10-K

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

FORM 10-K

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

For the fiscal year ended December 31, 2001

OR

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

Commission File Number:  0-24583
ADAMS GOLF, INC.
(Exact name of registrant as specified in its charter)

DELAWARE	75-2320087
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
300 Delaware Avenue, Suite 572, Wilmington, Delaware	19801
(Address of principal executive offices)	(Zip Code)

(302) 427-5892

(Registrant's telephone number, including area code)

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

None

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

Common Stock $.001 Par Value

Title of Class

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

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

At March 14, 2002, the aggregate market value of the Registrant's Common Stock held by nonaffiliates of the Registrant was $5,063,772 based on the closing sales price of $0.38 per share of the Registrant's Common Stock on the Nasdaq Stock Market's National Market.

The number of outstanding shares of the Registrant's Common Stock, par value $.001 per share, was 22,480,071 on March 29, 2002.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates certain information by reference from the Registrant's definitive proxy statement, dated April 3, 2002, for the annual meeting of stockholders to be held on May 1, 2002.

Item 1.  Business

General

Adams Golf, Inc. (the "Company" or "Adams Golf") designs, manufactures, markets and distributes premium quality, technologically innovative golf clubs including the Tight Lies GT irons and i-Woods, the Tight Lies family of fairway woods and drivers, the Tom Watson signature series of wedges and the GT Spec Putters.  The Company was incorporated in 1987 and re-domesticated in Delaware in 1990.  The Company completed an internal reorganization in 1997 and now conducts its operations through several direct and indirect wholly-owned subsidiaries.

Segments and Products

Adams Golf operates in a single segment within the golf industry (golf clubs) and offers more than one class of product within that segment.  The Company currently offers the following classes of products:

Drivers

The Company currently offers a variety of different models based on the shape, size and material(s) used (titanium and steel) in the club.  The Company's current driver heads are made of SP-700 Titanium and 17-4 stainless steel or 455 stainless steel depending on the model.  The recently introduced Tight Lies GT 363 and ST 363 models, with a 363cc traditional shaped head and high performance face are made of SP-700 titanium and are designed to deliver maximum distance and increased control for off-center shots.  The Tight Lies GT 363 is available in both a traditional graphite shaft and in Adams Golf's patented graphite tipped (GT) shaft.  The Tight Lies ST 363 driver head has been designed for optimal performance with True Temper Sports' Bi-Matrx, steel tipped shaft.  In addition, the Company recently introduced the Tight Lies GT 303 stainless steel drivers featuring a 455 stainless steel 303cc head.  The drivers are available with either a traditi onal graphite shaft or Adams Golf's proprietary graphite tipped (GT) shafts.  The Company also offers an ST version of the 303cc driver in its Tight Lies ST 303, which is made of 17-4 stainless steel and has also been optimized for use with the Bi-Matrx shaft.  The Company's other drivers include the SC Series drivers and Tight Lies 2 drivers with proprietary technologies that affect the directional spin of the golf ball during flight.

Fairway Woods

The Company currently offers a variety of fairway wood designs all of which incorporate the "upside down" head shape of the Company's most successful product line to date, the Tight Lies fairway woods.  Similar to the driver class, the Company also manufactures and markets products under the names Tight Lies GT and ST in the fairway wood class.  Recently, the Company introduced the Tight Lies GT fairway woods which incorporate the "thin-faced" design of the Tight Lies GT drivers to deliver maximum distance and playability.  The Tight Lies GT fairway woods are currently offered with either a traditional graphite shaft or a proprietary graphite tipped (GT) shaft.  The Tight Lies ST fairway woods feature a 17-4 stainless steel head designed to optimize performance with the steel-tipped Bi-Matrx shafts from True Temper Sports.  The Company also offers the Tight Lies GT i-Wood, which is a hybrid utility club designed to provide the golfer with the distance of a lo ng iron and the playability of a fairway wood.  The Company also continues to offer its original Tight Lies and Tight Lies 2 product lines.

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Irons, Wedges and Putters

Adams Golf currently offers the Tight Lies GT irons which incorporate the Company's popular "upside down" head design along with its innovative, proprietary graphite tipped (GT) shaft.  The GT irons are designed to produce straighter shots, reduced vibration and easy to hit playability.  In addition to the Performance and Tour models of the GT irons, the Company recently introduced the Ultimate GT Iron model which features a graduated offset and center of gravity through the set to provide increased distance and maximum forgiveness for off-center shots.  As a complement to the Tight Lies GT irons, Adams Golf offers the Tom Watson signature wedges with a classic profile and the Company's proprietary graphite tipped (GT) shaft designed to produce less friction and increased feel and playability.  Finally in this, class, the Company has recently introduced the GT Spec line of putters featuring a milled face and body cast from soft stainless steel.  These putters are designed to provide a better feeling, more consistent path to the hole through the use of heavier head weights and the addition of the Company's graphite tipped (GT) shafts.

Percentage of Net Sales by Product Class

	2001	2000	1999
Drivers	25.5%	22.8%	32.5%
Fairway Woods	46.5	70.5	63.6
Irons, Wedges and Other	28.0	6.7	3.9
Total	100.0%	100.0%	100.0%
	======	======	=====

The Company's growth and ultimate success depends, in large part, on its ability to develop and introduce new products that are adopted by consumers in the marketplace.  Historically, a large portion of new golf club technologies and product designs have been met with consumer rejection.  Certain products introduced by the Company have not met the level of consumer acceptance anticipated by management.  No assurance can be given that the Company will be able to continue to design, manufacture and introduce new products that will meet with market acceptance.  Failure by the Company to identify and develop innovative new products that achieve widespread market acceptance would adversely affect the Company's future growth and viability.  Additionally, successful technologies, designs and product concepts are likely to be copied by competitors.  Certain of the Company's products and technologies have been copied by competitors in the past, resulting in, among other things, the diversion of management's attention, confusion in the marketplace and price erosion.  The Company's operating results have fluctuated and could continue to fluctuate as a result of the number, timing and market acceptance of new product introductions by the Company or its competitors.

Design and Development

The Company's design and development team is responsible for developing, testing and introducing new technologies and product designs.  This team is currently led by Barney Adams, the Company's founder, Chairman and inventor of the Tight Lies fairway woods, and Adams Golf's in-house design development team headed by Tim Reed, Vice President-Research and Development.  Prior to joining the Company, Mr. Reed, spent over 18 years in the golf industry and, most notably, was responsible for all new product introductions at TearDrop Golf Company which included TearDrop Putters and Tommy Armour and Ram brand golf clubs.

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Management and the design and development team engages in a four-step process to create new products.

Market Evaluation - Prior to development of any potential concepts, the Company's management team in conjunction with the design and development team performs an extensive evaluation of the current golf market to determine which particular product classes the Company will pursue for concept development.  As a part of the market evaluation, the Company analyzes its current product offerings against current and anticipated competitor product offerings in the context of consumer preferences.  To determine consumer preferences, the Company utilizes its independent sales force, consumer surveys and market intelligence tools that solicit product and design characteristics desired by consumers.  Once the consumer product and design characteristics are determined and evaluated, management and the design and development team determine the product classes and types of products that will be pursued for the upcoming season.

Performance Characteristics - For the product classes and the types of products to be offered within those classes, management evaluates the target market for its new concepts and the performance characteristics that are commensurate with the target market.  Performance characteristics are always predicated on producing high quality, high performance products.  Certain performance characteristics that are evaluated include easy playability, ball flight and spin objectives, desired weight and feel of the product and conformity to U.S. Golf Association ("USGA") golf equipment standards.

Patent Review - The Company considers patent protection for its technologies and product designs to be an important part of its development strategy; however, the Company may not seek patent protection for some of its technologies or product designs.  The Company and its patent attorneys conduct a search of prior art and existing products to determine whether a new product idea may be covered by an existing patent.  Patent review, depending upon the complexity of the design involved, generally requires between three and 18 months to complete, however, this stage of product development typically occurs in conjunction with one or more of the other steps.

