a Bachelors Degree in Business Administration from         
Manhattan College.                                                              

Robert J. Krause joined the Company's predecessor in June 1993 and served 
as a Site Manager until January 1995, when he became the Vice                   
President--Strategic Planning and Development. From 1983 to 1993, Mr. Krause    
was Vice President of Administrative Services for The Bank of New York. From    
1978 to 1983, he held product development, marketing and strategic planning     
responsibilities at Irving Trust Company. Mr. Krause has a Bachelors Degree     
in Electrical Engineering from the University of Oklahoma.                      

Rodger P. Potocki was the Northern District Director for the Company from 
September 1994 until he was appointed Vice President--Regional Manager,         
Northern Region, in February 1995. From October 1979 to September 1994, he      
was Executive Vice President of Oneida County Industrial Development            
Corporation, a non-profit development corporation ("Oneida Industrial"). At     
Oneida Industrial, Mr. Potocki was responsible for new investment and job       
creation projects in Oneida County, New York, and implemented New York          
State's first direct loan fund for new businesses. Previously, he served as     
Director of Planning and Development for the City of Rome, New York. Mr.        
Potocki has a Masters Degree in Political Science from the Graduate School of   
Public Affairs in Albany, New York and a Bachelors Degree from Syracuse         
University.                                                                     

Margaret M. Santorufo joined the Company as Controller in June 1995. From 
January 1990, until she joined the Company in 1995, she was an audit            
supervisor with Richard A. Eisner & Company, L.L.P. Ms. Santorufo received a    
Bachelors Degree in Accounting from St. John's University.                      

James Ganley has been a director of the Company since 1994. From October  
1988 until his retirement in 1990, Mr. Ganley was a Senior Executive Vice       
President of The Bank of New York. Mr. Ganley was a member of the Senior        
Management Steering Committee at The Bank of New York and was directly          
responsible for the merger of the systems, products and operations of The       
Bank of New York with Irving Trust Company. Prior to 1988, Mr. Ganley had       
held various executive positions at Irving Trust Company and was Group          
Executive responsible for Banking Operation activities, which comprised 13      
divisions. He was also a member of Irving Trust Company's Senior Executive      
Management Committee. Mr. Ganley received a Bachelors Degree in Economics       
from New York University and was a participant in Harvard University's          
program for management development.                                             

Jimmy C.M. Hsu has been a director of the Company since 1994. Mr. Hsu is  
currently the Vice Chairman and a director of Russ Berrie and Company, Inc.     
("Russ Berrie"), a New York Stock Exchange listed company which manufactures    
and distributes toys and gifts to retail stores; however Mr. Hsu has            
announced his resignation from Russ Berrie, effective July 31, 1996. Mr. Hsu    
joined Russ Berrie in 1979 as Vice President, Far East Operations. In 1987,     
he was appointed Senior Vice President and Director of World-Wide Marketing     
of Russ Berrie. In 1991, he was elected to the board of Russ Berrie and was     
appointed the position of Executive Vice President. In 1995, Mr. Hsu became     
Vice Chairman of Russ Berrie.                                                   

Yupin Wang has been a director of the Company since 1994. Mr. Wang is     
currently the President of W W International, a worldwide management            
consulting firm. Prior to establishing W W International in 1992, Mr. Wang      
was a member of the executive management team of International Business         
Machines Corp. ("IBM") from 1962 to 1992. He had held various positions at      
IBM, including Director of Marketing Operations, Director of Marketing          
Strategy and Director of Customer Satisfaction. As Director of Customer         
Satisfaction, he established IBM's Customer Satisfaction Management System,     
which contributed to IBM Rochester winning the Malcolm Baldrige Award. Mr.      
Wang received a Bachelors Degree in Economics from National Taiwan University   
and Masters Degrees from Oklahoma State University and New York University.     

Directors are currently elected annually. Vacancies and newly-created     
directorships resulting from any increase in the number of authorized           
directors will be filled by a majority vote of the directors then in office.    
Officers are elected by, and serve at the pleasure of, the Board of             
Directors.                                                                      

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The Company's employee directors do not receive any additional            
compensation for their services as directors. Non-employee directors do not     
receive a fee for serving as such, but are reimbursed for expenses. However,    
each non-employee director received options to purchase 5,000 shares of         
Common Stock upon adoption of the 1994 Stock Option Plan and receives           
additional options annually. See "Stock Option Plans" below.                    

EXECUTIVE COMPENSATION                                                          

The following table sets forth the annual and long-term compensation for  
services in all capacities paid to Dominic Chang, the Company's Chairman of     
the Board, President and Chief Executive Officer, during 1993, 1994 and 1995.   
No executive officer received compensation exceeding $100,000 during 1993,      
1994 or 1995.                                                                   

SUMMARY COMPENSATION TABLE  

                                                        · Enlarge/Download Table

                                   ANNUAL COMPENSATION                    LONG-TERM COMPENSATION                          
                           ----------------------------------  ------------------------------------------                 
NAME AND                                                         RESTRICTED    SECURITIES     LONG-TERM                   
PRINCIPAL                                        OTHER ANNUAL      STOCK       UNDERLYING   INCENTIVE PLAN    ALL OTHER   
POSITION            YEAR    SALARY     BONUS     COMPENSATION     AWARD(S)      OPTIONS        PAYOUTS       COMPENSATION 
-----------------  ------  ---------  -------   --------------  ------------  ------------  --------------  --------------
                                                                                                                          
DOMINIC CHANG,     1993     $65,000     --          $9,000(1)        --            --             --              --      
 Chairman of the                                                                                                          
 Board, Chief      1994     $65,000     --          $9,000(1)(2)     --            --             --              --      
 Executive                                                                                                                
 Officer and                                                                                                              
 President         1995     $65,000     --          $9,000(1)        --          10,000(3)        --              --      

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

(1) Represents amounts paid to lease a car used by Mr. Chang.             

 (2) Does not include a distribution of $310,000 made to reimburse Mr. Chang
for federal and state income taxes payable by him based on        
   undistributed earnings of the Company's subsidiaries which elected to
be treated as S Corporations pursuant to Section 1362(a) of the   
     Internal Revenue Code, through the date of the Company's initial public
offering of its securities.                                       

 (3) Stock options to purchase 10,000 shares of Common Stock were granted in
March 1995 at $6.75 per share (the fair market value of the Common
   Stock on the date of such grant); these options became exercisable in
March 1996.                                                       

The following table sets forth certain information concerning options     
granted to the Chief Executive Officer during the fiscal year ended December    
31, 1995.                                                                       

OPTION GRANTS IN LAST FISCAL YEAR   

               INDIVIDUAL GRANTS
             -------------------------------------------------------------
NUMBER OF      PERCENT OF                   
SECURITIES    TOTAL OPTIONS                 
UNDERLYING     GRANTED TO      EXERCISE OR  
OPTIONS      EMPLOYEES IN     BASE PRICE  
NAME              GRANTED(1)     FISCAL YEAR      ($/SHARE)    EXPIRATION DATE  
--------------  ------------  ---------------   -------------  ---------------  
Dominic Chang       10,000          6.5%            $6.75       MARCH 8, 2005   

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

(1) All options were granted at an exercise price equal to the fair market
value of the Common Stock on the date of grant.                   

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AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED DECEMBER 31, 1995      
AND FISCAL YEAR END OPTION VALUES                                               

The following table sets forth certain information concerning the number  
and value of securities underlying exercisable and unexercisable stock          
options as of the fiscal year ended December 31, 1995 by the Chief Executive    
Officer. No options were exercised by the Chief Executive Officer during the    
fiscal year ended December 31, 1995.                                            

FISCAL YEAR-END OPTION VALUES   

                NUMBER OF SECURITIES            VALUE OF UNEXERCISED
               UNDERLYING UNEXERCISED           IN-THE-MONEY OPTIONS
              OPTIONS AT FISCAL YEAR END        AT FISCAL YEAR END (1)
              ------------------------------  ------------------------------
NAME              EXERCISABLE    UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE  
--------------  -------------  ---------------  -------------  ---------------  
Dominic Chang         --             10,000           --            $115,000    

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

(1) The value of unexercised options is determined by multiplying the     
   number of options held by the difference between the closing price of
 the Common Stock of $18.25 at December 31, 1995, as reported by the
   Nasdaq National Market and the exercise price of the options granted.

STOCK OPTION PLANS                                                              

On July 19, 1994, the Board of Directors of the Company and stockholders  
of the Company adopted the Company's 1994 Stock Option Plan (the "Plan"). The   
Plan provides for the grant of options to purchase up to 300,000 shares of      
Common Stock to employees, officers, directors and consultants of the           
Company. Options may be either "incentive stock options" within the meaning     
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),   
or non-qualified options. Incentive stock options may be granted only to        
employees of the Company, while non-qualified options may be issued to          
non-employee directors, consultants and others, as well as to employees of      
the Company. On March 6, 1996, the Board of Directors of the Company adopted,   
and on June 7, 1996, the stockholders approved, the Company's 1996 Stock        
Incentive Plan (the "New Plan"). The New Plan is identical to the Plan,         
except that the New Plan provides (i) for the grant of options to purchase up   
to 500,000 shares of Common Stock and (ii) an automatic grant of                
non-qualified stock options to purchase 10,000 shares to each non-employee      
director upon his election or appointment to the Board of Directors and         
annual grants (commencing on the date the New Plan was approved by              
stockholders) to each non-employee director of non-qualified stock options to   
purchase 10,000 shares of Common Stock at the fair market value of the Common   
Stock on the date of the grant.                                                 

The Plan is administered by the Stock Option Committee, which determines, 
among other things, those individuals who receive options, the time period      
during which the options may be partially or fully exercised, the number of     
shares of Common Stock issuable upon the exercise of each option and the        
option exercise price. The Plan also provided for an automatic grant of         
non-qualified stock options to purchase 5,000 shares of Common Stock to each    
non-employee director upon his election or appointment to the Board of          
Directors and annual grants of non-qualified stock options to purchase 2,000    
shares of Common Stock at the fair market value of the Common Stock on the      
date of such grant. Effective on June 7, 1996, such automatic grants ceased     
and were replaced by the automatic grants under the New Plan.                   

The exercise price per share of Common Stock subject to an incentive      
option may not be less than the fair market value per share of Common Stock     
on the date the option is granted. The per share exercise price of the Common   
Stock subject to a non-qualified option may be established by the Board of      
Directors. The aggregate fair market value (determined as of the date the       
option is granted) of Common Stock for which any person may be granted          
incentive stock options which first become exercisable in any calendar year     
may not exceed $100,000. No person who owns, directly or indirectly, at the     
time of the granting of an incentive stock option to such person, 10% or more   
of the total combined voting power of all classes of stock of the Company (a    
"10% Stockholder") shall be eligible to receive any incentive stock options     
under the Plan unless the exercise price is at least 110% of the fair market    
value of the shares of Common Stock subject to the option, determined on the    
date of grant. Non-qualified options are not subject to such limitation.        

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No stock option may be transferred by an optionee other than by will or   
the laws of descent and distribution, and, during the lifetime of an            
optionee, the option will be exercisable only by the optionee. In the event     
of termination of employment other than by death or disability, the optionee    
will have no more than three months after such termination during which the     
optionee shall be entitled to exercise the option, unless otherwise             
determined by the Stock Option Committee. Upon termination of employment of     
an optionee by reason of death or permanent disability, such optionee's         
options remain exercisable for one year thereafter to the extent such options   
were exercisable on the date of such termination.                               

Options under the Plan must be issued within 10 years from the effective  
date of the Plan which is July 19, 1994. Incentive stock options granted        
under the Plan cannot be exercised more than 10 years from the date of grant.   
Incentive stock options issued to a 10% Stockholder are limited to five-year    
terms. All options granted under the Plan provide for the payment of the        
exercise price in cash or by delivery to the Company of shares of Common        
Stock already owned by the optionee having a fair market value equal to the     
exercise price of the options being exercised, or by a combination of such      
methods. Therefore, an optionee may be able to tender shares of Common Stock    
to purchase additional shares of Common Stock and may theoretically exercise    
all of such optionee's stock options with no additional investment other than   
the purchase of the original shares.                                            

Any unexercised options that expire or that terminate upon an employee's  
ceasing to be employed by the Company become available again for issuance       
under the Plan.                                                                 

To date, options to purchase 294,000 shares of Common Stock have been     
granted under the Plan (of which options to purchase 25,075 shares have been    
exercised), and options to purchase 30,000 shares of Common Stock have been     
granted under the New Plan. In addition, on March 8, 1995, Messrs. Chang and    
Thampi were each granted options outside of the Plan to purchase 10,000         
shares of Common Stock at $6.75 per share (the fair market value of the         
Common Stock on the date of such grant) in connection with an amendment to      
their respective employment agreements. These options became exercisable in     
March 1996. In addition, on March 7, 1996, various employees of the Company     
were granted options outside of both the Plan and the New Plan to purchase an   
aggregate of 53,500 shares of Common Stock at $19.875 (the fair market value    
of the Common Stock on the date of such grant), which options vest ratably      
over three years.                                                               

EMPLOYMENT AGREEMENTS                                                           

The Company has entered into employment agreements, each expiring on      
December 31, 1999, with each of Mr. Chang and Mr. Thampi, pursuant to which     
each will devote at least 95% of his business time to the affairs of the        
Company. Pursuant to his employment agreement, Mr. Chang received a base        
salary of $65,000 in 1995 and will receive a base salary of $120,000 in 1996,   
$140,000 in each of 1997 and 1998, and $160,000 in 1999. Such base salaries     
are subject to additional increase within the discretion of the Board of        
Directors which will take into account, among other things, the performance     
of the Company and the performance, duties and responsibilities of Mr. Chang.   
Mr. Chang will also receive use of a Company-leased automobile. The             
employment agreement also provides that Mr. Chang will not compete with the     
Company for two years after the termination of his employment.                  

Pursuant to his employment agreement, Mr. Thampi received a base salary of
$60,000 in 1995 and will receive a base salary of $100,000 in 1996, $120,000    
in each of 1997 and 1998 and $140,000 in 1999. Such base salaries are subject   
to additional increase within the discretion of the Board of Directors which    
will take into account, among other things, the performance of the Company      
and the performance, duties and responsibilities of Mr. Thampi. Mr. Thampi      
will also receive use of a Company-leased automobile. The employment            
agreement also provides that Mr. Thampi will not compete with the Company for   
two years after the termination of his employment.                              