Development - Concurrent with the patent review process, the design and development team begins to develop computer generated working designs incorporating the desired performance characteristics which are then modeled using in-house rapid prototyping systems.  During the development phase, substantial consideration is also given to the optimal shaft performance, cosmetics and sound characteristics.  Once prototypes are developed, they are subjected to stringent iterative testing requirements to determine if the product will deliver the desired performance.  In certain circumstances, prototypes are distributed to consumers to solicit feedback with respect to specific product performance characteristics and intangible consumer perception.  Using the feedback of consumers, subsequent modifications are made to the products to achieve the performance requirements desired by the identified target market.  The Company then solicits official USGA approval.&nb sp; Once approved, the product is considered for commercial release.

Historically, the entire process from Market Evaluation through Development has taken from 6 to 12 months to complete.

The Company's research and development expenses were approximately $1,008,000, $2,083,000 and $2,092,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

Patents

The Company's ability to compete effectively in the golf club market will depend, in large part, on its ability to maintain the proprietary nature of its technologies and products.  The Company currently holds 21 U.S. patents relating to certain of its products and proprietary technologies and has four patent applications pending.  Assuming timely payment of maintenance fees, if any, the Company expects that the 21 currently issued patents will expire on various dates between 2009 and 2019.  The Company has been awarded patents with respect to the design of the Tight Lies fairway wood, the SC Series driver, the Tight Lies GT irons, including the Company's graphite tipped (GT) shaft and the Tight Lies ST fairway wood and driver heads.  There can be no assurance, however, as to the degree of protection afforded by these or any other patents held by the Company or as to the likelihood that patents will be issued from the pending patent applications.  Moreover, t hese patents may have limited commercial value or

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may lack sufficient breadth to adequately protect the aspects of the Company's products to which the patents relate.  The Company currently holds six foreign patents and has eleven foreign patent applications pending.  The U.S. patents held by the Company do not preclude competitors from developing or marketing products similar to the Company's products in international markets.

There can be no assurance that competitors, many of whom have substantially greater resources than the Company and have made substantial investments in competing products, will not apply for and obtain patents that will prevent, limit or interfere with the Company's ability to make and sell its products.  The Company is aware of numerous patents held by third parties that relate to products competitive to the Company's.  There is no assurance that these patents would not be used as a basis to challenge the validity of the Company's patent rights, to limit the scope of the Company's patent rights, or to limit the Company's ability to obtain additional or broader patent rights.  A successful challenge to the validity of the Company's patents may adversely affect the Company's competitive position.  Moreover, there can be no assurance that such patent holders or other third parties will not claim infringement by the Company with respect current and future products. & nbsp;Because U.S. patent applications are held and examined in secrecy, it is also possible that presently pending U.S. applications will eventually issue with claims that may be infringed by the Company's products or technologies.  The defense and prosecution of patent suits is costly and time-consuming, even if the outcome is favorable.  This is particularly true in foreign countries where the expenses associated with such proceedings can be prohibitive.  An adverse outcome in the defense of a patent suit could subject the Company to significant liabilities to third parties, require the Company and others to cease selling products, or require disputed rights to be licensed from third parties.  Such licenses may not be available on satisfactory terms, or at all.

Despite the Company's efforts to protect its patent and other intellectual property rights, unauthorized parties have attempted and are expected to continue to attempt to copy all, or certain aspects of, the Company's products.  Policing unauthorized use of the Company's intellectual property rights can be difficult and expensive, and while the Company generally takes appropriate action whenever it discovers any of its products or designs have been copied, knock-offs and counterfeit products are a persistent problem in the performance-oriented golf club industry.  There can be no assurance that the Company's means of protecting its patent and other intellectual property rights will be adequate.

Raw Materials, Manufacturing and Assembly

The Company manages all stages of manufacturing, from sourcing to assembly, in order to maintain a high level of product quality and consistency.  The Company establishes product specifications, selects the material used to produce the components and tests the specifications of all components received by the Company.

As a part of its operational restructuring executed in 2001, the Company elected to outsource substantially all of its manufacturing processes to a third-party service provider.  The service provider is compensated on a per piece basis for every golf club assembled and is allowed to utilize certain equipment and production space previously utilized by the Company for its internal manufacturing processes.  All products manufactured by the service provider continue to be subject to the same quality control and product specification requirements previously instituted by the Company.  Management believes that outsourcing its manufacturing process to a third party will, in addition to certain other benefits, reduce costs associated with seasonal production requirements.

Consequently, as a part of the Company's quality control program, the Company has established a quality assurance program at the manufacturing facilities of its component part suppliers to monitor adherence to design specifications.  Upon arrival at the Company's manufacturing facilities in Plano, Texas, the components used in the Company's clubs are again checked to ensure consistency with strict design specifications.  Golf clubs are then assembled by manufacturing personnel using the appropriate component parts.

The Company has redundant sources of supply for each of the component parts used in the manufacture of the original Tight Lies.  However, the components used in the manufacture of all other product lines are currently selected from a small number of suppliers, each of which is sourced from a single supplier within that group.  Therefore, for all products other than the original Tight Lies, the Company effectively has a single source of supply.  Substantially all of the Company's fairway wood, driver and iron component parts are manufactured in Taiwan, China and Mexico.  Both multi-material shafts, Graphite Tip (GT) and Bi-Matrx steel tip (ST) shafts used

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 in some of the Company's product lines are available from a sole supplier, True Temper Sports.   The Company has not entered into a long-term supply agreement with any of its component part suppliers, including True Temper Sports.

The Company could, in the future, experience shortages of components or periods of increased price pressures which could have a material adverse effect on the Company's business, results of operations, financial position or liquidity.  In the event that the Company was unable to obtain adequate supplies or experienced a supply interruption of its proprietary Graphite Tip (GT) shaft from the sole manufacturer, True Temper Sports, the Company could experience up to a 25% reduction in its annual net sales focused primarily in the iron and wedge product class.  With respect to other component parts utilized in the manufacture of its current products, although the Company would be able to identify alternative manufacturers to source the materials, it would likely result in delays during the transition period which could have a material adverse impact on the Company's business, results of operations, financial position and liquidity.  In addition, any failure to obtain adequate suppli es or fulfill customer orders on a timely basis could have a material adverse effect on the Company's financial position or liquidity, business or results of operations.

Marketing

The goals of the Company's marketing efforts are to build its brand identity and drive sales through its retail distribution channels.  To accomplish these goals, Adams Golf uses traditional image-based advertising, engages in promotional activities, and capitalizes on its relationships with well known golf personalities.

Traditional Image-Based Advertising - The Company's primary advertising efforts focus on traditional image-based advertising.  This advertising includes a series of commercials which run during major golf tournaments and golf related and other programs; newspaper, magazine and radio ad campaigns; sponsorship of a developmental professional tour and sponsorship of selected golf tournaments.

Promotional Activities - The Company engages in a variety of promotional activities to sell and market its products.  Such activities have included consumer sweepstakes; promotional giveaways with certain purchases, including items such as instructional videos, gift packaging and golf bags; and other promotional campaigns.

Relationships with Professional Golfers - The Company has entered into endorsement contracts with professional golfers on the PGA and Senior PGA Tours and believes that having a presence on these tours promotes the validity of its product lines and builds brand awareness.  In August 1999, the Company entered into a five year endorsement agreement with Tom Watson which will expire August 31, 2004.  Under the terms of the agreement, Mr. Watson is entitled to an annual retainer, options to purchase a certain number of shares of the Company's stock, a royalty on sales of the Tight Lies GT irons and bonuses contingent on levels of performance in televised golf events.  In exchange for the compensation noted above, Mr. Watson must meet and maintain certain performance requirements which include, but are not limited to, exclusive use of the Company's products, participation in minimum number of events and public appearances and feedback on performance of the Company's products.& nbsp; In addition to the agreement with Mr. Watson, the Company has entered into endorsement agreements with other well-known professionals such as Bruce Lietzke, Larry Nelson, Sammy Rachels, Walter Hall and Jose Maria Canizares, which expire at various dates through 2004 and require use of certain of the Company's products  The Company also continues to maintain an endorsement from Hank Haney which expires February 28, 2003.  In addition, to Mr. Haney's endorsement, he is required to exclusively use the Company's products, make a minimum number of appearances and provide feedback on performance of the Company's products.

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Markets and Methods of Distribution

The Company sells its products through on- and off-course golf shops, selected sporting goods retailers and through its international subsidiary, agent and distributor network.

Sales to Retailers - The Company sells a majority of its products to selected retailers.  To maintain its high quality reputation and generate retailer loyalty, the Company currently does not sell its products through price sensitive general discount warehouses or membership clubs.  The Company believes its selective retail distribution strategy helps its retailers maintain profitable margins and maximize sales of the Company's products.  For the year ended December 31, 2001 sales to retailers accounted for approximately 81% of the Company's total net sales, as compared to approximately 82% for the year ended December 31, 2000.

Adams Golf maintains a field sales staff that at March 14, 2002 consisted of 35 independent sales representatives and three regional vice presidents who are in regular personal contact with the Company's retail accounts (approximately 4,000 retailers).  These sales representatives and regional vice presidents are supported by five inside sales representatives who maintain contact with the Company's retailers nationwide.  The inside sales representatives also serve in a customer service capacity as the Company believes that superior customer service can significantly enhance its marketing efforts.

International Sales - International sales are made primarily in Europe, Canada and Japan.  International sales in the Europe are made through a wholly-owned subsidiary of the Company, whereas sales in Canada are made through an agency relationship established in the latter part of 2000.  Commencing January 1, 2002, sales to Japan were made through an independent distributor.  Prior to that date, sales were made through a wholly-owned subsidiary of the Company.  International sales to other countries throughout the world are made through a network of approximately 40 independent distributors.  For the year ended December 31, 2001, 2000 and 1999, international sales accounted for approximately 19.3%, 15.8% and 13.7% of the Company's net sales.

Web Site - The Company maintains a Web site at adamsgolf.com, which allows the visitor to access certain information about the Company's products and to locate retailers.  The Company does not currently sell its products via its Web site.

Unauthorized Distribution of Counterfeit Clubs

Despite the Company's efforts to limit its distribution to selected retailers, some quantities of the Company's products have been found in unapproved outlets or distribution channels.  The existence of a "gray market" in the Company's products can undermine the sales of authorized retailers and foreign wholesale distributors who promote and support the Company's products, and can injure the Company's image in the minds of its customers and consumers.  Adams Golf makes efforts to limit or deter unauthorized distribution of its products, but does not believe the unauthorized distribution of its products can be totally eliminated.  The Company does not believe that the unauthorized distribution of its clubs has had or will have a material adverse effect on the Company's results of operations, financial condition or competitive position, although there can be no assurance as to future results.  In addition, the Company is occasionally made aware of the existence of counte rfeit copies of its golf clubs particularly in foreign markets.  The Company takes action in these situations through local authorities and legal counsel where practical.  The Company does not believe that the availability of counterfeit clubs has had or will have a material adverse effect on the Company's results of operations, financial condition or competitive position, although there can be no assurance as to future results.

Industry Specific Requirements

The Company performs ongoing credit evaluations of its wholesale customers' financial condition and generally provides credit without the requirement of collateral from these customers.  The Company believes it has adequate reserves for potential credit losses. For the year ended December 31, 2001, the Company experienced a reduced level of delinquent or uncollectible accounts as compared to 2000.  However, Company does not anticipate that current trends will continue given the current domestic economic conditions.  Additionally, approximately 28.5% of the Company's net sales for the year ended December 31, 2001 were derived from nine customers.  Should these or the Company's other customers fail to meet their obligations to the Company, the Company's results of operations

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and cash flows would be adversely impacted.  Due to industry sensitivity to consumer buying trends and available disposable income, the Company has in the past extended payment terms to specific retail customers.  Issuance of these terms (i.e. greater than 30 days or specific dating) is dependent on the Company's relationship with the customer and the customer's payment history.  Payment terms are extended to selected customers typically during off-peak times in the year in order to promote the Company's brand name and to assure adequate product availability often to coincide with planned promotions or advertising campaigns.  Although a significant amount of the Company's sales are not affected by these terms, the extended terms do have a negative impact on the Company's financial position and liquidity.  The Company expects to continue to selectively offer extended payment terms in the future, depending upon known industry trends and the Co mpany's financial plans.

In addition to extended payment terms, the nature of the industry also requires that the Company carry a substantial level of inventory due to the lead times associated with purchasing components overseas coupled with the seasonality of customer demand. The Company's inventory balances were approximately $17,418,000 and $13,779,000 at December 31, 2001 and 2000, respectively.

Major Customers

The Company is currently dependent on nine customers which collectively comprise approximately 28.5% of net revenues for the year ended December 31, 2001.  Of these customers, three customers individually represented greater than 5% of net revenues for the year ended December 31, 2001, but no customer represented greater than 10% of the Company's net revenues during that period.  The loss of one or more of these customers would have a material adverse effect on consolidated revenues.

Seasonality and Quarterly Fluctuations

Golf generally is regarded as a warm weather sport and net sales of golf equipment have been historically strongest for the Company during the first and second quarters which ensures adequate levels of inventory at retail for the golf season.  In addition, net sales of golf clubs is dependent on discretionary consumer spending, which may be affected by general economic conditions.  A decrease in consumer spending generally could result in decreased spending on golf equipment, which could have a material adverse effect on the Company's business, operating results and financial condition.  In addition, the Company's future results of operations could be affected by a number of other factors, such as unseasonable weather patterns; demand for and market acceptance of the Company's existing and future products; new product introductions by the Company's competitors; competitive pressures resulting in lower than expected selling prices; and the volume of orders that are received and t hat can be fulfilled in a quarter.  Any one or more of these factors could adversely affect the Company or result in the Company failing to achieve its expectations as to future sales or net income.

Because most operating expenses are relatively fixed in the short term, the Company may be unable to adjust spending sufficiently in a timely manner to compensate for any unexpected sales shortfall which could materially adversely affect quarterly results of operations and liquidity.  If technological advances by competitors or other competitive factors require the Company to invest significantly greater resources than anticipated in research and development or sales and marketing efforts, the Company's business, operating results or financial condition could be materially adversely affected.  Accordingly, the Company believes that period-to-period comparisons of its results of operations should not be relied upon as an indication of future performance.  In addition, the results of any quarter are not indicative of results to be expected for a full fiscal year.  As a result of fluctuating operating results or other factors discussed above and below, in certain future quarters the Company's results of operations may be below the expectations of public market analysts or investors.  In such event, the market price of the Company's common stock could be materially adversely affected.

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Backlog

The amount of the Company's backlog orders at any particular time is affected by a number of factors, including seasonality and scheduling of the manufacturing and shipment of products.  At March 14, 2002, the Company had $297,000 of orders on backlog as compared to $1,516,000 at March 19, 2001.  Management does not anticipate that a significant level of orders will remain unfilled within the current fiscal year.  Management has concluded that, for this purpose, a backlog of greater than 1% of total annual net sales would be signficant.  In addition, the Company believes that the amount of its backlog is not an appropriate indicator of levels of future production.