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PRINCIPAL STOCKHOLDERS  

The following table sets forth certain information as of May 1, 1996      
regarding the beneficial ownership of the Company's Common Stock by (i) each    
person known by the Company to own beneficially more than 5% of the Company's   
Common Stock, (ii) each director and the chief executive officer of the         
Company and (iii) all directors and executive officers of the Company as a      
group. Except as otherwise indicated and subject to community property laws     
where applicable, the persons named in the table below have sole voting and     
dispositive power with respect to the shares of Common Stock shown as           
beneficially owned by them.                                                     

                                                        · Enlarge/Download Table

                                       AMOUNT AND NATURE OF                 AMOUNT AND NATURE OF        
                                       BENEFICIAL OWNERSHIP                 BENEFICIAL OWNERSHIP        
                                        OF THE COMMON STOCK                    OF COMMON STOCK          
                                        BEFORE THE OFFERING                 AFTER THE OFFERING(1)       
                                ---------------------------------  -------------------------------------
                                                    PERCENTAGE OF                          PERCENTAGE OF
NAME AND ADDRESS                                     OUTSTANDING                            OUTSTANDING 
OF BENEFICIAL OWNER                   NUMBER           SHARES              NUMBER             SHARES    
------------------------------  ----------------  ---------------  --------------------  ---------------
                                                                                                        
Dominic Chang (2) .............     2,822,750(5)       32.8%             2,822,750(5)(6)       24.3%    
Janus Capital Corporation (3)       1,015,875          11.8%             1,015,875              8.8%    
George Soros (4) ..............       500,000           5.8%               500,000              4.3%    
Jimmy C.M. Hsu (2) ............       191,084(7)(8)     2.2%               191,084(7)(8)(9)     1.6%    
Krishnan P. Thampi (2) ........       181,950(10)       2.1%               181,950(10)(11)      1.6%    
James Ganley (2) ..............        15,834(8)         *                  15,834(8)            *      
Yupin Wang (2) ................         7,334(8)         *                   7,334(8)            *      
All directors and executive                                                                             
 officers of the Company                                                                                
 as a group (ten persons)  ....     3,233,286(5)(7)    37.3%             3,233,286(5)(7)       27.7%    
                                             (10)(12)                             (10)(12)(13)          

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

*Less than 1%.                                                            

(1) If the Underwriters' over-allotment option is exercised in full, the        
 Selling Stockholders, who are Dominic Chang, Jimmy C. M. Hsu, Krishnan P.
 Thampi, Upper Hembree Partners, L.P. and Air Dome Limited Partnership and
    Golf Masters Limited Partnership will sell an aggregate of 450,000 shares of
Common Stock. Following are the positions, offices or other material    
relationship (other than as a stockholder) which each of the Selling    
  Stockholders has had within the past three years with the Company: Dominic
Chang (officer/director); Jimmy C.M. Hsu (director); Krishnan P. Thampi 
(officer/director); Upper Hembree Partners, L.P. (the seller of the     
   Alpharetta Golf Center in September 1995); Air Dome Limited Partnership and
    Golf Masters Limited Partnership (the sellers of the Valley View Golf Center
in November 1995). Prior to the Offering, Upper Hembree Partners, L.P.  
 beneficially owned 91,080 shares of Common Stock (1.1% of the outstanding
  Common Stock), which amount includes 8,280 shares of Common Stock issuable
upon exercise of options which are currently exercisable. Prior to the  
   Offering, Air Dome Limited Partnership and Golf Masters Limited Partnership
 beneficially owned 86,800 shares of Common Stock (1.0% of the outstanding
   Common Stock), which amount includes 10,000 shares of Common Stock issuable
upon exercise of options which are currently exercisable. If the        
   Underwriters' over-allotment option is exercised in full, (i) Upper Hembree
Partners, L.P. will sell 33,718 shares of Common Stock and after the    
  Offering will beneficially own 57,362 shares of Common Stock, representing
   0.5% of the outstanding Common Stock, and (ii) Air Dome Limited Partnership
    and Golf Masters Limited Partnership will sell 42,866 shares of Common Stock
   and after the Offering will beneficially own 43,934 shares of Common Stock,
representing 0.4% of the outstanding Common Stock. See "Underwriting."  

(2) The address of such stockholder is: c/o Family Golf Centers, Inc.,          
225 Broadhollow Road, Melville, New York 11747.                         

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(3) The address of Janus Capital Corporation ("JCC"), Janus Enterprise Fund     
    ("JEF") and Mr. Thomas H. Bailey is: 100 Fillmore Street, Suite 300, Denver,
Colorado 80206. Information regarding the aggregate number of shares of 
Common Stock beneficially owned by JCC, a registered investment advisor,
 JEF, an investment company, and Mr. Thomas H. Bailey and their investment
   and voting power with respect to such shares is based on the information as
   reported in the Schedule 13G filed by these persons, dated January 9, 1996.
 Mr. Thomas H. Bailey owns approximately 12.2% of JCC and may be deemed to
   exercise control over JCC as a result. As a result of JCC's role of advisor
  to various entities, including JEF, JCC may be deemed to be the beneficial
   owner of the 1,015,875 shares of Common Stock held by such accounts managed
 by it, including JEF. Mr. Bailey and JCC do not have the right to receive
  dividends from, or the proceeds from the sale of, any such shares owned by
  the accounts managed by JCC and each disclaims beneficial ownership of the
shares held by the accounts JCC manages (including JEF).                

(4) George Soros ("Soros") holds these shares of Common Stock in his capacity   
as the sole proprietor of the investment advisory firm, Soros Fund      
Management ("SFM"), which holds the shares for the account of Quantum   
 Partners, LDC ("Quantum"), a Cayman Islands company. The address of Soros
and SFM is: 888 Seventh Avenue, 33rd Floor, New York, New York 10106.   
Certain information regarding the number of shares of Common Stock      
beneficially owned by Soros and Quantum and their investment and voting 
    power with respect to such shares is based on the information as reported in
the Schedule 13D filed by these persons, dated December 20, 1995.       

(5) Includes 1,000 shares of Common Stock owned by Mr. Chang's children.        
Includes 10,000 shares of Common Stock issuable upon exercise of options
which are currently exercisable. Of such shares, 174,000 are pledged to 
   United Orient Bank and 187,750 are pledged to Chemical Bank, each to secure
a personal loan to Mr. Chang.                                           

(6) If the Underwriters' over-allotment option is exercised in full, Mr. Chang  
will sell 213,416 shares of Common Stock and after the Offering will    
    beneficially own 2,609,334 shares of Common Stock, representing 23.3% of the
outstanding Common Stock.                                               

(7) Does not include 66,250 shares of Common Stock beneficially owned by Mr.    
Hsu's brother. Mr. Hsu disclaims beneficial ownership of his brother's  
shares.                                                                 

(8) Includes 2,334 shares of Common Stock issuable upon exercise of options     
which are currently exercisable.                                        

(9) If the Underwriters' over-allotment option is exercised in full, Mr. Hsu    
will sell 50,000 shares of Common Stock and after the Offering will     
 beneficially own 141,084 shares of Common Stock, representing 1.3% of the
outstanding Common Stock.                                               

(10) Includes 45,000 shares of Common Stock issuable upon exercise of options   
which are currently exercisable.                                      

(11) If the Underwriters' over-allotment option is exercised in full, Mr. Thampi
will sell 50,000 shares of Common Stock and after the Offering will   
   beneficially own 131,950 shares of Common Stock, representing 1.2% of the
outstanding Common Stock.                                             

(12) Includes 16,336 shares of Common Stock issuable upon exercise of options   
which are currently exercisable.                                      

(13) If the Underwriters' over-allotment option is exercised in full, three of  
    the group of ten directors and executive officers of the Company will sell
 an aggregate of 313,416 shares of Common Stock. Assuming such exercise,
     after the Offering the directors and executive officers of the Company as a
    group will beneficially own 2,919,870 shares of Common Stock, representing
25.9% of the outstanding Common Stock.                                

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  

Pursuant to an Exchange Agreement dated as of September 11, 1994, among   
the Company and Dominic Chang, the Chairman of the Board, President, Chief      
Executive Officer and a principal stockholder of the Company, Krishnan          
Thampi, the Chief Financial Officer, Executive Vice President, Chief            
Operating Officer, Secretary, Treasurer and a director and principal            
stockholder of the Company, Jimmy C.M. Hsu, a director and principal            
stockholder of the Company, John Chen and Tommy Hsu (collectively, the          
"Predecessor Holders"), upon the closing of the IPO, the Company received all   
of the issued and outstanding shares of the following corporations              
(collectively, the "Subsidiary Shares"): Skycon Construction Co., Inc., which   
is the general contractor of the Company's golf centers; Orient Associates      
International, Inc., which leases the land upon which the Company's golf        
centers are located and is the party which owns the license to the "Golden      
Bear" trademarks; Skydrive Co., Inc., Skydrive Greenburgh Co., Inc. and         
Skydrive Willowbrook NJ, Inc., each of which operates one of the Company's      
golf centers; and Skydrive Alley Pond Company, Inc., which was the general      
partner of the partnership that operated the Douglaston golf center. The        
Predecessor Holders received an aggregate of 3,445,000 shares of Common Stock   
in exchange for the Subsidiary Shares, for which they had paid an aggregate     
of $2.4 million (approximately $.70 per share of Common Stock). In connection   
with the initial organization of the Company, Mr. Chang purchased 5,000         
shares of Common Stock for nominal consideration in July 1994.                  

In February 1994, Messrs. Chang and Thampi acquired interests in TPT of   
65% and 5%, respectively, for nominal cash consideration plus Mr. Chang's       
agreement to obtain up to $4.5 million of bank loans for TPT and to guarantee   
such bank loans, if necessary. The remaining 30% was owned by two individuals   
not affiliated with the Company (although one of such individuals became an     
employee of the Company subsequent to the acquisition of TPT). Also in          
February 1994, the predecessor of the Company assigned to TPT its rights        
under the License Agreement for the establishment of Golden Bear Golf Centers   
in California. The Company guaranteed TPT's obligations to the Licensor in      
connection with the assignment. By agreement dated October 25, 1994, TPT's      
stockholders granted the Company the option, exercisable on January 1, 1998     
or earlier if TPT had at least $1.0 million of income, to acquire TPT for a     
price payable in Common Stock equal to 12.5 times the net after tax income of   
TPT during the full 12 months immediately preceding the exercise of such        
option. In November 1995, the Company acquired TPT for $4.0 million (payable    
in the form of a note which became due and was paid at the closing of the       
Secondary Offering) and up to $2.0 million of additional purchase price         
payable upon the achievement of certain operating income targets. The terms     
of the acquisition were determined by negotiations involving Messrs. Chang      
and Thampi and the non-affiliated stockholders of TPT and the transaction was   
subject to certain conditions (which were satisfied on November 8, 1995),       
including approval by all of the directors of the Company, other than Messrs.   
Chang and Thampi and receipt of an opinion from an investment banking firm      
that the consideration to be paid by the Company for TPT was fair from a        
financial point of view. The Company received an opinion from the investment    
banking firm of Houlihan Lokey that the consideration to be paid by the         
Company for TPT was fair from a financial point of view. Houlihan Lokey has     
been engaged in the business of providing financial advisory services since     
1970. They specialize in the valuation of businesses and properties, with       
substantial experience in the valuation of securities of recreational           
companies. In addition to such opinion, such Board members also considered a    
number of factors in approving the acquisition of TPT, including (i) the        
elimination of potential conflicts of interest, (ii) the opportunity to         
expand operations to the West Coast, (iii) the location and prospects of the    
golf facilities operated by TPT, (iv) the cost of establishing golf             
facilities comparable to those operated by TPT, (v) the operating history of    
TPT compared with the operating history of the Company's East Coast             
facilities at a comparable stage of development, (vi) the potential             
improvement in TPT's performance due to the elimination of duplicative          
administrative expenses, (vii) TPT's current financial condition and (viii)     
the opportunity to acquire TPT for less than the Company believed it would      
pay if it exercised its option to purchase TPT in 1998. For a description of    
the terms of the acquisition, including amounts received by Messrs. Chang and   
Thampi, see "Business--Recently Opened or Acquired Facilities."                 

Mr. Chang, either individually or with his wife, was the guarantor or     
co-borrower of $3.7 million, $1.46 million and $1.46 million of the Company's   
indebtedness, as of December 31, 1994, December 31,                             

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1995 and March 31, 1996, respectively. In addition, a company ("Hsing Lung")    
which owns and operates a dairy farm in New York and has been owned by Mr.      
Chang since 1986, was a co-borrower with the predecessor of the Company of a    
loan that had an outstanding balance of $2.5 million as of December 31, 1994    
and no outstanding balance as of December 31, 1995. Mr. Chang granted           
security interests in certain of his personal assets, including Hsing Lung      
and his Common Stock, to secure his obligations under certain of such           
guarantees.                                                                     

Neither Mr. Chang nor any other officer of the Company is obligated to    
provide any additional guaranty or financial assistance to the Company in the   
future.                                                                         

The Company was indebted to Mr. Chang and Mr. Thampi in the amounts of    
$330,000 and $125,000, respectively, as of December 31, 1994. As of December    
31, 1995, the Company was not indebted to either of Mr. Chang or Mr. Thampi.    
The amounts outstanding as of December 31, 1994 were paid in full by the        
Company on November 30, 1995. Such loans were due on demand and, except for     
the $310,000 described below, bore interest at LIBOR (6.5% at December 31,      
1994 and 6.8% at November 30, 1995). Interest on such loans aggregated          
$40,000 and $16,000 for the years ended December 31, 1994 and 1995,             
respectively. In addition, from September 1, 1994 through November 21, 1994,    
Hsing Lung made non-interest bearing loans to the Company in the aggregate      
amount of $88,000, which the Company repaid on December 16, 1994.               

The amount due to Mr. Chang as of December 31, 1994 of $330,000 includes  
$310,000, representing a distribution payable to Mr. Chang to pay federal and   
state income taxes owed by Mr. Chang in respect of the earnings of certain of   
the Company's subsidiaries operated under Subchapter S of the Internal          
Revenue Code of 1986, as amended, until the closing of the IPO.                 

The Company believes that each of the foregoing transactions were         
completed on terms at least as favorable to the Company as those which could    
have been obtained from an unaffiliated party.                                  

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DESCRIPTION OF CAPITAL STOCK  

The following description of the Company's capital stock and selected     
provisions of its Certificate of Incorporation and By-Laws is a summary and     
is qualified in its entirety by reference to the Company's Certificate of       
Incorporation and By-Laws, copies of which have been filed as exhibits to the   
Registration Statement of which this Prospectus is a part.                      

COMMON STOCK                                                                    

The Company is authorized to issue up to 50,000,000 shares of Common      
Stock, par value $.01 per share, of which 8,598,025 shares are outstanding as   
of the date hereof. Holders of Common Stock are entitled to one vote for each   
share held of record on each matter submitted to a vote of stockholders.        
There is no cumulative voting for election of directors. Subject to the prior   
rights of any series of preferred stock which may from time to time be          
outstanding, if any, holders of Common Stock are entitled to receive ratably,   
dividends when, as, and if declared by the Board of Directors out of funds      
legally available therefor and, upon the liquidation, dissolution or winding    
up of the Company, are entitled to share ratably in all assets remaining        
after payment of liabilities and payment of accrued dividends and liquidation   
preferences on the preferred stock, if any. Holders of Common Stock have no     
preemptive rights and have no rights to convert their Common Stock into any     
other securities. The outstanding Common Stock is validly authorized and        
issued, fully paid and nonassessable.                                           

PREFERRED STOCK                                                                 

The Company is authorized to issue up to 2,000,000 shares of preferred    
stock, par value $.10 per share. The preferred stock may be issued in one or    
more series, the terms of which may be determined at the time of issuance by    
the Board of Directors, without further action by stockholders, and may         
include voting rights (including the right to vote as a series on particular    
matters), preferences as to dividends and liquidation, conversion rights,       
redemption rights and sinking fund provisions. The issuance of any such         
preferred stock could adversely affect the rights of the holders of Common      
Stock and, therefore, reduce the value of the Common Stock. The ability of      
the Board of Directors to issue preferred stock could discourage, delay or      
prevent a takeover of the Company. See "Risk Factors--Preferred Stock;          
Possible Anti-Takeover Effects of Certain Charter, By-Law and Contractual       
Provisions."                                                                    

DELAWARE ANTI-TAKEOVER LAW                                                      

The Company is subject to the provisions of Section 203 of the Delaware   
General Corporation Law ("Section 203"), an anti-takeover law. In general,      
Section 203 prohibits a Delaware corporation, the stock of which generally is   
publicly traded or held of record by more than 2,000 stockholders, from         
engaging, in certain circumstances, in a "business combination" with an         
"interested stockholder" for a period of three years after the date of the      
transaction in which the person became an interested stockholder, unless the    
business combination is approved in a prescribed manner. For purposes of        
Section 203, a "business combination" includes a merger, asset sale or other    
transaction resulting in a financial benefit to the interested stockholder,     
and an "interested stockholder" is a person who, together with affiliates and   
associates, owns (or within three years prior, did own) 15% or more of the      
corporation's voting stock. Section 203 could prohibit or delay a merger,       
takeover or other change in control of the Company and therefore could          
discourage attempts to acquire the Company.                                     