Competition

The golf club market is highly competitive.  The Company competes with a number of established golf club manufacturers, some of which have greater financial and other resources.  The Company's competitors include Callaway Golf Company, adidas-Saloman AG (Taylor Made - adidas Golf), Fortune Brands, Inc. (Titleist and Cobra) and Karsten Manufacturing Company (PING), among others.  The Company competes primarily on the basis of performance, brand name recognition, quality and price.  The Company believes that its ability to market its products through multiple distribution channels, including on- and off- course golf shops and selected sporting goods retailers, is important to the manner in which the Company competes.  The purchasing decisions of many golfers are often the result of highly subjective preferences, which can be influenced by many factors including, among others, advertising, media, promotions and product endorsements.  These preferences may also be subject to rapid and unanticipated changes.  The Company could face substantial competition from existing or new competitors who introduce and successfully promote golf clubs that achieve market acceptance.  Such competition could result in significant price erosion or increased promotional expenditures, either of which could have a material adverse effect on the Company's business, operating results and financial condition.  There can be no assurance that Adams Golf will be able to compete successfully against current and future sources of competition or that its business, operating results or financial condition will not be adversely affected by increased competition in the market in which it operates.

The golf club industry is generally characterized by rapid and widespread imitation of popular technologies, designs and product concepts.  Due to the success of the Tight Lies fairway woods, the Company experienced several competitors introducing products similar to the Tight Lies fairway woods.  The Company may face competition from manufacturers introducing other new or innovative products or successfully promoting golf clubs that achieve market acceptance.  The failure to compete successfully in the future could result in a material deterioration of customer loyalty and the Company's image, and could have a material adverse effect on the Company's business, results of operations, financial position or liquidity.

The introduction of new products by the Company or its competitors can result in closeouts of existing inventories at both the wholesale and retail levels.  Such closeouts are likely to result in reduced margins on the sale of older products, as well as reduced sales of new products given the availability of older products at lower prices.

Domestic and Foreign Operations

Domestic and foreign net sales for the year ended December 31, 2001, 2000 and 1999 are comprised as follows:

	2001		2000		1999
Domestic	$ 39,675,000	80.7%	$ 35,743,000	84.2 %	$ 47,175,000	86.3 %
Foreign	9,495,000	19.3	6,706,000	15.8	7,477,000	13.7
Total	$ 49,170,000	100.0%	$ 42,449,000	100.0 %	$ 54,652,000	100.0 %
	=========	======	=========	======	=========	======

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Employees

At March 14, 2002, the Company had 62 full-time employees including 23 engaged in order fulfillment, 5 in research and development and quality control, 8 in sales support and 26 in management and administration.  The Company's employees are not unionized.  Management believes that its relations with its employees are good.

Item 2.   Properties

The Company's administrative offices and manufacturing facilities currently occupy approximately 86,000 square feet of space in Plano, Texas.  This facility is leased by the Company pursuant to a lease agreement expiring in 2004 and may be extended for an additional five years.  The Company maintains the right to terminate the lease if it moves to a larger facility owned by the current lessor.  The Company believes that these facilities will be sufficient for the forseeable future.

Item 3.   Legal Proceedings

Beginning in June 1999, the first of seven class action lawsuits was filed against the Company, certain of its current and former officers and directors, and the three underwriters of the Company's initial public offering ("IPO") in the United States District Court of the District of Delaware.  The complaints alleged violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, in connection with the Company's IPO.  In particular, the complaints alleged that the Company's prospectus, which became effective July 9, 1998, was materially false and misleading in at least two areas.  Plaintiffs alleged that the prospectus failed to disclose that unauthorized distribution of the Company's products (gray market sales) allegedly threatened the Company's long-term profits. Plaintiffs also alleged that the prospectus failed to disclose that the golf equipment industry suffered from an oversupply of inventory at the retail level, which had an adverse impact on the Company's sales.  On May 17, 2000, these cases were consolidated into one amended complaint, and a lead plaintiff was appointed.  The plaintiffs were seeking unspecified amounts of compensatory damages, interests and costs, including legal fees.  On December 10, 2001, the United States District Court for the District of Delaware dismissed the consolidated, amended complaint citing the plaintiffs failed to plead any facts supporting their claim that the Company, its officers, directors or underwriters violated the federal securities laws.  On January 14, 2002, the plaintiffs filed a motion for leave an amended claim to file an amended complaint.  In the motion, Plaintiffs allege that, if given another opportunity, they would be able to amend the original causes of action to state actionable claims.  On January 24, 2002, the Company filed an opposition to the plaintiff's motion and is awaiting a response from the court.

The Company maintains directors' and officers' and corporate liability insurance to cover risks associated with these securities claims filed against the Company or its directors and officers.

At this time it is not possible to predict whether the Company will incur any liability or to estimate the damages, or the range of damages, that the Company might incur in connection with the action.  The Company is also not able to estimate the amount, if any, of reimbursements that it would receive from insurance policies should damages with respect to the above actions be incurred.

In January 2001, the Company was notified that it was part of an investigation by the Federal Trade Commission concerning practices surrounding manufacturers' minimum advertised price policies and Internet retailers.  As of March 29, 2002, the Company has yet to receive any additional correspondence beyond the initial request for information submitted in January 2001.  Management does not anticipate future inquiries regarding the matter and in that context does not anticipate any potential liability.  No assurance can be given that the Commission will not continue to assess the competitive landscape of the industry and direct future inquires to the Company.  Given those circumstances, no assurance can be given that the future inquiries by the Commission will not have a material adverse effect on the Company's results of operations, financial condition, or competitive position.

From time to time the Company is engaged in various legal proceedings in the normal course of business.  The ultimate liability, if any, for the aggregate amounts claimed cannot be determined at this time.  However, the Company, based on consultation with legal counsel, is of the opinion that there are no matters pending or threatened which could have a material adverse effect on the Company's financial condition, results of operations or liquidity.

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

Not Applicable

10

PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters

The Company's common stock is currently listed and traded on the Nasdaq Stock Market's National Market under the symbol "ADGO".  The prices in the table below represent, for the periods indicated, the quarterly high and low sales price for Adams Golf, Inc. common stock as reported by the Nasdaq Stock Market.  All price quotations represent prices between dealers, without retail mark-ups, mark-downs or commissions and may not represent actual transactions.

	High	Low
2001
First Quarter	$  1.906	$  0.375
Second Quarter	1.711	0.586
Third Quarter	0.953	0.250
Fourth Quarter	0.555	0.281
2000
First Quarter	$  2.625	$  1.531
Second Quarter	2.000	0.813
Third Quarter	1.712	0.970
Fourth Quarter	1.500	0.250

On March 14, 2002, the last reported sale price of the common stock on the Nasdaq Stock Market's National Market was $0.38 per share.  At March 14, 2002, Adams Golf, Inc. has approximately 6,000 stockholders based on the number of holders of record and an estimate of the number of individual participants represented by security position listings.

No dividends have been declared or paid relating to the Company's common stock.

On July 30, 2001, the Company was notified by Nasdaq that it had failed to maintain the minimum $1.00 bid price requirement for 30 consecutive trading days and that the 90 day "cure-period" for which the Company's stock would need to satisfy the minimum bid requirement of $1.00 for ten consecutive trading days had begun.  Given the events of September 11, 2001 in New York City and Washington D.C., Nasdaq had provided temporary relief with respect to the minimum bid price requirement until January 2, 2002 and suspended the Company's 90 day cure period initiated on July 30, 2001.  Effective January 2, 2002, Nasdaq reinstated the minimum bid price requirement and on February 14, 2002, again notified the Company that it had failed to meet the minimum $1.00 bid price for 30 consecutive trading days and that the 90 day "cure period" had been initiated.  If the Company's stock is unable to satisfy the minimum bid requirement of $1.00 for ten consecutive trading days during the 90 day " cure period," Nasdaq will provide the Company with written notification that it has determined to delist the Company's common stock from the National Market System.  The Company would be entitled to request a review of that determination or elect to phase down to the Nasdaq SmallCap Market in accordance with the program described below.

On February 6, 2002 and for a one year period thereafter, the Securities and Exchange Commission approved a pilot program modifying the minimum bid price grace period for the Nasdaq SmallCap Market.  Under the program, the Company could elect to phase down to the SmallCap Market at the expiration of the 90 day National Market "cure period" at which time the Company would receive an additional 90 days to achieve the minimum bid requirement of $1.00 for ten consecutive trading days.  Should the Company be unable to achieve the minimum bid requirement while continuing to demonstrate compliance with the core initial listing standards of the SmallCap Market of either (i) net income of $750,000, (ii) stockholders' equity of $5 million or (iii) market capitalization of $50 million, the Company will be afforded an additional 180 day grace period to regain compliance.  Should the Company be unable to regain compliance, the Company's common stock would be delisted from the Nasdaq SmallCap Market at which time it could be eligible to trade on the electronic bulletin board, rather than either the Nasdaq National Market or SmallCap Systems.  The inability to maintain a listing on the Nasdaq Stock Market could adversely affect the ability or willingness of investors to purchase the common stock, which, in turn, would likely severely affect the market liquidity of the Company's securities.

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Item 6.   Selected Financial Data

The selected financial data presented below is derived from the Company's consolidated financial statements for the years ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively.  The data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," the consolidated financial statements and related notes, and other financial information included elsewhere in this document.

	Year Ended December 31,
	2001	2000	1999	1998	1997
	(in thousands, except per share data)
Consolidated Statements of Operations Data:
Net Sales	$ 49,170	$ 42,449	$ 54,652	$ 85,989	$ 37,330
Operating income (loss)	(13,185)	(38,509)	(18,735)	18,500	(3,969)
Net income (loss)	$(13,409)	$(37,241)	$(10,589)	$ 12,510	$ (4,654)
	=======	=======	=======	======	======
Income (loss) per common share(1) - basic and diluted	$    (0.60)	$   (1.66)	$   (0.47)	$    0.61	$   (0.37)
	=======	=======	=======	======	======
Weighted average common shares(1):
Basic	22,480	22,480	22,480	20,435	12,519
	=======	=======	=======	======	======
Diluted	22,480	22,480	22,480	20,677	12,519
	=======	=======	=======	======	======

	December 31,
	2001	2000	1999	1998	1997
	(in thousands)
Consolidated Balance Sheet Data:
Total assets	$ 34,810	$ 47,786	$ 83,210	$ 96,906	$ 17,360
Total debt (including current maturities)	--	--	--	175	--
Stockholders' equity	$ 27,622	$ 41,252	$ 78,371	$ 88,190	$   8,325

______________________

(1) See Note 1 of Notes to Consolidated Financial Statements for information concerning the calculation of income (loss) per common share and weighed average common shares outstanding.

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Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company designs, manufactures, markets and distributes premium quality, technologically innovative golf clubs including the Tight Lies GT irons and i-Woods, the Tight Lies family of fairway woods and drivers, the Tom Watson signature series of wedges and the GT Spec Putters.  Founded in 1987, the Company operated initially as a components supplier and contract manufacturer.  Thereafter, the Company established its custom fitting operation and today the Company markets a full line of innovative, high quality, professionally engineered golf clubs to players at all skill levels.

The Company's net sales are primarily derived from sales to on- and off- course golf shops and selected sporting goods retailers and, to a lesser extent, international distributors.  No assurances can be given that demand for the Company's current products or the introduction of new products will allow the Company to achieve historical levels of sales in the future.

The Company manages all stages of manufacturing, from sourcing to assembly, in order to maintain a high level of product quality and consistency.  The Company establishes product specifications, selects the material used to produce the components and tests the specifications of all components received by the Company.  

Consequently, as a part of the Company's quality control program, the Company has established a quality assurance program at of manufacturing facilities of its component parts to monitor adherence to design specifications.  Upon arrival at the Company's manufacturing facilities in Plano, Texas, the components used in the Company's clubs are again checked to ensure consistency with strict design specifications.  Golf clubs are then assembled by a third party service provider using the appropriate component parts.  The Company has redundant sources of supply for each of the component parts used in the manufacture of the original Tight Lies.  However, the components used in the manufacture of all other product lines are generally selected from a small number of suppliers each of which is sourced from a single supplier within that group.  Therefore, for all products other than the original Tight Lies, the Company effectively has a single source of supply. &n bsp;Substantially all of the Company's fairway wood, driver and iron component parts are manufactured in Taiwan, China and Mexico.  Both multi-material shafts, Graphite Tip (GT) and Bi-Matrx steel tip (ST) shafts used in some of the Company's product lines are available from a sole supplier, True Temper Sports

Costs of the Company's clubs consist primarily of component parts, including the head, shaft and grip.  To a lesser extent the Company's cost of goods sold includes contract labor, occupancy and shipping costs in connection with the inspection, testing, assembly and distribution of its products.

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Results of Operations

The following table sets forth operating results expressed as a percentage of net sales for the periods indicated

	Years Ended December 31,
	2001	2000	1999
Net sales	100.0 %	100.0 %	100.0  %
Cost of goods sold	49.7	46.4	33.9
Gross profit	50.3	53.6	66.1
Operating expenses:
Research and development expenses	2.1	4.9	3.8
Sales and marketing expenses	49.9	87.5	76.4
General and administrative expenses:
Provision for bad debts	1.2	10.5	3.1
Other	17.3	23.5	17.1
Settlement expense	3.2	--	--
Restructuring expense	3.4	--	--
Write-off of prepaid Professional Services Agreement	--	17.9	--
Total operating expenses	77.1	144.3	100.4
Operating loss	(26.8)	(90.7)	(34.3)
Interest income, net	0.8	3.2	3.1
Other income (expense), net	(0.1)	0.4	--
Loss before income taxes	(26.1)	(87.1)	(31.2)
Income tax expense (benefit)	1.2	0.6	(11.8)
Net loss	(27.3)%	(87.7)%	(19.4)%
	======	======	======

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Net sales increased 15.8% to $49.2 million for the year ended December 31, 2001 from $42.4 million for 2000, primarily due to significant increases in sales of mass produced irons and drivers.  Net sales of irons increased 268.2% to $12.5 million or 25.4% of net sales from $3.4 million or 8.0% of net sales for the years ended December 31, 2001 and 2000, respectively.  The increase is primarily the result of the introduction of the Tight Lies GT irons in the fall of 2000 which translated into increased volume in 2001.  The Tight Lies GT irons represent the Company's first mass produced set of irons.  Prior to their introduction, the Company's participation in the iron category was limited to custom irons sold through the Company's custom fitting accounts.  Also contributing to the increase in net sales for the year ended December 31, 2001 as compared to 2000, was an increase in driver sales of $2.8 million primarily the result of the introduction of the Tight Lies ST Driver in January 2001.  Increased revenues were partially offset by reduced sales for the Tight Lies 2 and SC Driver product lines.  Net sales of drivers were $12.5 million or 25.5% of net sales as compared to $9.7 million or 22.8% of net sales for the periods ended December 31, 2001 and 2000, respectively.  Approximately $2.9 million of net sales for the year ended December 31, 2001 was derived from the closeout of the SC Series driver.  The increases in the iron and driver categories were partially offset by reduced levels of fairway wood sales.  The reduced levels of fairway wood revenues was primarily the result of the diversification of the Company's revenues to a variety of new product classes.  Net sales of fairway woods decreased to $22.8 million or 46.5% from $29.9 million or 70.5% for the years ended December 31, 2001 and 2000, respectively.  Tight Lies ST fairway woods and Tight Lies GT i-Woods, each introduced in Janua ry 2001 generated $14.1 million of the $22.9 million in net sales of fairway woods for the year ended December 31, 2001 with the remainder generated by the original Tight Lies and Tight Lies 2 product lines.

Net sales of the Company's products outside the U.S. increased to $9.5 million or 19.3% of net sales, from $6.7 million or 15.8% of net sales for the years ended December 31, 2001 and 2000, respectively, with growth focused primarily in Canada and Europe.