CERTAIN BY-LAW PROVISIONS                                                       

The Company's By-Laws provide that special meetings of the stockholders   
may only be called by the Chairman of the Board of Directors, if any, the       
Chief Executive Officer, the Secretary of the Company or a majority of the      
Board of Directors or by stockholders who own in the aggregate 66 2/3 % of      
the outstanding stock of all classes entitled to vote at such meeting. The      
By-Laws also provide that stockholder action can be taken only at an annual     
or special meeting of stockholders, prohibit stockholder action by written      
consent in lieu of a meeting and require an advance notice procedure for        
stockholders to make nominations of candidates for election as directors. The   
foregoing provisions could have the                                             

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effect of delaying until the next stockholders' meeting stockholder actions     
which are favored by the holders of a majority of the outstanding voting        
securities of the Company. The By-Laws require the affirmative vote of 80% of   
the Board of Directors to amend or repeal any of the provisions described in    
this paragraph.                                                                 

OUTSTANDING OPTIONS AND WARRANTS                                                

The Company has outstanding options to purchase up to an aggregate of     
390,705 shares of Common Stock at prices ranging from $3.50 to $27.50 per       
share, with a weighted average price per share of $12.48. Of such options,      
options to purchase 372,425 shares of Common Stock expire on various dates in   
2004 through 2006, subject to earlier expiration if the Company's employment    
of the optionee terminates and options to purchase 18,280 shares of Common      
Stock issued in connection with the acquisition of various golf facilities      
expire in 2000. In addition, options to purchase 20,000 shares of Common        
Stock have been issued to certain executive officers, which expire in 2005.     
See "Management -- Stock Option Plans." The Company has outstanding warrants    
issued to the representatives of the underwriters of the Secondary Offering     
at the closing thereof, expiring on December 18, 2000, to purchase 300,000      
shares of Common Stock at $20.25 per share, and warrants issued on March 7,     
1996 to Monness, Crespi, Hardt & Co. for consulting services to be rendered     
over a three-year period, expiring on March 7, 1997, to purchase 70,000         
shares of Common Stock at $19.875 per share.                                    

TRANSFER AGENT                                                                  

Continental Stock Transfer & Trust Company, New York, New York is the     
Transfer Agent for the Company's Common Stock.                                  

LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS           

The Company's Certificate of Incorporation limits the liability of        
directors to the maximum extent permitted by Delaware law. Delaware law         
provides that directors of a company will not be personally liable for          
monetary damages for breach of their fiduciary duties as directors, except      
for liability for (i) any breach of their duty of loyalty to the company or     
its stockholders, (ii) acts or omissions not in good faith or involving         
intentional misconduct or a knowing violation of law, (iii) unlawful payment    
of dividends or unlawful stock repurchases or redemptions as provided in        
Section 174 of the Delaware General Corporation Law or (iv) any transaction     
from which the director derived an improper personal benefit.                   

The Company's Certificate of Incorporation provides that the Company shall
indemnify its officers, directors, employees and other agents to the fullest    
extent permitted by Delaware law.                                               

The Company maintains a policy of insurance under which the directors and 
officers of the Company are insured, subject to the limits of the policy,       
against certain losses arising from claims made against such directors and      
officers by reason of any acts or omissions covered under such policy in        
their respective capacities as directors or officers, including liabilities     
under the Securities Act. Insofar as indemnification for liabilities arising    
under the Securities Act may be permitted to directors, officers and            
controlling persons of the Company pursuant to the foregoing provisions, or     
otherwise, the Company has been advised that in the opinion of the Securities   
and Exchange Commission (the "Commission") such indemnification is against      
public policy as expressed in the Securities Act and is, therefore,             
unenforceable.                                                                  

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UNDERWRITING  

Subject to the terms and conditions set forth in the Underwriting         
Agreement, the Company has agreed to sell an aggregate of 3,000,000 shares of   
Common Stock to the Underwriters named below (the "Underwriters"), for whom     
Jefferies & Company, Inc. and Hampshire Securities Corporation are acting as    
the representatives (the "Representatives"), and the Underwriters have          
severally agreed to purchase, the number of shares of Common Stock set forth    
opposite their respective names in the table below at the price set forth on    
the cover page of this Prospectus.                                              

                                                                · Download Table

                                          NUMBER OF
UNDERWRITERS                               SHARES  
------------                              ---------
                                                   
Jefferies & Company, Inc. .............   1,020,000
Hampshire Securities Corporation  .....   1,020,000
CS First Boston Corp. .................      60,000
A.G. Edwards & Sons, Inc. .............      60,000
Goldman, Sachs & Co. ..................      60,000
Morgan Stanley & Co. Incorporated  ....      60,000
Oppenheimer & Co., Inc. ...............      60,000
Salomon Brothers Inc. .................      60,000
Crowell, Weedon & Co. .................      30,000
Cruttenden Roth Incorporated ..........      30,000
Dain Bosworth Incorporated ............      30,000
Fahnestock & Co. Inc. .................      30,000
First Albany Corporation ..............      30,000
First of Michigan Corp. ...............      30,000
Gerard Klauer Mattison & Co., LLC  ....      30,000
Janney Montgomery Scott Inc. ..........      30,000
Josephthal Lyon & Ross Inc. ...........      30,000
Ladenburg, Thalmann & Co. Inc.  .......      30,000
Mesirow Financial Inc. ................      30,000
H.J. Meyers & Co., Inc. ...............      30,000
Monness, Crespi, Hardt & Co., Inc.  ...      30,000
Rauscher Pierce Refsnes, Inc. .........      30,000
The Robinson-Humphrey Company, Inc.  ..      30,000
Rodman & Renshaw, Inc. ................      30,000
Starr Securities Inc. .................      30,000
Van Kasper & Co. ......................      30,000
Vector Securities International, Inc.        30,000
The Williams Capital Group, L.P.  .....      30,000
                                        -----------
  Total ...............................   3,000,000
                                        ===========

The Underwriting Agreement provides that the obligation of the            
Underwriters to purchase the shares of Common Stock is subject to certain       
conditions. The Underwriters are committed to purchase all of the shares of     
the Common Stock (other than those covered by the over-allotment option         
described below), if any are purchased.                                         

The Underwriters propose to offer the Common Stock to the public initially
at the public offering price set forth on the cover page of this Prospectus,    
and to certain dealers at such price less a concession not in excess of $1.20   
per share. The Underwriters may allow, and such dealers may reallow, a          
discount not in excess of $0.10 per share to certain other dealers. After the   
Offering, the public offering price, the concession to selected dealers and     
the reallowance to other dealers may be changed by the Representatives.         

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In the Secondary Offering, the Company granted Jefferies the right, at its
option, for a period ending in December 1998, to have a representative attend   
all meetings of the Board of Directors of the Company and receive               
reimbursement for all expenses incurred in attending such meetings. Such        
agreement remains in effect.                                                    

The Selling Stockholders have granted to the Underwriters an option,      
exercisable for 30 days from the date of this Prospectus, to purchase up to     
450,000 additional shares of Common Stock at the public offering price, less    
the underwriting discount. To the extent such option is exercised, each         
Underwriter will become obligated, subject to certain conditions, to purchase   
additional shares of Common Stock proportionate to such Underwriter's initial   
commitment as indicated in the preceding table. The Underwriters may exercise   
such right of purchase only for the purpose of covering over-allotments, if     
any, made in connection with the sale of the shares of Common Stock.            

The Company and the Selling Stockholders have agreed to indemnify the     
Underwriters against certain liabilities, including civil liabilities under     
the Securities Act, or will contribute to payments the Underwriters may be      
required to make in respect thereof.                                            

In the Secondary Offering, the directors and officers of the Company      
agreed with the underwriters of such offering not to publicly sell or           
otherwise dispose of any shares of Common Stock or securities exercisable for   
or convertible into shares of Common Stock ("Securities") until December 13,    
1996, except in the case of Common Stock pledged or to be pledged by Dominic    
Chang to secure personal loans, without the prior written consent of            
Jefferies. Such agreements remain in effect and, after the Offering, will       
cover 3,161,950 shares of Common Stock or 27.3% of the then outstanding         
Common Stock (or, if the Underwriters' over-allotment option is exercised in    
full, 2,788,534 shares of Common Stock or 24.0% of the then outstanding         
Common Stock). See "Risk Factors--Shares Eligible for Future Sale;              
Registration Rights."                                                           

The Company has agreed with the Underwriters not to offer, issue or sell  
any Securities for a period of six months from the date of this Prospectus,     
subject to certain limited exceptions, without the consent of Jefferies.        

Certain of the Underwriters and selling group members that currently act  
as market markers for the Common Stock may engage in "passive market making"    
in the Common Stock on the Nasdaq Stock Market in accordance with Rule 10b-6A   
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").     
Rule 10b-6A permits, upon the satisfaction of certain conditions,               
underwriters and selling group members participating in a distribution that     
are also market makers in the security being distributed to engage in limited   
market making transactions during the period when Rule 10b-6 under the          
Exchange Act would otherwise prohibit such activity. Rule 10b-6A prohibits      
underwriters and selling group members engaged in passive market making         
generally from entering a bid or effecting a purchase at a price that exceeds   
the highest bid for those securities on the Nasdaq Stock Market by a market     
maker that is not participating in the distribution. Under Rule 10b-6A each     
underwriter or selling group member engaged in passive market making is         
subject to a daily net purchase limitation equal to 30% of such entity's        
average daily trading volume during the two full consecutive calendar months    
immediately preceding the date of the filing of the registration statement      
under the Securities Act pertaining to the security to be distributed.          

LEGAL MATTERS   

The validity of the shares of Common Stock offered hereby and certain     
other legal matters will be passed upon for the Company and the Selling         
Stockholders by Squadron, Ellenoff, Plesent & Sheinfeld, LLP, New York, New     
York. Certain legal matters in connection with the Offering will be passed      
upon for the Underwriters by Fulbright & Jaworski L.L.P., New York, New York.   

EXPERTS   

The consolidated financial statements of the Company as at December 31,   
1994 and December 31, 1995 and for each of the years in the three year period   
ended December 31, 1995 have been audited by                                    

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Richard A. Eisner & Company, LLP, independent auditors, as indicated in their   
report with respect thereto, and are included herein in reliance upon such      
report given upon the authority of said firm as experts in accounting and       
auditing. The financial statements of the Hiland Park Golf Course at April      
30, 1995 and for the eleven month period then ended, which are included in      
this Prospectus, have been included herein in reliance upon the report of       
Silverstein, Loftus & Ross, CPAs, P.C., independent certified public            
accountants, appearing elsewhere herein, and upon the authority of said firm    
as experts in accounting and auditing. The financial statements of Pelham       
Enterprises, Inc. at December 31, 1994 and for the year then ended, which are   
included in this Prospectus, have been included herein in reliance upon the     
report of Bradshaw, Gordon & Clinkscales, P.A., independent certified public    
accountants, appearing elsewhere herein, and upon the authority of said firm    
as experts in accounting and auditing. The financial statements of RFC          
Enterprises, Inc. at December 31, 1994 and for the year then ended, which are   
included in this Prospectus, have been included herein in reliance upon the     
report of Drunagel, Johnson, Rutherford & Wilkins, P.C., independent            
certified public accountants, appearing elsewhere herein, and upon the          
authority of said firm as experts in accounting and auditing. The financial     
statements of Upper Hembree Partners, L.P. at December 31, 1994 and for the     
two years then ended, which are included in this Prospectus, have been          
included herein in reliance upon the report of Ernest T. Northrup,              
independent certified public accountant, appearing elsewhere herein, and upon   
the authority of said firm as experts in accounting and auditing. The           
financial statements of The Practice Tee, Inc. at December 31, 1994 and for     
the period February 8, 1994 (inception) to December 31, 1994, which are         
included in this Prospectus, have been included herein in reliance upon the     
report of Robert Del Riego, independent certified public accountant,            
appearing elsewhere herein, and upon the authority of said firm as experts in   
accounting and auditing. The financial statements of Golf Masters Limited       
Partnership at December 31, 1994 and for the year then ended, and Air Dome      
Limited Partnership at December 31, 1994 and for the year then ended, which     
are included in this Prospectus, have been included herein in reliance upon     
the reports of Sewell & Co., Inc., independent certified public accountants,    
appearing elsewhere herein, and upon the authority of said firm as experts in   
accounting and auditing. The financial statements of Owl's Creek Golf Center,   
Inc. at December 31, 1995, and for the year then ended which are included in    
this Prospectus, have been included herein in reliance upon the report of       
Anne E. Gorry, independent certified public accountant, appearing elsewhere     
herein, and upon the authority of said firm as experts in accounting and        
auditing. The financial statements of Flemington Golf and Sports Center, LLC    
at December 31, 1995 and for the year then ended, which are included in this    
Prospectus, have been included herein in reliance upon the report of            
Ehrenkrantz and Company, independent certified public accountants, appearing    
elsewhere herein, and upon the authority of said firm as experts in             
accounting and auditing. The financial statements of 202 Golf Associates,       
Inc. at December 31, 1995 and for the year then ended, which are included in    
this Prospectus, have been included herein in reliance upon the report of       
Mangini, Traeger & Company, P.C., independent certified public accountants,     
appearing elsewhere herein, and upon the authority of said firm as experts in   
accounting and auditing. The financial statements of Indian River               
Golf-O-Rama, Inc. at December 31, 1995 and for the year then ended, which are   
included in this Prospectus, have been included herein in reliance upon the     
report of Shanholt Glassman Hoffman Klein & Co., P.C., independent certified    
public accountants, appearing elsewhere herein, and upon the authority of       
said firm as experts in accounting and auditing. The financial statements of    
Golf and Sports Center of the Palm Beaches, Inc. at December 31, 1995 and for   
the year then ended, and W.A.G.N. Partners at December 31, 1995 and for the     
year then ended, which are included in this Prospectus, have been included      
herein in reliance upon the reports of Charles W. Cairnes, Jr. P.A.,            
independent certified public accountant, appearing elsewhere herein, and upon   
the authority of said firm as experts in accounting and auditing. The           
financial statements of Catalina Golf Center at December 31, 1995 and for the   
year then ended which are included in this Prospectus, have been included       
herein in reliance upon the report of Robert Decker, C.P.A., independent        
certified public accountant, appearing elsewhere herein, and upon the           
authority of said firm as experts in accounting and auditing. The financial     
statements of K.G. Golf, Inc. at December 31, 1995 and for the year then        
ended, which are included in this Prospectus, have been included herein in      
reliance upon the report of Goffena & Baker, C.P.A., independent certified      
public accountants, appearing elsewhere herein, and upon the authority of       
said firm as experts in accounting and auditing. The financial statements of    
Tree Court Golf & Recreational Complex, Inc., at December 31,                   

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1995 and for the year then ended, which are included in this Prospectus, have   
been included herein in reliance upon the report of BDO Seidman, LLP,           
independent certified public accountants, appearing elsewhere herein, and       
upon the authority of said firm as experts in accounting and auditing.          