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Cost of goods sold increased to $24.4 million or 49.7% of net sales, for the year ended December 31, 2001 from $19.7 million or 46.4% of net sales, for the comparable period of 2000.  The overall dollar increase is primarily the result of a 10.9% increase in units sold during the year ended December 31, 2001 as compared to 2000 coupled with changes in the product mix to the higher cost ST and GT product lines.  In addition, cost of goods sold for the year ended December 31, 2000 included $2.5 million of costs associated with the write-down of certain inventories of the SC Series driver, original Tight Lies and Tight Lies 2 product lines to net realizable value coupled with $0.7 million of costs associated with a sales program whereby one additional SC Series driver was given for every four held by retailers as compensation for reductions in the suggested retail selling price.  Excluding the impact of this inventory write-down and sales program above, cost of goods sold as a perc entage of net sales was 38.9% for the year ended December 31, 2000 as compared to 49.7% for the comparative period of 2001.  The increase in cost of goods sold as a percentage of net sales of 10.8% is primarily the result of 40.7% of net sales being generated by the ST Driver and GT irons which generally produce a lower gross margin on a per unit basis compared to historical levels.  In addition, the Company reduced the wholesale selling price of the original Tight Lies, Tight Lies 2 and SC driver product lines during 2001.  These products generated approximately 6.2 fewer basis points of margin in the aggregate as compared to the similar period in 2000.  The Company anticipates that cost of goods sold as a percentage of net sales will continue at current levels given the utilization of more costly component parts and expected wholesale selling price reductions for maturing product lines.

Operating expenses are primarily comprised of selling and marketing expenses, general and administrative expenses and research and development expenses.  In addition, for the year ended December 31, 2001, operating expenses included non-recurring expenses associated with a corporate restructuring plan and costs associated with the settlement of the Company's dispute with Nicholas A. Faldo regarding the provisions of his prior professional services agreement with the Company.

Selling and marketing expenses decreased to $24.5 million from $37.1 million for the years ended December 31, 2001 and 2000, respectively.  The decrease is primarily attributable to reduced advertising costs of $9.1 million for television and print media associated with the launch of the Tight Lies 2 fairway woods and Tight Lies GT irons in 2000 and an overall decrease in marketing expenses generally.  To a lesser extent, the decrease is associated with reduced creative costs associated with commercials of $1.2 million and reduced royalties of $1.4 million resulting from the cessation of Adams Golf Ltd.'s relationship with Mr. Faldo.  In addition, payroll expense decreased $0.9 million as a result of the Company's corporate restructuring executed in August 2001 which resulted in infrastructure reductions and the conversion of the domestic sales organization to an independent (non-employee) sales force.  Also, depreciation was reduced by $0.5 million resulting from infr astructure reductions associated with the Company's direct to consumer sales organization.  These decreases are partially offset by costs associated with the Company's sales agency relationship in Canada, established in August 2000, which resulted in costs of $0.9 million for the year ended December 31, 2001.  Considering the corporate restructuring executed during 2001, it is expected that compensation related expenses will be at reduced levels in future comparative periods.

General and administrative expenses, including provisions for bad debts, decreased to $9.1 million from $14.5 million for the years ended December 31, 2001 and 2000, respectively.  The decrease is primarily the result of a decrease in the provision for bad debts from $4.4 million to $0.6 million for the years ended December 31, 2000 and 2001, respectively.  The decrease in the provision for bad debts on a year over year basis is primarily due to a general downturn in the sales of golf equipment retailers and the attendant bankruptcies and financial difficulties experienced by those customers during 2000.  This situation eased somewhat in the year ended December 31, 2001.  The decrease in general and administrative expenses is also attributed to a reduction in payroll related expenses of $1.3 million resulting from an overall reduction in infrastructure attributable to attrition and the corporate restructuring executed in 2001.

15

Research and development expenses, primarily consisting of costs associated with development of new products, were $1.0 million for the year ended December 31, 2001, as compared to $2.1 million for the year ended December 31, 2000.  The decrease in the research and development expenses was primarily due to $0.8 million being included in the amounts for the year ended December 31, 2000 resulting from amortization of compensation resulting from stock granted to Nicholas A. Faldo in accordance with his prior professional services agreement during the year ended December 31, 2000.  Adams Golf, Ltd. declared Mr. Faldo in material breach of his contract in 2000 and in 2000, the Company wrote off the value of the remaining unamortized compensation as a separate charge to operations because it would not provide future benefit to the Company.

During the year ended December 31, 2001, an agreement was reached with Mr. Faldo in settlement of the dispute regarding provisions of his prior professional services agreement with the Company.  Mr. Faldo received $0.5 million in connection with the settlement.  In addition, Mr. Faldo will receive $0.5 million on July 15, 2002 and a series of annual installments for the years 2003 through 2011 aggregating to $2.0 million.  In addition, Mr. Faldo is entitled to receive up to an additional $2.0 million contingent on the Company reaching certain financial performance thresholds. For the year ended December 31, 2001, the Company recorded a net charge of $1.6 million related to the settlement.  The charge is comprised of $2.7 million in expense representing the present value of the stream of future payments through 2011 under the provisions of the settlement utilizing the Company's incremental borrowing rate of 6.04%.  In accordance with the terms of the settleme nt, Mr. Faldo waived all future rights to unpaid royalties of $1.1 million associated with his prior professional services agreement with the Company.

During the year ended December 31, 2001, the Company executed an operational restructuring plan, which reduced its employee staff by 55 positions primarily associated with the conversion of its sales staff to independent (non-employee) sales representatives.  In addition, the Company eliminated 76 non-exempt positions resulting from the outsourcing of the Company's golf club assembly process.  In total, the operational restructuring plan resulted in severance related costs of approximately $1.0 million.  In addition, the Company wrote-off the remaining unamortized portion of goodwill of $0.6 million associated with its wholly-owned subsidiary in Japan.  This write-off resulted from a further revision of the Company's business model, in which management determined that it was beneficial to service the Japanese market through a distributor relationship rather than through a wholly-owned subsidiary.  Therefore, through comparison of the expected future cash flow s associated with Adams Golf Japan, Inc. to the carrying value of the remaining goodwill and long-lived assets, it was determined that the remaining unamortized portion was impaired.

As a result of the above, the Company's operating loss was $13.2 million for the year ended December 31, 2001 compared to $38.5 million for the year ended December 31, 2000.

For the year ended December 31, 2001, the Company recorded income tax expense of $0.6 million primarily representing taxes owed in settlement of Internal Revenue Service audits for the tax years ended December 31, 1997, 1998 and 1999.  In addition, for the year ended December 31, 2001, the Company did not recognize any income tax benefit due to the inability to conclude based on a weighting of objective evidence, on a more likely than not basis that deferred income tax benefits will ultimately be realized

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Net sales decreased 22.3% to $42.4 million for the year ended December 31, 2000 from $54.7 million for 1999, primarily due to a lower volume of fairway woods and SC Series drivers being sold as a result of competition from other equipment manufacturers.  Net sales of fairway woods decreased 14.0% from $34.8 million for the year ended December 31, 1999 to $29.9 million for the year ended December 31, 2000.  The decrease is primarily the result of significantly reduced volumes of the original Tight Lies line coupled with reductions in the wholesale selling price for this product line.  These factors were partially offset by increased volume of the Tight Lies 2 line, which was introduced in October 1999.  Net sales of drivers decreased 45.5% to $9.7 million for the year ended December 31, 2000 from $17.8 million in 1999.  The decrease in overall driver sales was due primarily to a 38% overall reduction in the wholesale selling price and reduced volumes resulting from increased competition in the driver category.  Net sales for the year ended December 31, 2000 were positively impacted by the Company's entry into the iron category with the introduction of the Tight Lies GT irons in November 2000.  Net sales of the iron and wedge category increased 106.9% from $1.6 million for the year ended December 31, 1999 to $3.4 million for 2000.  Net sales of 

16

the Company's products outside the U.S. decreased to $6.7 million from $7.5 million for the years ended December 31, 2000 and 1999, respectively, but increased as a percentage of net sales to 15.8% from 13.7%.