AVAILABLE INFORMATION   

The Company is subject to the informational requirements of the Exchange  
Act and in accordance therewith files periodic reports, proxy statements, and   
other information with the Commission. Such reports, proxy statements, and      
other information can be inspected and copied at the public reference           
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,   
Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World     
Trade Center, Suite 1300, New York, New York 10048; and 500 West Madison        
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be     
obtained from the Public Reference Section of the Commission, Room 1024, 450    
Fifth Street, N.W. Washington, D.C. 20549 at prescribed rates. In addition,     
copies of such reports, proxy statements, and other information concerning      
the Company may also be inspected and copied at the library of the Nasdaq       
National Market, 1735 K Street, N.W., Washington, D.C. 20006, upon which the    
Common Stock of the Company is traded. The Commission maintains a World Wide    
Web site on the Internet at http:// www.sec.gov that contains reports, proxy    
and information statements and other information regarding registrants that     
file electronically with the Commission.                                        

The Company has filed with the Commission a Registration Statement on Form
SB-2 (herein, together with all amendments and exhibits, referred to as the     
"Registration Statement") under the Securities Act, with respect to the         
Common Stock offered hereby. This Prospectus does not contain all the           
information set forth in the Registration Statement, certain parts of which     
are omitted in accordance with the rules and regulations of the Commission.     
For further information with respect to the Company and the Common Stock,       
reference is hereby made to the Registration Statement and the documents        
incorporated herein by reference, which may be examined without charge at the   
public reference facilities maintained by the Commission at Room 1024, 450      
Fifth Street, N.W., Washington, D.C. 20549. Copies thereof may be obtained      
from the Commission upon payment of the prescribed fees. Statements contained   
in this Prospectus or in any document incorporated herein by reference as to    
the contents of any contract or document referred to herein are not             
necessarily complete, and in each instance reference is made to the copy of     
such contract or document filed as an exhibit to the Registration Statement     
or such other document, each such statement being qualified in all respects     
by such reference.                                                              

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INDEX TO FINANCIAL STATEMENTS 

                                                        · Enlarge/Download Table

                                                                                               PAGE  
                                                                                            ---------
                                                                                                     
PRO FORMA:                                                                                           
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES                                                           
 Pro Forma Unaudited Condensed Balance Sheet as of March 31, 1996 ......................... F-6      
 Notes to Pro Forma Unaudited Condensed Balance Sheet ..................................... F-8      
 Pro Forma Unaudited Condensed Statements of Operations for the Year Ended                           
  December 31, 1995 and for the Three Months Ended March 31, 1996 ......................... F-9      
 Pro Forma Unaudited Condensed Statement of Operations for the                                       
  Year Ended December 31, 1995 ............................................................ F-10     
 Notes to Pro Forma Unaudited Condensed Statement of Operations for the Year Ended                   
  December 31, 1995 ....................................................................... F-12     
 Pro Forma Unaudited Condensed Statement of Operations for the                                       
  Three Months Ended March 31, 1996 ....................................................... F-13     
 Notes to Pro Forma Unaudited Condensed Statement of Operations for the Three Months                 
  Ended March 31, 1996 .................................................................... F-14     
HISTORICAL:                                                                                          
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES                                                           
 Report of Independent Auditors ........................................................... F-15     
 Consolidated Balance Sheets as at December 31, 1994, December 31, 1995 and                          
  March 31, 1996 (Unaudited) .............................................................. F-16     
 Consolidated Statements of Operations for the Years Ended December 31, 1993,                        
  December 31, 1994 and December 31, 1995 and for the Three Months Ended March 31,  1995             
 (Unaudited) and March 31, 1996 (Unaudited) ............................................... F-17     
 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended                      
  December 31, 1993, December 31, 1994 and December 31, 1995 and for the Three Months                
  Ended March 31, 1996 (Unaudited) ........................................................ F-18     
 Consolidated Statements of Cash Flows for the Years Ended December 31, 1993,                        
  December 31, 1994 and December 31, 1995 and for the Three Months Ended                             
  March 31, 1995 (Unaudited) and March 31, 1996 (Unaudited) ............................... F-19     
 Notes to Financial Statements ............................................................ F-20     
OWL'S CREEK GOLF CENTER, INC.                                                                        
 Independent Auditor's Report ............................................................. F-32     
 Balance Sheet as of December 31, 1995 .................................................... F-33     
 Statement of Operations and Retained Earnings (Deficit) for the Year Ended                          
  December 31, 1995 ....................................................................... F-34     
 Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-37     
 Notes to Financial Statements ............................................................ F-38     
 Statement of Operations for the Period from January 1, 1996 to March 5, 1996  ............ F-40     
FLEMINGTON GOLF AND SPORTS CENTER, LLC                                                               
 Independent Auditors' Report ............................................................. F-42     

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 Balance Sheet as of December 31, 1995 .................................................... F-43     
 Statement of Operations and Members' Deficit as of December 31, 1995 ..................... F-44     
 Statement of Cash Flows as of December 31, 1995 .......................................... F-45     
 Notes to Financial Statements ............................................................ F-46     
202 GOLF ASSOCIATES, INC.                                                                            
 Independent Auditors' Report ............................................................. F-49     
 Balance Sheet as of December 31, 1995 .................................................... F-50     
 Statement of Operations & Shareholders' Deficit for the Year Ended                                  
  December 31, 1995 ....................................................................... F-51     
 Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-52     
 Notes to Financial Statements ............................................................ F-53     
 Balance Sheet as of March 31, 1995 ....................................................... F-55     
 Statement of Operations for the Three Months Ended March 31, 1996 ........................ F-56     
 Statement of Cash Flows for the Three Months Ended March 31, 1996 ........................ F-57     
 Notes to Financial Statements ............................................................ F-58     
INDIAN RIVER GOLF-O-RAMA, INC.                                                                       
 Independent Auditors' Report ............................................................. F-59     
 Balance Sheets as of December 31, 1995 and December 31, 1994 ............................. F-60     
 Statement of Changes in Shareholder's Equity for the Years Ended December 31, 1995                  
  and 1994 ................................................................................ F-61     
 Statement of Cash Flows for the Years Ended December 31, 1995 and 1994  .................. F-62     
 Statements of Operations for the Years Ended December 31, 1995 and 1994  ................. F-63     
 Notes to Financial Statements ............................................................ F-64     
 Balance Sheet as of March 31, 1996 ....................................................... F-66     
 Statements of Operations for the Period January 1, 1996 to March 31, 1996  ............... F-67     
 Statement of Cash Flows for the Three Months Ended March 31, 1996 ........................ F-68     
 Notes to Financial Statements ............................................................ F-69     
CATALINA GOLF CENTER                                                                                 
 Independent Auditor's Report ............................................................. F-70     
 Balance Sheet as of December 31, 1995 .................................................... F-71     
 Statement of Income and Proprietor's Capital for the Year Ended December 31, 1995  ....... F-72     
 Statement of Cash Flow for the Year Ended December 31, 1995 .............................. F-73     
 Notes to Financial Statements ............................................................ F-74     
 Balance Sheet as of March 31, 1996 ....................................................... F-77     
 Income Statement for the Period January 1, 1996 to March 31, 1996 ........................ F-78     
 Statement of Cash Flows for the Period Ended March 31, 1996 .............................. F-79     
 Notes to Financial Statements ............................................................ F-80     

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K.G. GOLF, INC.                                                                                      
 Independent Auditors' Report ............................................................. F-81     
 Balance Sheet as of December 31, 1995 .................................................... F-82     
 Income Statement for the Year Ended December 31, 1995 .................................... F-83     
 Statement of Retained Earnings for the Year Ended December 31, 1995 ...................... F-83     
 Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-84     
 Notes to Financial Statements ............................................................ F-85     
 Balance Sheet as of March 31, 1996 ....................................................... F-87     
 Income Statement for the Three Months Ended March 31, 1996 ............................... F-88     
 Statement of Cash Flows for the Three Months Ended March 31, 1996 ........................ F-89     
 Notes to Financial Statements ............................................................ F-90     
TREE COURT GOLF & RECREATIONAL COMPLEX, INC.                                                         
 Independent Auditors' Report ............................................................. F-91     
 Balance Sheet as of December 31, 1995 .................................................... F-92     
 Statement of Operations for the Year Ended December 31, 1995 ............................. F-93     
 Statement of Stockholders' Deficit ....................................................... F-94     
 Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-95     
 Summary of Accounting Policies ........................................................... F-96     
 Notes to Financial Statements ............................................................ F-97     
 Balance Sheet as of March 31, 1996 ....................................................... F-99     
 Statement of Operations for the Three Months Ended March 31, 1996 ........................ F-100    
 Statement of Cash Flows for the Three Months Ended March 31, 1996 ........................ F-101    
 Notes to Financial Statements ............................................................ F-102    
GOLF AND SPORTS CENTER OF THE PALM BEACHES, INC.                                                     
 Independent Auditor's Report ............................................................. F-103    
 Balance Sheet as of December 31, 1995 .................................................... F-104    
 Statement of Loss and Accumulated Deficit for the Year Ended December 31, 1995  .......... F-105    
 Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-106    
 Notes to Financial Statements ............................................................ F-107    
 Balance Sheet as of March 31, 1996 ....................................................... F-108    
 Statement of Operations for the Three Months Ended March 31, 1996 ........................ F-109    
W.A.G.N. PARTNERS                                                                                    
 Independent Auditor's Report ............................................................. F-110    
 Balance Sheet as of December 31, 1995 .................................................... F-111    
 Statement of Loss and Partners' Capital for the Year Ended December 31, 1995  ............ F-112    
 Statement of Cash Flows for the Year Ended December 31, 1995 ............................. F-113    
 Notes to Financial Statements ............................................................ F-114    

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PELHAM ENTERPRISES, INC.                                                                             
  Independent Auditors' Report  ........................................................... F-115    
  Balance Sheets at December 31, 1994 and April 30, 1995  ................................. F-116    
  Statements of Income and Retained Earnings for the Year Ended December 31, 1994 and  for           
  the Four Months Ended April 30, 1995  ................................................... F-117    
  Statements of Cash Flows for the Year Ended December 31, 1994 and for the Four Months              
   Ended April 30, 1995  .................................................................. F-118    
  Notes to Financial Statements  .......................................................... F-119    
HILAND PARK GOLF COURSE                                                                              
  Independent Auditors' Report  ........................................................... F-121    
  Balance Sheet at April 30, 1995  ........................................................ F-122    
  Statement of Income for the Eleven Months Ended April 30, 1995  ......................... F-123    
  Statement of Equity for the Eleven Months Ended April 30, 1995  ......................... F-124    
  Statement of Cash Flows for the Eleven Months Ended April 30, 1995  ..................... F-125    
  Notes to Financial Statements  .......................................................... F-127    
RFC ENTERPRISES, INC.                                                                                
  Independent Auditors' Report  ........................................................... F-129    
  Balance Sheet at December 31, 1994  ..................................................... F-130    
  Statement of Income and Accumulated Deficit for the Year Ended December 31, 1994  ....... F-131    
  Statement of Cash Flows for the Year Ended December 31, 1994  ........................... F-132    
  Notes to Financial Statements  .......................................................... F-133    
  Balance Sheet at July 31, 1995  ......................................................... F-136    
  Statement of Income and Accumulated Deficit for the Seven Months Ended July 31, 1995  ... F-137    
  Statement of Cash Flows for the Seven Months Ended July 31, 1995  ....................... F-138    
  Notes to Financial Statements  .......................................................... F-139    
UPPER HEMBREE PARTNERS, L.P.                                                                         
  Independent Accountant's Report  ........................................................ F-142    
  Balance Sheets at December 31, 1994 and July 31, 1995  .................................. F-143    
  Statements of Income for the Years Ended December 31, 1993, December 31, 1994 and the              
   Seven Months Ended July 31, 1995  ...................................................... F-144    
  Statements of Changes in Partners' Capital for the Years Ended December 31, 1993,                  
   December 31, 1994 and the Seven Months Ended July 31, 1995  ............................ F-145    
  Statements of Cash Flows for the Years Ended December 31, 1993, December 31, 1994 and              
   the Seven Months Ended July 31, 1995  .................................................. F-146    
  Notes to Financial Statements  .......................................................... F-147    
THE PRACTICE TEE, INC.                                                                               
  Independent Auditors' Report  ........................................................... F-152    
  Consolidated Balance Sheet at December 31, 1994  ........................................ F-153    
  Consolidated Statement of Operations and Accumulated Deficit for the Period February 8,            
   1994 (Inception) to December 31, 1994  ................................................. F-154    

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  Consolidated Statement of Cash Flow for the Period February 8, 1994 (Inception) to                 
   December 31, 1994  ..................................................................... F-155    
  Notes to Financial Statements  .......................................................... F-156    
  Consolidated Balance Sheet at September 30, 1995  ....................................... F-159    
  Consolidated Statement of Operations and Accumulated Deficit for the Nine Months  Ended            
  September 30, 1995  ..................................................................... F-160    
GOLF MASTERS LIMITED PARTNERSHIP                                                                     
  Independent Auditors' Report  ........................................................... F-161    
  Balance Sheets at December 31, 1994 and September 30, 1995  ............................. F-162    
  Statements of Changes in Partners' Capital for the Year Ended December 31, 1994 and the            
   Nine Months Ended September 30, 1995  .................................................. F-164    
  Statements of Income and Expense for the Year Ended December 31, 1994 and for the  Nine            
  Months Ended September 30, 1995  ........................................................ F-165    
  Statements of Cash Flows for the Year Ended December 31, 1994 and for the Nine Months              
   Ended September 30, 1995  .............................................................. F-166    
  Notes to Financial Statements  .......................................................... F-167    
AIR DOME LIMITED PARTNERSHIP                                                                         
  Independent Auditors' Report  ........................................................... F-170    
  Balance Sheet at December 31, 1994  ..................................................... F-171    
  Statement of Changes in Partners' Capital for the Year Ended December 31, 1994  ......... F-172    
  Statement of Income and Expense for the Year Ended December 31, 1994  ................... F-173    
  Statement of Cash Flows for the Year Ended December 31, 1994  ........................... F-174    
  Notes to Financial Statements  .......................................................... F-175    
  Balance Sheet at September 30, 1995  .................................................... F-176    
  Statement of Changes in Partners' Capital for the Nine Months Ended September 30, 1995  . F-177    
  Statement of Income and Expense for the Nine Months Ended September 30, 1995  ........... F-178    
  Statement of Cash Flows for the Nine Months Ended September 30, 1995  ................... F-179    
  Notes to Financial Statements  .......................................................... F-180    

F-5               

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
PRO FORMA UNAUDITED CONDENSED BALANCE SHEET   
AS OF MARCH 31, 1996  

The following pro forma condensed balance sheet reflects the transactions 
indicated below as if they had occurred on March 31, 1996: (1) the acquisitions 
(the "Acquisitions") of 202 Golf Associates, Inc. ("Yorktown Heights"),         
Indian River Golf-O-Rama, Inc. ("Indian River"), K.G. Golf Inc.                 
("Fairfield"), Catalina Golf Center ("Tucson"), Tree Court Golf &               
Recreational Complex, Inc. ("St. Louis") and Golf & Sports Center of the Palm   
Beaches, Inc. and W.A.G.N. Partners (collectively, "West Palm Beach") and (2)   
the Acquisitions and assumed repayment of $5.0 million of indebtedness          
incurred in connection with the Acquisitions, from the net proceeds             
from the sale of 199,124 shares of Common Stock of the Company at an            
offering price per share of $27. The Acquisitions are accounted for as          
purchases in accordance with Accounting Principles Board Opinion No. 16. In     
the opinion of management of Family Golf Centers, Inc. and its subsidiaries     
(the "Company"), all adjustments necessary to present fairly such pro forma     
condensed balance sheet have been made.                                         

The pro forma condensed balance sheet should be read in conjunction with  
the notes thereto, the financial statements of the Company, Yorktown Heights,   
Indian River, Fairfield, Tuscon, St. Louis and West Palm Beach and the          
related notes thereto and with "Management's Discussion and Analysis of         
Financial Condition and Results of Operations," each included elsewhere in      
this Prospectus. The pro forma condensed balance sheet is not necessarily       
indicative of what the actual financial position would have been had the        
transactions occurred at March 31, 1996, nor does it purport to represent the   
future financial position of the Company.                                       

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
PRO FORMA UNAUDITED CONDENSED BALANCE SHEET   
MARCH 31, 1996  
(IN THOUSANDS)  

                                                        · Enlarge/Download Table


                                              THE    YORKTOWN INDIAN                                   WEST      PRO FORMA 
                                            COMPANY  HEIGHTS  RIVER  FAIRFIELD  TUCSON  ST. LOUIS  PALM BEACH  ADJUSTMENTS 
                                           -------  --------  ------  ---------  ------  ---------  ----------  -----------
                                                                                                                           
ASSETS                                                                                                                     
CURRENT ASSETS:                                                                                                            
 CASH AND CASH EQUIVALENTS ..............  $11,147                     $    5                                   $(3,620)(A)
 INVENTORIES ............................    3,019                        106                                              
 PREPAID EXPENSES .......................    2,358                          2                                              
                                          -------  --------  ------  ---------  ------  ---------  ----------  ----------- 
  TOTAL CURRENT ASSETS ..................   16,524                        113                                       (3,620)

PROPERTY AND EQUIPMENT ..................   44,027   $2,100   $1,549   $  993     $569     $609       $3,506       (149)(A)
LOAN ACQUISITION COSTS ..................      222                                                                         
DEFERRED TAX BENEFIT ....................      116                                                                         
OTHER ASSETS ............................    1,567                                                                         
EXCESS OF COST OVER FAIR VALUE OF ASSETS       674                                                                         
                                          -------  --------  ------  ---------  ------  ---------  ----------  ----------- 
  TOTAL .................................  $63,130   $2,100   $1,549   $1,106     $569     $609       $3,506    $   (3,769)
                                          =======  ========  ======  =========  ======  =========  ==========  =========== 

LIABILITIES                                                                                                                
CURRENT LIABILITIES:                                                                                                       
 ACCOUNTS PAYABLE AND ACCRUED  EXPENSES    $ 2,051                     $   70                                              
 CURRENT PORTION OF LONG-TERM                                                                                              
  OBLIGATIONS ...........................    1,523                                                              $     5,000
                                          -------  --------  ------  ---------  ------  ---------  ----------  ----------- 
  TOTAL CURRENT LIABILITIES .............    3,574                         70                                         5,000

LONG-TERM OBLIGATIONS (LESS CURRENT                                                                                        
 PORTION) ...............................    7,229                                                                         
DEFERRED RENT ...........................      103                                                                         
OTHER LIABILITIES .......................      238                                                                         
                                          -------  --------  ------  ---------  ------  ---------  ----------  ----------- 
  TOTAL LIABILITIES .....................   11,144                         70                                         5,000

COMMON STOCK ............................       85                                                                         
ADDITIONAL PAID-IN CAPITAL ..............   50,909                                                                      600
RETAINED EARNINGS .......................    1,027                                                                         
TREASURY STOCK ..........................      (35)                                                                        
NET ASSETS ACQUIRED .....................            $2,100   $1,549   $1,036     $569     $609       $3,506     (9,369)(A)
                                          -------  --------  ------  ---------  ------  ---------  ----------  ----------- 
  TOTAL STOCKHOLDERS' EQUITY ............   51,986    2,100    1,549    1,036      569      609        3,506        (8,769)
                                          -------  --------  ------  ---------  ------  ---------  ----------  ----------- 
  TOTAL .................................  $63,130   $2,100   $1,549   $1,106     $569     $609       $3,506    $   (3,769)
                                          =======  ========  ======  =========  ======  =========  ==========  =========== 

[TABLE CONTINUED FROM ABOVE]                                                                                               

                                       PRO FORMA                                                                           
       PRO FORMA                      REFLECTING                                                                           
       REFLECTING                  THE ACQUISITIONS                                                                        
         THE          PRO FORMA    AND REPAYMENT OF                                                                        
    ACQUISITIONS(1)   ADJUSTMENTS      DEBT(2)                                                                             
 -----------------  -----------  ----------------                                                                          
                                                                                                                           

         $ 7,532                        $ 7,532                                                                            
           3,125                          3,125                                                                            
           2,360                          2,360                                                                            
   -----------------  -----------  ----------------                                                                        
          13,017                         13,017                                                                            

          53,204                         53,204                                                                            
             222                            222                                                                            
             116                            116                                                                            
           1,567                          1,567                                                                            
             674                            674                                                                            
   -----------------  -----------  ----------------                                                                        
         $68,800                        $68,800                                                                            
   =================  ===========  ================                                                                        

         $ 2,121                        $ 2,121                                                                            

(A)        6,523       $(5,000)(B)        1,523                                                                            
   -----------------  -----------  ----------------                                                                        
           8,644           (5,000)        3,644                                                                            

           7,229                          7,229                                                                            
             103                            103                                                                            
             238                            238                                                                            
   -----------------  -----------  ----------------                                                                        
          16,214           (5,000)       11,214                                                                            
   -----------------  -----------  ----------------                                                                        

              85                 2 (B)       87                                                                            
          51,509             4,998 (B)   56,507                                                                            
           1,027                          1,027                                                                            
             (35)                           (35)                                                                           
              --                             --                                                                            
   -----------------  -----------  ----------------                                                                        
          52,586             5,000       57,586                                                                            
   -----------------  -----------  ----------------                                                                        
         $68,800       $        --      $68,800                                                                            
   =================  ===========  ================                                                                        


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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO PRO FORMA UNAUDITED CONDENSED BALANCE SHEET  
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)   

(A)  To reflect the acquisition of Yorktown Heights, Indian River, Fairfield,   
Tucson, St. Louis and West Palm Beach after March 31, 1996 as follows:        

                                                                · Download Table

                    ADJUSTMENT    BOOK VALUE                              
                     TO FAIR        OF NET                                
                   VALUE ASSETS     ASSETS      COMMON     DEBT           
     COMPANY         ACQUIRED      ACQUIRED     STOCK     ISSUED     CASH 
----------------  ------------  ------------  --------  --------  --------
                                                                          
Yorktown Heights     $   100        $2,100       $600               $1,600
Indian River  ...       (149)        1,549                           1,400
Fairfield .......        434         1,036                $1,470          
Tucson ..........        531           569                 1,100          
St. Louis .......        691           609                 1,300          
West Palm Beach       (1,756)        3,506                 1,130       620
                  ------------  ------------  --------  --------  --------
                     $  (149)       $9,369       $600     $5,000    $3,620
                  ============  ============  ========  ========  ========

(B)  Reflects the sale of 199,124 shares of Common Stock of the Company at an   
offering price of $27, the net proceeds of which will be used to              
repay indebtedness of $5,000.                                                 

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
PRO FORMA UNAUDITED CONDENSED   
STATEMENTS OF OPERATIONS  
FOR THE YEAR ENDED DECEMBER 31, 1995  
AND FOR THE THREE MONTHS ENDED MARCH 31, 1996   

The following pro forma condensed statements of operations reflect the    
transactions indicated below as if such transactions had occurred on January    
1, 1995: (1) the acquisitions of Pelham Enterprises, Inc., the Hiland Park      
Golf Course, RFC Enterprises, Inc., Upper Hembree Partners, L.P., The           
Practice Tee, Inc. (''TPT'') Golf Masters Limited Partnership and Air Dome      
Limited Partnership (collectively, "Valley View"), Owl's Creek Golf Center,     
Inc., ("Virginia Beach"), Flemington Golf and Sports Center, LLC                
("Flemington") and associated land, Yorktown Heights, Indian River,             
Fairfield, Tucson, St. Louis and West Palm Beach (collectively, the "Acquired   
Companies") acquired during 1995 and 1996 as if the Acquired Companies had      
been acquired on January 1, 1995 and (2) the acquisition of the Acquired        
Companies and the assumed repayment of $5.0 million of indebtedness incurred    
in connection with the acquisitions of the Acquired Companies from the net      
proceeds of the sale of 199,124 shares of Common Stock of the Company at an     
offering price per share of $27. The acquisitions of the                        
Acquired Companies except TPT have been accounted for as purchases in           
accordance with Accounting Principles Board Opinion No. 16. Since TPT has       
been acquired from related parties, the acquisition has been recorded using     
historical basis. In the opinion of management of the Company, all              
adjustments necessary to present fairly such pro forma statements of            
operations have been made.                                                      

These pro forma condensed statements of operations should be read in      
conjunction with the notes thereto, the financial statements of the Company     
and the Acquired Companies and the related notes thereto and with               
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations," each included elsewhere in this Prospectus. The pro forma          
condensed statements of operations are not necessarily indicative of what the   
actual results of operations would have been had the transactions occurred at   
January 1, 1995, or January 1, 1996 nor do they purport to indicate the         
results of future operations.                                                   

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS   
YEAR ENDED DECEMBER 31, 1995  
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)   

                                                        · Enlarge/Download Table

                                                              ACQUIRED COMPANIES              
                                                --------------------------------------------- 
                                                               HILAND                  UPPER  
                                                    PELHAM      PARK        RFC       HEMBREE 
                                          THE    ENTERPRISES,   GOLF    ENTERPRISES  PARTNERS,
                                        COMPANY    INC.(A)   COURSE(A)    INC.(A)     L.P.(A) 
                                       -------  ------------  -------  -----------  --------- 
                                                                                              
Operating revenues ...................  $ 9,795      $117       $ 100      $363        $386   
Merchandise sales ....................    2,637       150          17                         
                                       -------  ------------  -------  -----------  --------- 
 Total revenue .......................   12,432       267         117       363         386   
                                       -------  ------------  -------  -----------  --------- 
Operating expenses ...................    6,614        87         297       234         317   
Cost of merchandise sold .............    1,779       111         152                         
Selling, general and administrative                                                           
 expenses ............................    1,242        39          44       110          46   
                                       -------  ------------  -------  -----------  --------- 
Operating income (loss) ..............    2,797        30        (376)       19          23   
Interest expense .....................      939        16                    61         112   
Other (income) expense ...............      (66)                                         (6)  
                                       -------  ------------  -------  -----------  --------- 
Income (loss) before income taxes and                                                         
 extraordinary item ..................    1,924        14        (376)      (42)        (83)  
Income tax expense (benefit) .........      669                                               
                                       -------  ------------  -------  -----------  --------- 
INCOME (LOSS) before extraordinary                                                            
 item ................................  $ 1,255      $ 14       $(376)     $(42)       $(83)  
                                       =======  ============  =======  ===========  ========= 
Income (loss) per share before                                                                
 extraordinary item ..................  $  0.24                                               
                                       =======                                                
Weighted average shares outstanding  .    5,271                                               
                                       =======                                                

(RESTUBBED TABLE CONTINUED FROM ABOVE)  

                                                        · Enlarge/Download Table

                                                VALLEY  VIRGINIA               YORKTOWN  
                                        TPT(A) VIEW(A)  BEACH(B) FLEMINGTON(B) HEIGHTS(B)
                                       ------  ------  --------  -----------  ---------  
                                                                                         
Operating revenues ...................  $ 244   $ 668     $616      $   501      $ 388   
Merchandise sales ....................             44       92                           
                                       ------  ------  --------  -----------  ---------  
 Total revenue .......................    244     712      708          501        388   
                                       ------  ------  --------  -----------  ---------  
Operating expenses ...................     86     395      404          900        393   
Cost of merchandise sold .............             36       72                           
Selling, general and administrative                                                      
 expenses ............................    264     404      119                     101   
                                       ------  ------  --------  -----------  ---------  
Operating income (loss) ..............   (106)   (123)     113         (399)      (106)  
Interest expense .....................      3      34      192          128        164   
Other (income) expense ...............     (1)     (2)       2        2,448              
                                       ------  ------  --------  -----------  ---------  
Income (loss) before income taxes and                                                    
 extraordinary item ..................   (108)   (155)     (81)      (2,975)      (270)  
Income tax expense (benefit) .........      1                                            
                                       ------  ------  --------  -----------  ---------  
INCOME (LOSS) before extraordinary                                                       
 item ................................  $(109)  $(155)    $(81)     $(2,975)     $(270)  
                                       ======  ======  ========  ===========  =========  
Income (loss) per share before                                                           
 extraordinary item ..................                                                   
Weighted average shares outstanding  .                                                   

(a) Represents operations from January 1, 1995 through date of            
acquisition.                                                                    

(b) Represents operations for the year ended December 31, 1995.           

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                                                                · Download Table

                       ACQUIRED COMPANIES                     
--------------------------------------------------------------
  INDIAN                                            WEST PALM 
 RIVER(B)  FAIRFIELD(B)  TUCSON(B)  ST. LOUIS(B)    BEACH(B)  
--------  ------------  ---------  ------------  -------------
                                                              
  $ 510   $791             $ 156       $ 443         $  863   
     98                                                       
--------  ------------  ---------  ------------  -------------
    608   791                156         443            863   
--------  ------------  ---------  ------------  -------------
    607   800                214         544          1,029   

     72                                                       

    161                       33                              
--------  ------------  ---------  ------------  -------------
   (232)  (9)                (91)       (101)          (166)  
          104                132          77            182   
                              (5)          2                  
--------  ------------  ---------  ------------  -------------

   (232)  (113)             (218)       (180)          (348)  

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

  $(232)  $(113)           $(218)      $(180)        $ (348)  
========  ============  =========  ============  =============


(RESTUBBED TABLE CONTINUED FROM ABOVE)  

                                                                · Download Table

                                                  PRO FORMA  
                                               REFLECTING THE
                  PRO FORMA                       ACQUIRED   
                REFLECTING THE                  COMPANIES AND
   PRO FORMA       ACQUIRED       PRO FORMA     REPAYMENT OF 
  ADJUSTMENTS    COMPANIES(1)    ADJUSTMENTS       DEBT(2)   
-------------  --------------  -------------  ---------------
                                                             
                   $15,941                         $15,941   
                     3,038                           3,038   
-------------  --------------  -------------  ---------------
                    18,979                          18,979   
-------------  --------------  -------------  ---------------
    $  (171)(A)     12,750                          12,750   

                     2,222                           2,222   

         13 (A)      2,576                           2,576   
-------------  --------------  -------------  ---------------
        158          1,431                           1,431   
         44 (A)      2,188     $(500)(D)             1,688   
     (2,448)(A)        (76)                            (76)  
-------------  --------------  -------------  ---------------

      2,562           (681)      500                  (181)  
       (916)(B)       (246)      180 (D)               (66)  
-------------  --------------  -------------  ---------------

    $ 3,478        $  (435)     $320                $ (115)  
=============  ==============  =============  ===============

                   $ (0.08)                        $  (.02)  
=============  ==============                 ===============
        366 (C)      5,637       199 (D)             5,836   
=============  ==============  =============  ===============

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS  
YEAR ENDED DECEMBER 31, 1995  
(in thousands, except share and per share data)   

(A)     Expense adjustments for the period ended December 31, 1995 to reflect   
    the acquisition of the Acquired Companies as if the acquisitions had
taken place at the beginning of the period:                     

                                                        · Enlarge/Download Table

                                                                                                  IMPAIRMENT
                                                    INTEREST      DEPRECIATION    AMORTIZATION   IN VALUE OF
            COMPANY               DATE ACQUIRED   ADJUSTMENT(1)    ADJUSTMENT     OF GOODWILL       ASSETS  
------------------------------  ---------------  -------------  --------------  --------------  ------------
                                                                                                            
Pelham Enterprises, Inc.  .....       April 1995      $ (30)         $  12                                  
Hiland Park Golf Course  ......         May 1995       (212)            14                                  
RFC Enterprises, Inc. .........      August 1995          9            (33)     $8                          
Upper Hembree Partners, L.P.  .      August 1995         (4)          (108)                                 
TPT ...........................    November 1995         26                                                 
Valley View ...................    November 1995                       (56)                                 
Virginia Beach ................       March 1996         12             22                                  
Flemington ....................       March 1996         39                                        $(2,448) 
Yorktown Heights ..............       April 1996          4                     5                           
Indian River ..................         May 1996        140             (4)                                 
Fairfield .....................        June 1996         36             25                                  
Tucson ........................        June 1996        (22)                                                
St. Louis .....................        June 1996         53             34                                  
West Palm Beach ...............        June 1996         (7)           (77)                                 
                                                 -------------  --------------  --------------  ------------
                                                      $  44          $(171)     $13                $(2,448) 
                                                 =============  ==============  ==============  ============

(1) Assumes average rate of borrowing at 10%.                           