Cost of goods sold increased to $19.7 million or 46.4% of net sales from $18.5 million or 33.9% of net sales for the years ended December 31, 2000 and 1999, respectively.  The increase as a percentage of net sales is partially due to cost of goods sold for the year ended December 31, 2000 including $2.5 million of additional expense associated with the write down of inventories of SC Series drivers, Tight Lies and Tight Lies 2 product lines to their estimated net realizable value which approximated 5.9% of net sales.  In addition, during 2000 the Company initiated a program with retailers whereby one additional SC Series driver was given for every four held by retailers as compensation for reductions in the suggested retail selling price.  The effect of the program was to increase cost of goods sold by 1.6% of net sales.  Additionally, the increase in cost of goods sold as a percentage of net sales is also attributable to the reduction in the suggested retail selling p rice of the SC Series driver and the original Tight Lies lines which as compared to the year ended December 31, 1999 resulted in a 9.5% reduction in the gross margin in 2000.  These factors were partially offset by the positive impact of changes in the revenue mix to higher margin products.  The positive impact of the change in the revenue mix was approximately 4.0%.  The Company anticipates that cost of goods sold as a percentage of net sales will continue at higher levels than experienced in prior years due primarily to the Company entering into new equipment categories coupled with newly introduced products that incorporate new technology in shaft and head design resulting in higher component costs.

For the year ended December 31, 2000, operating expenses were comprised primarily of selling and marketing expenses, general and administrative expenses, the write-off of a prepaid professional service agreement and to a lesser extent, research and development expenses.  Selling and marketing expense decreased to $37.1 million from $41.7 million for the years ended December 31, 2000 and 1999, respectively.  The decrease in selling and marketing expense is primarily the result of reduced advertising costs of $8.7 million associated with television and print media.  For the year ended December 31, 1999, the Company utilized these mediums extensively to promote the introduction of the SC Series driver, Faldo wedge and to promote sell-through of the Tight Lies fairway woods at retail.  In addition, the Company experienced a $0.4 million decrease in creative costs associated with infomercials as compared to the year ended December 31, 1999.  The reduction in these expense categories was partially offset by an increase of $1.9 million associated with the full operations of the Company's subsidiaries in the United Kingdom and Japan, $1.8 increase in sales promotion expenses, $0.7 million in additional payroll costs relating to the addition of experienced field sales personnel and a $0.6 million increase in endorsement expense primarily associated with the agreement with Tom Watson.

General and administrative expenses, including provisions for bad debts, increased to $14.5 million or 34.1% of net sales for the year ended December 31, 2000 from $11.0 million or 20.2% of net sales for the comparable period ended December 31, 1999.  The increase is primarily attributable to an increase in the provision for bad debts of $2.7 million resulting from a general downturn in the sales of golf equipment retailers and attendant bankruptcies and financial difficulties experienced by certain customers.  In addition, the Company also experienced an increase in costs of $1.0 million associated with the operations of its subsidiaries in the United Kingdom and Japan for the year ended December 31, 2000 as compared to the year ended December 31, 1999.

Research and development expenses, primarily consisting of costs associated with the development of new products, remained consistent at $2.1 million for each of the years ended December 31, 2000 and 1999.  Research and development expense includes amortization of compensation resulting from stock granted to Nicholas A. Faldo in accordance with his professional service agreement.  The impact of the amortization was $0.8 million for the year ended December 31, 2000 as compared to $1.0 million for the year ended December 31, 1999.  As Adams Golf Ltd. has announced that Mr. Faldo is in material breach of his contract, research and development expense will be at reduced levels in the future as the remaining unamortized value of the stock granted to Mr. Faldo was written-off as a charge to operations in the year ended December 31, 2000.

The write-off of the prepaid professional service agreement of $7.6 million represents a charge resulting from Mr. Faldo having been declared in material breach of his contract.  The amount represents the remaining unamortized portion of compensation resulting from stock granted in accordance with his professional service agreement.  As the Company does not believe the agreement will provide future benefit to the Company, the remaining unamortized portion was written-off as a charge to operations in the year ended December 31, 2000.

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As a result of the above, the Company's operating loss was $38.5 million for the year ended December 31, 2000 compared to $18.7 million for the year ended December 31, 1999.

The effective tax rate for the year ended December 31, 2000 was 0.6% compared to 37.9% for the year ended December 31, 1999.  The effective tax rate for the year ended December 31, 2000 was impacted by a valuation allowance of $13.6 million recorded to fully reserve net deferred tax assets as the Company is unable to conclude, based on a weighting of objective evidence, that it is more likely than not that the net deferred tax assets will be realized.

Liquidity and Capital Resources

Cash and cash equivalents increased to $9.2 million at December 31, 2001 from $6.5 million at December 31, 2000.  During the year, approximately $11.3 million was used in operations, primarily as a result of the $3.6 million increase in inventories for component part purchases and $7.1 million in operating losses, exclusive of non-cash expenses aggregating to $6.0 million primarily associated with depreciation, the write-off of the remaining goodwill associated with the wholly-owned subsidiary in Japan., the settlement with Nicholas A. Faldo and the operational restructuring executed during 2001.

Cash provided by investing activities of $14.3 million for the year ended December 31, 2001 is primarily related to the sales and maturities of marketable securities of $7.1 million and $10.4 million, respectively, offset by purchases of marketable securities of $2.9 million and equipment of $0.3 million in the ordinary course of business.

Working capital decreased to $24.2 million at December 31, 2001 compared to $34.5 million at December 31, 2000.

On March 27, 2001, the Company executed a $10.0 million revolving credit facility ("the facility") with General Electric Capital Corporation, which expires in March 2004.  During the quarter ended September 30, 2001, the Company violated a maximum monthly net loss covenant due primarily to incremental costs associated with the Company's settlement with Nick Faldo and the operational restructuring.  In addition, the Company did not comply with the December 31, 2001 minimum working capital and cash requirements required at December 31, 2001.  For each of the covenant violations noted, General Electric Capital Corporation granted the Company a waiver in each circumstance and considers the Company in good standing with regard to the provisions of the agreement.  Currently, the Company does not have any borrowings outstanding under the facility.

On March 28, 2002, the facility was amended to allow for special revolving credit advances up to the lesser of a borrowing base amount or $3.0 million.  The borrowing base for the special revolving credit advances is limited to the sum of i) the lesser of 50% of eligible accounts receivable or 85% of the estimated net forced liquidation value of eligible inventory, as determined by the lender, plus ii) 85% of the net forced liquidation value of eligible finished goods inventory, as determined by the lender.  Borrowings outstanding are secured by substantially all of the Company's property and assets.

The facility requires the Company to maintain a lock-box arrangement whereby cash receipts from accounts receivable are used to first pay down outstanding advances under the facility.  Daily cash required to fund operations in excess of the amounts remaining after repaying outstanding advances must be borrowed in the form of additional advances under the facility.  In any event, the special revolving credit advances must be repaid no later than August 31, 2002.  Additional amounts are not anticipated to be available under the facility after August 31, 2002.

The amended facility requires the Company to comply with a number of restrictive covenants, including restrictions on the amount capital expenditures of $0.5 million for any fiscal year, incurrence of other debt and sales of assets.  Additionally, the facility requires the Company to maintain compliance with various financial covenants, including, among other things, minimum tangible net worth and cash balances of $30 million and $15 million, respectively, at December 31, 2002 and net borrowing availability of $3 million.

18

The amended terms call for borrowings to bear interest at the GE Capital Commercial Paper rate plus 5.75% per year.  At March 14, 2002, the GE Capital Commercial Paper Rate was 1.82%.  The unused portion of the revolving credit facility is subject to a commitment fee of 0.25% per year.  There were no borrowings outstanding under the facility at December 31, 2001.  The maximum availability under the amended facility as of March 29, 2002 was $3.0 million.