(B)  To reflect the income tax effect arising from the losses of the      
Acquired Companies.                                             

(C)  To reflect the issuance of Common Stock for the Acquired Companies.  

(D)  To reflect the reduction of interest expense assuming that the net   
proceeds  of $5,000 from the sale of 199,124 shares of Common Stock of the      
Company at  an offering price of $27 has been applied to the repayment of       
indebtedness at the beginning of the year and the related income tax effect.    

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS   
THREE MONTHS ENDED MARCH 31, 1996   
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)   

                                                        · Enlarge/Download Table

                                                             ACQUIRED COMPANIES                             
                               ---------------------------------------------------------------------------- 

                                                                                                       WEST 
                         THE    VIRGINIA  FLEMINGTON  YORKTOWN  INDIAN  FAIRFIELD  TUCSON  ST. LOUIS   PALM 
                       COMPANY  BEACH(A)     (B)    HEIGHTS(C) RIVER(C)    (C)      (C)       (C)   BEACH(C)
                      -------  --------  ----------  --------  ------  ---------  ------  ---------  ------ 
                                                                                                            
Operating revenues  .  $2,691     $ 35                  $ 74   $54        $ 52      $ 39     $ 63      $221 
Merchandise sales  ..     671        2                         3            68                              
                      -------  --------  ----------  --------  ------  ---------  ------  ---------  ------ 
 Total revenue ......   3,362       37                    74   57          120        39       63       221 
                      -------  --------  ----------  --------  ------  ---------  ------  ---------  ------ 
Operating expenses  .   2,252       39       $ 25         88   40           61        11       77       191 
Cost of merchandise                                                                                         
 sold ...............     457        2                         3            61                              
Selling, general and                                                                                        
 administrative                                                                                             
 expenses ...........     643       27                    22   8            10        26                  7 
                      -------  --------  ----------  --------  ------  ---------  ------  ---------  ------ 
Operating income                                                                                            
  (loss).............      10      (31)       (25)       (36)  6           (12)        2      (14)       23 
Interest expense  ...     100       34                    26                24        40       22           
Other income                                                                                                
 (expense) ..........     197      (14)                    3                                                
                      -------  --------  ----------  --------  ------  ---------  ------  ---------  ------ 
Income before Income                                                                                        
 taxes ..............     107      (79)       (25)       (59)  6           (36)      (38)     (36)       23 
Income tax expense                                                                                          
 (benefit) ..........      38                                                                               
                      -------  --------  ----------  --------  ------  ---------  ------  ---------  ------ 
Net income (loss) ...  $   69     $(79)      $(25)      $(59)  $6         $(36)     $(38)    $(36)     $ 23 
                      =======  ========  ==========  ========  ======  =========  ======  =========  ====== 
Net income                                                                                                  
 (loss) per share ...    0.01                                                                               
Weighted average      =======                                                                               
 shares outstanding     8,648                                                                               
                      =======                                                                               

[TABLE CONTINUED FROM ABOVE]                                                                                

                                              PRO FORMA                                                     
                                              REFLECTING                                                    
                                                 THE                                                        
                PRO    FORMA                 ACQUISITIONS                                                   
                  REFLECTING                     AND                                                        
  PRO FORMA           THE        PRO FORMA   REPAYMENT OF                                                   
 ADJUSTMENTS    ACQUISITIONS(1) ADJUSTMENTS    DEBT(2)                                                      
-----------     -------------  -----------  ------------                                                    

                    $3,229                      $3,229                                                      
                       744                         744                                                      
-----------     -------------  -----------  ------------                                                    
                     3,973                       3,973                                                      
-----------     -------------  -----------  ------------                                                    
   $  (29)           2,755                       2,755                                                      

                       523                         523                                                      

                       743                         743                                                      
-----------     -------------  -----------  ------------                                                    
       29              (48)                        (48)                                                     
      (70) (A)         176        $ (125) (D)       51                                                      

      (61) (A)         125                         125                                                      
-----------     -------------  -----------  ------------                                                    

       38              (99)          125           (26)                                                     
      (74) (B)         (36)           45 (D)        (9)                                                     
-----------     -------------  -----------  ------------                                                    
   $   112        $     (63)       $   80        $  (17)                                                    
===========     =============  ===========  ============                                                    
                    $(0.01)                     $(0.00)                                                     
                =============               ============                                                    
      131 (C)        8,779           199 (D)     8,978                                                      
==========      =============  ===========  ============                                                    


 (a) Represents operations from January 1, 1996 through date of acquisition.

(b) Represents estimated operations from January 1, 1996 through date of  
acquisition.                                                      

(c) Represents operations for the three months ended March 31, 1996.      

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS  
THREE MONTHS ENDED MARCH 31, 1996   
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)   

(A)     Expense adjustments for the period ended March 31, 1996 to reflect      
    the acquisition of the Acquired Companies as if the acquisitions had
taken place at the begining of the period:                      

                                                        · Enlarge/Download Table

                                                                      OTHER          
                        DATE      INTEREST EXPENSE   DEPRECIATION   (INCOME)         
      COMPANY         ACQUIRED     ADJUSTMENT (1)     ADJUSTMENT     EXPENSE    OTHER
-----------------  ------------  ----------------  --------------  ---------  -------
                                                                                     
Virginia Beach  ..   March 1996         $ 34             $ (9)         $15       $14 
Flemington .......   March 1996                                                      
Yorktown Heights     April 1996           26                            20           
Indian River .....    May 1996                             (1)          17           
Fairfield ........   June 1996            11                6                        
Tucson ...........   June 1996           (12)                                        
St. Louis ........   June 1996            11                8                        
West Palm Beach  .   June 1996           (20)             (19)           9           
                                 ----------------  --------------  ---------  -------
                                        $ 50             $(15)         $61       $14 
                                 ================  ==============  =========  =======

(1) Assumes average rate of borrowing at 10%                            

(B)     To reflect the income tax effect arising from the losses of the         
Acquired Companies.                                             

(C)     To reflect the issuance of Common Stock for the Acquired Companies.     

(D)     To reflect the reduction of interest expense assuming that the net      
     proceeds of $5,000 from the sale of 199,124 shares of Common Stock of
the Company at an offering price of $27 has been applied        
     to the repayment of indebtedness at the beginning of the year and the
related income tax effect.                                      

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REPORT OF INDEPENDENT AUDITORS  

Board of Directors                                                              
Family Golf Centers, Inc.                                                       
Melville, New York                                                              

We have audited the accompanying consolidated balance sheets of Family    
Golf Centers, Inc. and subsidiaries as at December 31, 1994 and December 31,    
1995 and the related consolidated statements of operations, changes in          
stockholders' equity and cash flows for each of the years in the three-year     
period ended December 31, 1995. These financial statements are the              
responsibility of the Company's management. Our responsibility is to express    
an opinion on these financial statements based on our audits.                   

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

In our opinion, the financial statements enumerated above present fairly, 
in all material respects, the financial position of Family Golf Centers, Inc.   
and subsidiaries at December 31, 1994 and December 31, 1995 and the results     
of their operations and their cash flows for each of the years in the           
three-year period ended December 31, 1995 in conformity with generally          
accepted accounting principles.                                                 

Richard A. Eisner & Company, LLP                                                
New York, New York                                                              
March 15, 1996                                                                  

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS   
(DOLLARS IN THOUSANDS)  

                                                        · Enlarge/Download Table


                                                                  DECEMBER 31,       MARCH 31, 
                                                             --------------------      1996    
                                                                1994       1995                
                                                             ---------  ---------              
                                                                                               
                                                                                    (UNAUDITED)
                           ASSETS                                                              
                          (NOTE F)                                                             
Current assets:                                                                                
 Cash and cash equivalents (Notes A[3] and A[11])  .........   $ 2,296    $23,121     $11,147  
 Inventories (Note A[4]) ...................................       462      1,941       3,019  
 Prepaid expenses and other current assets (Note D)  .......       222        999       2,358  
 Deferred tax asset (Note J) ...............................        65                         
                                                             ---------  ---------  ----------- 
  Total current assets .....................................     3,045     26,061      16,524  
Property, plant and equipment (net of accumulated                                              
 depreciation of $733, $1,336 and $1,634 at December 31,                                       
 1994, December 31, 1995 and March 31, 1996, respectively)                                     
 (Notes A[5], B and C) .....................................    11,726     33,330      44,027  
Loan acquisition costs (net of accumulated amortization of                                     
 $105, $12 and $25 at December 31, 1994, December 31, 1995                                     
 and March 31, 1996, respectively) .........................       376        234         222  
Deferred tax asset (Note J) ................................                  116         116  
Other assets ...............................................       519      1,205       1,567  
Excess of cost over fair value of assets acquired (Note B).        411        636         674  
                                                             ---------  ---------  ----------- 
  TOTAL ....................................................   $16,077    $61,582     $63,130  
                                                             =========  =========  =========== 
                         LIABILITIES                                                           
Current liabilities:                                                                           
 Accounts payable, accrued expenses and other current                                          
  liabilities ..............................................   $ 1,720    $  3,044    $ 2,051  
 Income taxes payable (Note J) .............................                  569              
 Current portion of long-term obligations (Note G)  ........     1,074      1,850       1,523  
 Due to Officers (Note F) ..................................       455                         
                                                             ---------  ---------  ----------- 
  Total current liabilities ................................     3,249      5,463       3,574  
Long-term obligations (less current portion) (Note G)  .....     5,254      6,343       7,229  
Deferred rent (Note E) .....................................       187        116         103  
Other liabilities ..........................................       153        272         238  
                                                             ---------  ---------  ----------- 
  Total liabilities ........................................     8,843     12,194      11,144  
                                                             ---------  ---------  ----------- 
Commitments, contingencies and other matters                                                   
 (Notes E and H)                                                                               

                    STOCKHOLDERS' EQUITY                                                       
Preferred stock -- authorized 1,000,000 shares, none                                           
 outstanding                                                                                   
Common stock authorized 10,000,000 shares, $.01 par value;                                     
 4,830,000, 8,318,045 and 8,489,325 shares outstanding at                                      
 December 31, 1994, December 31, 1995 and March 31, 1996,                                      
 respectively (Notes B and I) ..............................        48         83          85  
Additional paid-in capital (Note H[4]) .....................     7,302     48,347      50,909  
Retained earnings (Deficit) ................................      (116)       958       1,027  
Treasury stock .............................................                              (35) 
                                                             ---------  ---------  ----------- 
  Total stockholders' equity ...............................     7,234     49,388      51,986  
                                                             ---------  ---------  ----------- 
  TOTAL ....................................................   $16,077    $61,582     $63,130  
                                                             =========  =========  =========== 

The accompanying notes to financial statements                                  
are an integral part hereof.                                                    

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS   
(IN THOUSANDS, EXCEPT PER SHARE DATA)   

                                                        · Enlarge/Download Table


                                                                              THREE MONTHS ENDED
                                                 YEAR ENDED DECEMBER 31,          MARCH 31,     
                                             -----------------------------  --------------------
                                                1993      1994      1995       1995       1996  
                                             --------  --------  ---------  ---------  ---------
                                                                                 (UNAUDITED)    
                                                                                                
Operating revenues .........................   $1,993    $5,342    $  9,795   $1,360     $2,691 
Merchandise sales ..........................      639     1,020      2,637       422        671 
                                             --------  --------  ---------  ---------  ---------
  Total revenue ............................    2,632     6,362     12,432     1,782      3,362 
                                             --------  --------  ---------  ---------  ---------
Operating expenses .........................    2,247     4,215      6,614     1,061      2,252 
Cost of merchandise sold ...................      459       750      1,779       295        457 
Selling, general and administrative                                                             
 expenses. .................................      615       548      1,242       352        643 
                                             --------  --------  ---------  ---------  ---------
  Total expenses ...........................    3,321     5,513      9,635     1,708      3,352 
                                             --------  --------  ---------  ---------  ---------
Operating income (loss) ....................     (689)      849      2,797        74         10 
Interest expense ...........................     (192)     (313)      (939)      (92)      (100)
Other income (including insurance proceeds                                                      
 of $104 in 1993) ..........................      106        16         66        22        197 
                                             --------  --------  ---------  ---------  ---------
Income (loss) before income taxes, minority                                                     
 interest and extraordinary item ...........     (775)      552      1,924         4        107 
Income tax expense (benefit) (Notes A[8]                                                        
 and J) ....................................       --       (65)       669         2         38 
                                             --------  --------  ---------  ---------  ---------
Income (loss) before minority interest and                                                      
 extraordinary item ........................     (775)      617      1,255         2         69 
Minority interest in income (loss)  ........       12      (129)        --        --         -- 
Extraordinary charge -- early                                                                   
 extinguishment of debt (net of tax effect)        --        --       (181)       --         -- 
                                             --------  --------  ---------  ---------  ---------
NET INCOME (LOSS) ..........................   $ (763)   $   488   $  1,074   $    2     $   69 
                                             ========  ========  =========  =========  =========
Net income (loss) per share before                                                              
 extraordinary item (Note A[9]) ............   $ (.23)   $  .13    $   .24    $  .00     $  .01 
Extraordinary item .........................                          (.04)                     
                                             --------  --------  ---------  ---------  ---------
Net income (loss) per share ................   $ (.23)   $  .13    $   .20    $  .00     $  .01 
                                             ========  ========  =========  =========  =========
Weighted average shares outstanding  .......   3,272     3,636      5,271      4,938      8,648 
                                             ========  ========  =========  =========  =========

The accompanying notes to financial statements  
are an integral part hereof.  

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY  
(DOLLARS IN THOUSANDS)  

                                                        · Enlarge/Download Table


                                                CAPITAL STOCK                                                     
                                              (PAR VALUE $.01)                                                    
                                           ---------------------                                                  
                                             NUMBER OF              ADDITIONAL                RETAINED            
                                              SHARES                 PAID-IN      TREASURY    EARNINGS            
                                              ISSUED      AMOUNT     CAPITAL       STOCK     (DEFICIT)     TOTAL  
                                           -----------  --------  ------------  ----------  ----------  --------- 
                                                                                                                  
Balance -- January 1, 1993 ...............         110               $   292                   $  (23)    $   269 
Conversion of debt to capital ............                               500                                  500 
Issuance of stock ........................          55                 1,122                                1,122 
Net (loss) for the year ..................                                                       (763)       (763)
                                           -----------  --------  ------------  ----------  ----------  --------- 
Balance -- December 31, 1993 .............         165                 1,914                     (786)      1,128 
Issuance of stock ........................       5,055                                                            
Issuance of warrants in connection with                                                                           
 bridge loan .............................                                18                                   18 
Conversion of debt to capital ............                               500                                  500 
Recapitalization .........................   3,444,780  $34             (216)                     182           0 
Net proceeds from public offering  .......   1,380,000  14             5,396                                5,410 
S corporation distribution to                                                                                     
 stockholders ............................                              (310)                                (310)
Net income for the year ..................                                                        488         488 
                                           -----------  --------  ------------  ----------  ----------  --------- 
Balance -- December 31, 1994 .............   4,830,000  48             7,302                     (116)      7,234 
Issuance of stock (Note B) ...............     284,300  3              2,732                                2,735 
Net proceeds from public offering  .......   3,135,000  31            43,702                               43,733 
Public offering expenses .................                            (1,317)                              (1,317)
Exercise of warrants .....................      64,950  1                307                                  308 
Exercise of employee options .............       3,795                    13                                   13 
Preferential distribution to stockholders                                                                         
 of The Practice Tee, Inc. (Note H)  .....                            (4,392)                              (4,392)
Net income for the year ..................                                                      1,074       1,074 
                                           -----------  --------  ------------  ----------  ----------  --------- 
Balance -- December 31, 1995 .............   8,318,045  83            48,347                      958      49,388 
Issuance of stock ........................     150,000  2              2,238                                2,240 
Issuance of warrants .....................                               245                                  245 
Exercise of employee options .............      21,280                    79                                   79 
Treasury Stock in exchange for note                                                                               
 receivable (2,200 shares) ...............                                          $(35)                     (35)
Net income for the period ................                                                         69          69 
                                           -----------  --------  ------------  ----------  ----------  --------- 
Balance--March 31, 1996 (Unaudited)  .....   8,489,325  $85          $50,909        $(35)      $1,027     $51,986 
                                           ===========  ========  ============  ==========  ==========  ========= 

The accompanying notes to financial statements  
are an integral part hereof.    

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS   
(DOLLARS IN THOUSANDS)  

                                                        · Enlarge/Download Table


                                                                                                   THREE MONTHS ENDED  
                                                                    YEAR ENDED DECEMBER 31,             MARCH 31,      
                                                               --------------------------------  --------------------- 
                                                                  1993       1994        1995       1995        1996   
                                                               ---------  ---------  ----------  ---------  ---------- 
                                                                                                                       
Cash flows from operating activities:                                                                                  
 Net income (loss) ...........................................   $  (763)   $    488   $   1,074   $     2    $     69 
 Adjustments to reconcile net income (loss) to net cash                                                                
  provided by (used in) operating activities:                                                                          
   Depreciation and amortization .............................       260        564         739        173         251 
   Deferred tax asset ........................................                  (65)        (51)                       
   Extraordinary charge -- early extinguishment of debt --                                                             
    loan acquisition cost write-off ..........................                              302                        
   Minority interest in net income (loss) ....................       (12)       129                                    
   (Increase) in inventories .................................       (31)      (289)     (1,478)      (430)     (1,079)
   (Increase) in prepaid expenses and other current assets  ..       (13)      (124)       (778)      (513)     (1,313)
   (Increase) in other assets ................................       (80)      (181)       (749)       (65)       (205)
   Increase (Decrease) in accounts payable and accrued                                                                 
    expenses .................................................       405        239         655        444      (1,352)
   Increase (Decrease) in deferred rent ......................       209        (21)        (71)       (18)        (12)
   Increase (Decrease) in other liabilities ..................        25        123         119         (9)        (35)
   Increase (Decrease) in income taxes payable ...............                              569                   (569)
                                                               ---------  ---------  ----------  ---------  ---------- 
   Net cash provided by (used in) operating activities  ......         0        863         331       (416)     (4,245)
                                                               ---------  ---------  ----------  ---------  ---------- 
Cash flows from investing activities:                                                                                  
 Acquisitions of property and equipment ......................    (4,287)    (5,092)    (15,213)    (1,584)     (6,668)
 (Increase) in security deposits .............................       (26)       (37)                  (100)            
 Acquisition of limited partnership minority interest  .......               (1,280)                                   
 Acquisition of goodwill .....................................                             (259)                       
                                                               ---------  ---------  ----------  ---------  ---------- 
   Net cash (used in) investing activities ...................    (4,313)    (6,409)    (15,472)    (1,684)     (6,668)
                                                               ---------  ---------  ----------  ---------  ---------- 
Cash flows from financing activities:                                                                                  
 (Increase) Decrease in loan acquisition costs ...............                 (213)       (246)        31             
 Increase (Decrease) in loans payable to stockholders  .......        75         25                   (231)            
 Increase (Decrease) in due to officers ......................       (63)       (95)       (455)       479             
 Proceeds from loans -- bank and others ......................     3,555      4,497      17,916                        
 Repayment of loans -- bank and others .......................      (812)    (2,185)    (19,594)      (302)     (1,141)
 Proceeds from issuance of bridge financing and warrants  ....                  499                                    
 Repayment of bridge financing ...............................                 (499)                                   
 Net proceeds from issuance of common stock ..................     1,872      5,410      42,416                        
 Preferential distribution to stockholders of The Practice                                                             
  Tee, Inc. ..................................................                           (4,392)                       
 Proceeds from the exercise of warrants and options . .  .....                              321                     80 
                                                               ---------  ---------  ----------  ---------  ---------- 
   Net cash provided by (used in) financing activities  ......     4,627      7,439      35,966        (23)     (1,061)
                                                               ---------  ---------  ----------  ---------  ---------- 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  ........       314      1,893      20,825     (2,123)    (11,974)
Cash and cash equivalents -- beginning of period  ............        89        403       2,296      2,296      23,121 
                                                               ---------  ---------  ----------  ---------  ---------- 
CASH AND CASH EQUIVALENTS -- END OF PERIOD ...................   $   403    $  2,296   $  23,121   $   173    $ 11,147 
                                                               =========  =========  ==========  =========  ========== 
Supplemental and noncash disclosures:                                                                                  
 Acquisition of property in exchange for common stock  .......                         $   2,734              $  2,241 
 Acquisition of property subject to mortgage and notes  ......                                                   1,700 
 Treasury stock in exchange for note receivable ..............                                                      35 
 Issuance of warrants ........................................                                                     245 
 Conversion of amounts due to stockholders to common stock  ..              $    500                                   
 Property additions accrued but not paid .....................   $   207        662         669                    359 
 Accrual of S corporation distribution to stockholders  ......                  310                                    
 Interest paid ...............................................       276        476       1,296                    225 
 Taxes paid ..................................................                               53                    954 

The accompanying notes to financial statements                                  
are an integral part hereof.                                                    

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO FINANCIAL STATEMENTS   
(INFORMATION WITH RESPECT TO MARCH 31, 1996 AND THREE MONTHS  
ENDED MARCH 31, 1995 AND MARCH 31, 1996 IS UNAUDITED)   
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)   

(NOTE A) -- THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:         

[1] THE COMPANY:                                                              

Family Golf Centers, Inc. operates golf centers designed to provide a wide
variety of practice opportunities, including facilities for driving,            
chipping, putting, pitching and sand play. In addition, the Company's golf      
centers typically offer golf lessons instructed by PGA-certified golf           
professionals, full-line pro shops and other amenities to encourage family      
participation. The Company also operates a golf club which includes a           
regulation 18-hole golf course, a pro shop, a driving range, two restaurants    
and complete banquet facilities.                                                

Through an agreement with Golden Bear Golf Centers, Inc. ("GBGC"), the    
Company is a non-exclusive licensee for Golden Bear Golf Centers in certain     
territories. The license agreement is terminable by GBGC under certain          
conditions. (See Note H[3].)                                                    

[2] PRINCIPLES OF CONSOLIDATION:                                              

The consolidated financial statements include the accounts of Family Golf 
Centers, Inc. ("FGCI") and as of December 31, 1994, its wholly owned            
subsidiaries, Orient Associates International, Inc. ("OAI"), Skydrive Co.,      
Inc., Skydrive Willowbrook NJ, Inc., Skydrive Greenburgh Co., Inc., Skycon      
Construction Co., Inc., Skydrive Alley Pond Company, Inc. ("Skydrive Alley      
Pond"), (collectively, the "Operating Companies"), (the Operating Companies     
and FGCI together, the "Company"). In addition, as of December 31, 1995 the     
consolidated financial statements also include Hiland Family Golf Centers,      
Inc., Pelham Family Golf Center, Inc., Alpharetta Family Golf Centers, Inc.,    
Peachtree Family Golf Centers, Inc., Richmond Family Golf Centers, Inc.,        
Valley View Family Golf Centers, Inc. and The Practice Tee, Inc., which were    
formed in 1995 to acquire certain new golf facilities. In addition, as of       
March 31, 1996, the consolidated financial statements also include Mesa         
Family Golf Centers, Inc., Virginia Beach Family Golf Centers, Inc., and        
Flemington Family Golf Centers, Inc., which were formed in 1996 to acquire      
certain new golf facilities. All significant intercompany transactions and      
accounts have been eliminated.                                                  

Upon the closing of the Company's initial public offering in November     
1994, pursuant to an exchange agreement, FGCI acquired all of the outstanding   
common stock of the Operating Companies, in exchange for 3,445,000 shares of    
common stock of FGCI. The consolidated financial statements include the         
results of the Operating Companies for all periods presented as the Operating   
Companies were previously related through common ownership. The exchange        
transaction is accounted for in a manner similar to a pooling of interests      
and there was no change in the bases of the entities combined.                  

[3] CASH EQUIVALENTS:                                                         

The Company considers all highly liquid investments with a maturity of    
three months or less to be cash equivalents.                                    

[4] INVENTORIES:                                                              

Inventory consists of merchandise for sale in the pro shop at each        
facility and food and beverage in the restaurants and is valued at the lower    
of cost on a first-in, first-out basis or market.                               

[5] PROPERTY, PLANT AND EQUIPMENT:                                            

Property, plant and equipment is stated at cost. Depreciation and         
amortization of the respective assets is computed using the straight-line       
method over their estimated lives or the term of the lease, including           
expected renewal options, if shorter. Leasehold improvements are amortized      
using the straight-line method over the remaining life of the lease,            
including expected renewal options.                                             

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)  

(NOTE A) -- THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:         
(Continued)                                                                   
[6] PRE-OPENING COSTS:                                                      

Costs associated with the opening of a new location are deferred and      
amortized over one year.                                                        

Pre-opening costs consists of primarily employee recruitment and training 
costs as well as pre-opening marketing expenditures.                            

[7] LOAN ACQUISITION COSTS:                                                   

Loan acquisition costs incurred in connection with debt financing are     
amortized over the life of the applicable loan weighted in accordance with      
the amount of debt outstanding.                                                 

[8] INCOME TAXES:                                                             

Certain of the Operating Companies elected to be treated as S corporations
pursuant to Section 1362(a) of the Internal Revenue Code for federal and        
state income tax purposes. As a result of this election, the income of such     
Operating Companies was taxed directly to the individual stockholders. Upon     
the closing of the public offering in November, 1994, the Company became a C    
corporation and adopted Statement of Accounting Standards No. 109,              
"Accounting for Income Taxes" which requires the use of the liability method    
of accounting for income taxes.                                                 

[9] NET INCOME (LOSS) PER SHARE:                                              

Net income (loss) per share is computed using the weighted average number 
of shares outstanding during the period as adjusted for the exchange ratio      
for shares issued in the reorganization of the Company. The effect of           
outstanding options and warrants is computed, if dilutive, using the            
"treasury stock" method. In accordance with Securities and Exchange             
Commission requirements, common shares, options and warrants issued in          
certain of the Operating Companies during the twelve-month period prior to      
the filing of the initial public offering have been included in the             
calculation as if they were outstanding for all periods prior to the            
offering.                                                                       

[10] USE OF ESTIMATES:                                                        

The preparation of financial statements in conformity with generally      
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities at the   
date of the financial statements and the reported amounts of revenues and       
expenses during the reporting period. Actual results could differ from those    
estimates.                                                                      

[11] CONCENTRATION OF CREDIT RISK:                                            

Financial instruments which potentially subject the Company to significant
concentrations of credit risk consist principally of temporary cash             
investments. The Company places its temporary cash investments with high        
credit qualified financial institutions and, by policy, limits the amount of    
credit exposure to any one financial institution.                               

[12] RECENTLY ISSUED ACCOUNTING STANDARDS:                                    

A recently issued accounting standard regarding impairments of long-lived 
assets ("FAS 121") has not been adopted early by the Company. FAS 121           
requires entities to review long-lived assets and certain identifiable          
intangibles to be held and used, for impairment whenever changes in             
circumstances indicate that the carrying amount of an asset may not be          
recoverable. The impact of the adoption of this standard on financial           
position and results of operations is not expected to be material.              

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)  

(NOTE A) -- THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:         
(Continued)                                                                   
[13] STOCK BASED COMPENSATION:                                              

The Company accounts for stock based compensation including stock options 
under the basis of Accounting Principles Board Opinion No. 25 and will          
continue to do so in the future. The requirements of FAS 123 on stock based     
compensation will require additional disclosures commencing in 1996. Stock      
options issued in the quarter ended March 31, 1996 were not material and        
accordingly, no additional disclosure has been presented.                       

[14] UNAUDITED FINANCIAL STATEMENTS:                                          

The financial statements as of March 31, 1996 and for the three months    
ended March 31, 1996 and March 31, 1995 are unaudited and are not necessarily   
indicative of the results that may be expected for the year ending December     
31, 1996. In the opinion of management, the financial statements include all    
adjustments, consisting of normal recurring accruals, necessary for a fair      
presentation of the Company's financial position and results of operations.     

[15] INTERIM FINANCIAL REPORTING:                                             

Pursuant to APB Opinion No. 28, Interim Financial Reporting, certain      
accounting principles and practices followed for annual reporting are           
modified for interim reporting purposes, so that the reported results for       
these interim periods better relate to the results of operations for the        
annual periods. Therefore, certain costs and expenses other than merchandise    
cost are allocated among interim periods based on an estimate of benefit        
received or activity associated with the periods.                               

(NOTE B) -- ACQUISITION OF GOLF FACILITIES:                                     

In April 1995, the Company acquired Pelham Enterprises, Inc. ("Pelham"),  
an existing golf driving range. Pursuant to the purchase agreement, the         
Company acquired the outstanding shares of Pelham Enterprises, Inc. for (i)     
90,000 shares of FGCI common stock valued at $430 (ii) satisfaction of the      
loan from the sole stockholder to Pelham of $512 and (iii) a promissory note    
in favor of the sole stockholder for $230 in exchange for pro shop inventory    
and other assets. In connection with the issuance of common stock, the          
Company registered 45,000 shares in connection with the public offering in      
December 1995 and has agreed to certain registration rights for the remaining   
45,000 shares. Pelham's assets included land which was subject to an $818       
mortgage. A portion of the purchase price for the acquisition ($512) was        
financed with borrowings under a line of credit from Chemical Bank at an        
interest rate of prime plus 1.5%, which was subsequently repaid with a          
portion of the net proceeds of a public offering.                               

In May 1995, the Company acquired Hiland Park Golf Course ("Hiland"), a   
distressed property which was in foreclosure, consisting of a golf course,      
restaurant and catering facility. The purchase price for the assets was         
$3,750. The Company financed a portion of the purchase price of Hiland with a   
$3,000 loan from Orix USA Corp. at an interest rate of LIBOR plus 3.5%          
(capped at 10.5%) and with borrowings under a line of credit from Chemical      
Bank at an interest rate of prime plus 1.5%, which was subsequently repaid      
with a portion of the net proceeds of a public offering.                        

In August 1995, the Company acquired RFC Enterprises, Inc. ("RFC"), an    
existing golf center in Glen Allen, Virginia (near Richmond), in exchange for   
7,500 shares of common stock valued at $96 and $454 in cash. RFC's assets       
include land which is subject to a $170 mortgage. In connection with the        
issuance of common stock, the Company has agreed that, if such common stock     
does not have a current market price (as defined) of at least $10.00 per        
share on August 25, 1997, the Company will, subject to adjustment under         
certain circumstances, make up the difference between $10.00 per share and      
such current market price in cash, stock or a combination thereof.              

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)  

(NOTE B) -- ACQUISITION OF GOLF FACILITIES:  (Continued)                        
In August 1995, the Company purchased: (i) land in Duluth, Georgia (near
Atlanta) on which it intends to construct an executive golf course and (ii)     
an existing driving range ("Peachtree"). The purchase price consisted of $500   
in cash, a mortgage note in the amount of $1,600 bearing interest at the        
prime rate payable on August 28, 2000 and a promissory note in the amount of    
$1,000 which bears interest at 8% per annum payable on August 28, 1997 in       
cash or common stock of the Company, at the Company's option.                   

In September 1995, the Company acquired an existing driving range         
("McDivots") in Alpharetta, Georgia (near Atlanta) in exchange for 85,000       
shares of common stock and an option to purchase up to 8,500 shares of the      
common stock at an exercise price of $25.00 per share expiring in September     
2000. The property is subject to a mortgage of $1,800.                          

In November 1995, the Company acquired a 5 acre property in Valley View,  
Ohio ("Valley View") on which there is a domed indoor driving range. The        
purchase price consisted of: (i) 101,800 shares of common stock and, (ii) an    
option to purchase up to 10,000 shares of the Company's common stock at an      
exercise price of $25.00 per share and (iii) cash. The property was subject     
to a mortgage, due September 1997 and bearing interest at the greater of 8%     
and 1% over National City Bank's base rate.                                     

In November 1995, the Company acquired The Practice Tee, Inc. ("TPT"). TPT
operates a combination Golden Bear Golf Center and golf course facility in El   
Segundo, California and a combination golf center and par-3 golf course         
facility in Gilroy, California. The purchase price consisted of $4,000 and up   
to $2,000 payable upon the achievement of certain operating targets.            

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                                             PELHAM    HILAND     RFC            
                                           --------  --------  -------           
                                                                                 
Property, plant and equipment . ..........   $1,840    $3,850   $   747          
Other current assets .....................      250                              
Excess of cost over fair value ...........                         259           
                                           --------  --------  -------           
    Total assets .........................    2,090     3,850    1,006           
Assumption of mortgage payable ...........     (818)              (170)          
Assumption of other liabilities ..........                        (246)          
                                           --------  --------  -------           
Net assets acquired ......................   $1,272    $3,850   $   590          
                                           ========  ========  =======           
Fair value of stock issued ...............   $   430            $    96          
Loan from selling stockholder ............      512                              
Promissory note from selling stockholder        230                              
Mortgage from Orix USA Corp ..............             $3,000                    
Borrowings from Chemical Bank ............                750      451           
Other liabilities ........................                          43           
Acquisition costs ........................      100       100                    
                                           --------  --------  -------           
                                             $1,272    $3,850   $   590          
                                           ========  ========  =======           

                    (RESTUBBED TABLE CONTINUED FROM ABOVE)                       

                                             PEACHTREE    MCDIVOTS    VALLEY VIEW
                                           -----------  ----------  -------------
Property, plant and equipment . ..........     $900       $  3,140      $1,895   
Other current assets .....................                                       
Excess of cost over fair value ...........                                       
                                           -----------  ----------  -------------
    Total assets .........................      900         3,140        1,895   
Assumption of mortgage payable ...........                                (342)  
Assumption of other liabilities ..........                 (1,813)        (185)  
                                           -----------  ----------  -------------
Net assets acquired ......................     $900       $  1,327      $1,368   
                                           ===========  ==========  =============
Fair value of stock issued ...............                $  1,140      $1,069   
Loan from selling stockholder ............                                       
Promissory note from selling stockholder       $900                              
Mortgage from Orix USA Corp ..............                                       
Borrowings from Chemical Bank ............                     53          299   
Other liabilities ........................                    105                
Acquisition costs ........................                     29                
                                           -----------  ----------  -------------
                                               $900       $  1,327      $1,368   
                                           ===========  ==========  =============

In February and March 1996, the Company acquired a combination golf center
and par-3 golf course in Mesa, Arizona ("Mesa"), a combination golf center      
and par-3 golf course located in Virginia Beach, Virginia ("Virginia Beach")    
and a driving range, miniature golf course, batting cages, a pro shop and a     
club house located in Flemington, New Jersey ("Flemington") and associated      
land. The aggregate purchase price of these three properties was                
approximately $8,500, consisting of cash, common stock of the Company or        
notes, or a combination thereof.                                                

In April 1996, the Company acquired an existing golf recreational practice
facility in Yorktown Heights, New York.                                         

In May 1996, the Company consummated the purchase of a long-term leasehold
interest for property located in Indian River, Virginia on which there is an    
existing golf recreational facility.                                            

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)  

(NOTE B) -- ACQUISITION OF GOLF FACILITIES:  (Continued)                        
In June 1996, the Company consummated the purchases of leasehold        
interests for properties located in Fairfield, Ohio and St. Louis, Missouri     
on which there are existing golf recreational practice facilities and           
acquired existing golf recreational facilities in Tucson, Arizona and West      
Palm Beach, Florida.                                                            

The aggregate purchase price of the properties acquired in April 1996, May
1996 and June 1996 was approximately $9,220, consisting of cash, common stock   
of the Company or notes, or a combination thereof.                              

The operating results of Pelham, Hiland, RFC, Peachtree, McDivots, TPT and
Valley View are included in the Company's results of operations for the year    
ended December 31, 1995 from the date of acquisitions. The results of Mesa,     
Virginia Beach and Flemington are included in the Company's results of          
operations for the three months ended March 31, 1996 from the date of           
acquisitions. These acquisitions were accounted for by the purchase method of   
accounting.                                                                     

The following pro forma information for the years ended December 31, 1995 
and December 31, 1994 assumes that the acquisition of Pelham, Hiland, RFC,      
McDivots, Valley View and TPT had taken place at the beginning of each of       
those years and that the excess cost over the fair value of assets acquired     
for RFC is being amortized over 20 years. The operations of the existing        
driving range in Peachtree were not material to the operations of the           
Company.                                                                        

                        YEAR ENDED
                        DECEMBER 31,
                      --------------------
                       1995       1994
                      ---------  ---------
Total revenue ..........................   $14,522    $10,902                   
Net income (loss) ......................   $    472   $   (481)                 
Net income (loss) per share (Note A[9])    $   .09    $ (0.11)                  

The following pro forma information for the year ended December 31, 1995  
and for the three months ended March 31, 1996 assumes that, in addition to      
those acquisitions noted above, the acquisitions of Virginia Beach,             
Flemington, Yorktown Heights, Indian River, Fairfield, Tucson, St. Louis and    
West Palm Beach had taken place at the beginning of 1995 and that the excess    
of cost over the fair value of assets acquired is being amortized over 20       
years. The operations of Mesa were not material to the operations of the        
Company.                                                                        

                              YEAR ENDED      THREE MONTHS ENDED
                         DECEMBER 31, 1995    MARCH 31, 1996
                         -----------------  ------------------
Total revenue ...................       $18,979             $3,973              
Net (loss) ......................       $   (435)           $  (63)             
Net (loss) per share (Note A[9])        $  (.08)            $ (.01)             

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)  

(NOTE C) -- PROPERTY, PLANT AND EQUIPMENT:                                      

Property, plant and equipment are summarized as follows:                  

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                                                    DECEMBER 31,       MARCH 31,
                                               --------------------      1996   
                                                  1994       1995               
                                               ---------  ---------             
                                                                                
Golf driving range facilities ................   $ 5,123    $23,564     $29,431 
Leasehold improvements .......................     5,317      7,248       9,519 
Machinery and equipment ......................       827      1,617       2,077 
Furniture and fixtures and computer equipment         70        219         750 
Construction in progress .....................     1,122      2,018       3,884 
                                               ---------  ---------  -----------
  Total ......................................    12,459     34,666      45,661 
Accumulated depreciation and amortization  ...       733      1,336       1,634 
                                               ---------  ---------  -----------
  Balance ....................................   $11,726    $33,330     $44,027 
                                               =========  =========  ===========

Substantially all of the Company's property, plant and equipment is       
pledged as collateral for various loans (see Note G). Interest of $55, $150     
and $387 has been capitalized during the years ended December 31, 1993,         
December 31, 1994 and December 31, 1995, respectively, which amounts are        
included in property, plant and equipment. Similarly $52 and $117 was           
capitalized for the three months ended March 31, 1995 and March 31, 1996,       
respectively.                                                                   

(NOTE D) -- PREPAID EXPENSES AND OTHER CURRENT ASSETS:                          

Prepaid expenses and other current assets consist of the following:       

                                         DECEMBER 31,    MARCH 31,
                                    --------------      1996
                            1994    1995
                          ------  ------
Prepaid insurance ...........................   $115    $276     $   92         
Prepaid taxes ...............................      3      58        451         
Preopening expenses .........................            173        502         
Accounts receivable and interest receivable        6     177        438         
Accounts receivable -- employees ............      6      29         83         
Other receivables and prepaids ..............     92     286        792         
                                       ------  ------  -----------
Total .......................................   $222    $999     $2,358         
                                       ======  ======  ===========

(NOTE E) -- LEASING ARRANGEMENTS:                                               

Operating leases, which expire at various dates through 2038, are for land
at the facilities and for office space and, in some cases, are subject to       
annual increases based on changes in the Consumer Price Index.                  

Future minimum lease payments, including expected renewal options, under  
operating lease agreements that have initial or remaining noncancellable        
lease terms in excess of one year are as follows:                               

             DECEMBER 31,    MARCH 31,
              1995          1996
           --------------  -----------
1996 ..........................     $  1,497                                    
1997 ..........................       1,759        $ 1,532                      
1998 ..........................       1,831          1,800                      
1999 ..........................       1,898          1,867                      
2000 ..........................       1,927          1,930                      
2001 ..........................                      1,967                      
Thereafter ....................      56,116         56,384                      
           --------------  -----------
Total minimum lease payments      $65,028        $65,480                    
           ==============  ===========

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)  

(NOTE E) -- LEASING ARRANGEMENTS:  (Continued)  
Operating lease rent expense for the years ended December 31, 1993,     
December 31, 1994 and December 31, 1995 was $670, $1,372 and $1,527,            
respectively, and for the three months ended March 31, 1995 and March 31,       
1996 was $253 and $396, respectively.                                           

Pursuant to certain of the Company's land leases, rent expense charged to 
operations differs from rent paid because of the effect of free rent periods    
and scheduled rent increases. Accordingly, the Company has recorded deferred    
rent payable of $187, $116 and $103 at December 31, 1994, December 31, 1995     
and March 31, 1996, respectively. Rent expense is calculated by allocating      
total rental payments, including those attributable to scheduled rent           
increases, on a straight-line basis, over the lease term.                       

(NOTE F) -- DUE TO RELATED PARTIES:                                             

The Company was indebted to the Chief Executive Officer ("CEO") and the   
Chief Financial Officer ("CFO") for loans in the aggregate amount of $455 at    
December 31, 1994, due on demand and were paid off during 1995. The loans       
bear interest at LIBOR (6.5% at December 31, 1994). Interest on such loans      
aggregated $40 and $16 for the years ended December 31, 1995 and December 31,   
1994, respectively.                                                             

(NOTE G) -- DEBT:                                                               

[1] SHORT-TERM BORROWING:                                                     

At March 31, 1996, the Company has a revolving line of credit of $5,000,  
expiring on June 30, 1996, bearing interest at prime plus 1.5%. The line is     
collateralized by certain properties of the Company.                            

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)  

(NOTE G) -- DEBT:  (Continued)                                                  
[2] LONG-TERM OBLIGATIONS CONSIST OF THE FOLLOWING:                         

                                                        · Enlarge/Download Table


                                                                           DECEMBER 31,               
                                                                       ------------------             
                                                                                             MARCH 31,
                                                                          1994      1995       1996   
                                                                       --------  --------  -----------
                                                                                                      
Small business term loan bearing interest at 7.45%, payable in                                        
 monthly installments through April 2002 .............................   $  595    $   529            
Construction term loan for up to $1,700 bearing interest at the prime                                 
 rate plus 2%, payable in monthly installments through May 1997                                       
 (10.5% at March 31, 1996) ...........................................              1,457     $1,454  
Mortgage payable bearing interest at LIBOR plus 3.5% (capped at                                       
 10.5%), interest only first year and payable in monthly installments                                 
 through May 2000 ....................................................              3,000      3,000  
Promissory note due April 1996 bearing interest at bank's prime rate                                  
 (8.5% at March 31, 1996) ............................................                231             
Promissory note due August 1997 bearing interest payable monthly at                                   
 8% ..................................................................                998        998  
Mortgage payable due August 2000 bearing interest payable monthly at                                  
 bank's prime rate (8.5% at March 31, 1996) ..........................              1,600      1,600  
Mortgage payable bearing interest at the bank's prime rate plus 1%                                    
 payable in monthly installments through September 1997 (9.5% at                                      
 March 31, 1996) .....................................................                341             
Mortgage payable bearing interest at 9.8%, payable in monthly                                         
 installments through November 1996 ..................................                 37             
Mortgage payable due March 7, 2001 bearing interest at 5.25%  ........                         1,700  
Term loan bearing interest at the prime rate (8.5% at December 31,                                    
 1994) plus 2.5%, payable in varying monthly installments through May                                 
 1998 ................................................................       71                       
Construction term loan for $2,500 bearing interest at the bank's                                      
 prime rate (8.5% at December 31, 1994) plus 2%, payable in monthly                                   
 installments through December 1999 ..................................    2,500                       
One-year revolving working capital line of credit expiring April 2,                                   
 1995, bearing interest at the bank's prime rate (8.5% at December                                    
 31, 1994) plus 1% ...................................................      250                       
Term loan bearing interest at the prime rate (8.5% at December 31,                                    
 1994) plus 4.5% payable in monthly installments beginning March 1995                                 
 through March 1998 ..................................................      250                       
Construction term loan bearing interest at the bank's prime rate                                      
 (8.5% at December 31, 1994) plus 3.5%, payable in monthly                                            
 installments through December 1999. First year interest only  .......      816                       
Term loan bearing interest at 5.8%, payable on April 17, 1995  .......      100                       
Construction loan bearing interest at the bank's prime rate (8.75% at                                 
 December 31, 1994) plus 1.75%, payable in monthly installments                                       
 through May 1, 1998 .................................................    1,746                       
                                                                       --------  --------  -----------
  Total ..............................................................    6,328     8,193      8,752  
Less current portion .................................................    1,074     1,850      1,523  
                                                                       --------  --------  -----------
Noncurrent portion ...................................................   $5,254    $6,343     $7,229  
                                                                       ========  ========  ===========

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FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES  
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)  

(NOTE G) -- DEBT:  (Continued)  
The above loans are collateralized by certain assets of the Company     
including the Hiland golf club, golf driving range facilities, leasehold        
improvements, machinery and equipment and other assets. The con