The Company expects to meet future liquidity requirements through cash flows generated from operations, cash reserves and if necessary, utilization of its credit facility.  It is anticipated that operating cash flows, current cash reserves, and the Company's credit facility will also fund capital expenditure programs.  These capital expenditure programs can be suspended or delayed at any time with minimal disruption to the Company's operations if cash is needed in other areas of the Company's operations.  In addition, cash flows from operations, cash reserves and, if necessary, the credit facility will be utilized to support ongoing purchases of component parts for the Company's current and future product lines.  It is anticipated that cash requirements to support current purchasing activities will continue at current levels, taking into consideration the seasonality of the industry and consumer acceptance of the Company's products.  The current product lines are expected to continue to produce reduced margins as compared to historical levels resulting from the utilization of more expensive component parts and price reductions associated with maturing product lines.  Concerning advertising efforts, the Company anticipates requiring less cash flow to support discretionary programs as the Company continues to reduce its expenditures in this category as compared to historical trends.  In addition, the Company expects to require less cash flow to support compensation and related expenditures as a result of the operational restructuring executed during 2001.  In contrast, the Company anticipates that promotional expenses will remain at greater than historical levels to promote "sell through" of its current products at the retail level.  The expected operating cash flow, current cash reserves and the Company's credit facility are expected to allow the Company to meet working capital requirements during periods of low cash flows resulting from the seasonality of the industry.

Prior to the year ended December 31, 2001, the Company experienced declining sales and increasing operating losses.  Despite an increase in net sales and a reduction in the operating losses for the year ended December 31, 2001 as compared to 2000, the Company executed an operational restructuring plan and subsequent modification of its business model to further reduce infrastructure costs and costs associated with the assembly of its products.  Further actions of this nature may also be effected as appropriate.

During 2001, the Company executed an operational restructuring plan, which reduced its employee staff by 55 exempt positions primarily associated with the conversion of its sales staff to independent (non-employee) sales representatives and 76 non-exempt positions associated with the outsourcing of the Company's golf club assembly process.  In total, the operational restructuring plan resulted in severance related costs of approximately $1.0 million during the year just ended.

Subsequently, management further modified its current business model with respect to its operating activities in Japan.  Effective January 1, 2002, the Company's established a distributor relationship with a third party in Japan and closed its Japanese subsidiary at December 31, 2001.  As a result of the decision to serve the Japanese market via an independent distributor, the Company recorded certain costs associated with the wind-down of its Japanese operations.  These costs were primarily comprised of the write-off of the remaining unamortized goodwill of $0.6 million.  The effects of these costs are not expected to have a significant impact on the Company's liquidity.

Management believes that sufficient resources will be available to meet the Company's cash requirements through the next twelve months.  Cash requirements beyond twelve months are dependent on the Company's ability to introduce products which gain market acceptance and to manage working capital requirements.  The Company has introduced new products and has taken steps to increase the market acceptance of these and its other products.  Revenues during the year ended December 31, 2001 have increased over the comparable period in 2000.  However, the current domestic economic environment, competitive landscape of the golf industry and recent changes to the Company's business model, no assurance can be given that the Company will be able sustain the year over year revenue growth experienced during the year ended December 31, 2001.  No assurance can be given that the Company's projected cash resources will be sufficient to fund the Company's future cash requirement s beyond twelve months.  Accordingly, to remain viable, it is possible that the Company may have to raise additional capital and/or further reduce its operating expenses, including during the next twelve months, notwithstanding the liquidity 

19

available from the Company's revolving credit facility.  The Company may need to raise additional funds through the issuance of equity securities, in which case the percentage ownership of the stockholders of the Company will be reduced, stockholders may experience additional dilution, or such equity securities may have rights, preferences or privileges senior to the Company's Common Stock.  Nevertheless, given the current market price for the Company's common stock and the state of the capital markets generally, we do not expect that we would be able to raise funds through the issuance of our capital stock.  We may also find it difficult to secure other debt financing.  Accordingly, it is possible that our only source of funding is cash on hand and the current credit facility.  There can be no assurance that additional financing will be available when needed on terms favorable to the Company, or at all.  If adequate funds are not available or not available on acceptable terms, the Company may be unable to continue operations, develop, enhance and market products, retain qualified personnel, take advantage of future opportunities, or respond to competitive pressures, any of which could have a material adverse effect on the Company's business, operating results, financial condition or liquidity.

New Accounting Pronouncements

In April 2001, the Emerging Issues Task Force (EITF) reached consensus on Issue No. 00-25 (EITF 00-10), Vendor Income Statement Characterization of Consideration to a Purchaser of the Vendor's Products and Services, which establishes standards for how companies should account for cooperative advertising arrangements, buydowns and promotional expenditures.  The consensus reached was that all of the aforementioned amounts should be classified as a reduction of revenue.  The Company will adopt the provisions of this consensus in the first quarter of 2002, and is currently assessing the impact on the consolidated financial statements.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 142, Goodwill and Other Intangible Assets, which addresses the financial accounting and reporting for acquired goodwill and other intangible assets. The Company adopted the provisions of SFAS 142 on January 1, 2002 and will make any necessary reclassifications in order to conform with the new classification criteria in SFAS No. 141 for recognition separate from goodwill.  The Company will reassess the useful life and residual value of all intangible assets acquired, and make any necessary amortization period adjustments by March 31, 2002.  During the interim period ended March 31, 2002, the Company will test for impairment all intangible assets deemed to have an indefinite useful life and record any impairment loss as a cumulative effect of a change in accounting principle, if necessary.  Impairment will be measured as the excess of the carrying value over the fair value of an intangible asset with an indefinite useful life.

As of the date of adoption of SFAS No. 142, the Company expects to have unamortized goodwill in the amount of $0.1 million and no unamortized identifiable intangible assets.  The unamortized goodwill will be subject to the transition provisions of SFAS No. 142.  Amortization expense related to goodwill was $0.2 million, exclusive of impairments of $0.6 million associated with the Company's Japanese subsidiary and $0.2 million for the years ended December 31, 2001 and 2000, respectively.  The adoption of SFAS No. 142 is not expected to have a material impact on the consolidated financial statements.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 143, Accounting for Asset Retirement Obligations, which addresses the accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.  The Company is currently assessing the impact on the consolidated financial statements and will adopt the provisions of this standard in the first quarter of 2003.

In October, 2001, the Financial Accounting Standards Board issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which establishes a universal accounting model based on the framework established in SFAS 121for long-lived assets to be disposed of by sale. The Company is currently assessing the impact on the consolidated financial statements and will adopt the provisions of this standard in the first quarter of 2002.

20

Business Risks

As indicated below, this Form 10-K contains forward-looking statements that involve risks and uncertainties.  The Company's actual results may differ materially from the results discussed in the forward-looking statements.  Factors that may cause such a difference include, but are not limited to, those discussed in this section and elsewhere throughout this Form 10-K.

Dependence on New Product Introductions; Uncertain Consumer Acceptance

During the year ended December 31, 2001, the Company's fairway woods represented 46.5% of net sales whereas, for the year ended December 31, 2000, the Company's fairway woods represented 70.5% of net sales.  To date, although certain of the Company's new product introductions have experienced modest success, the Company's ultimate success depends, in large part, on its ability to successfully develop and introduce new products widely accepted in the marketplace.  Historically, a large portion of new golf club technologies and product designs have been met with consumer rejection.  Certain products previously introduced by the Company have not met the level of consumer acceptance anticipated by management.  No assurance can be given that the Company's current or future products will meet with consumer acceptance.  Failure by the Company to timely identify and develop innovative new products that achieve widespread market acceptance would adversely affect the C ompany's continued viability.  Additionally, successful technologies, designs and product concepts are likely to be copied by competitors.  Accordingly, the Company's operating results could fluctuate as a result of the amount, timing, and market acceptance of new product introductions by the Company or its competitors.  The design of new golf clubs is also greatly influenced by the rules and interpretations of the USGA.  Although the golf equipment standards established by the USGA generally apply only to competitive events sanctioned by the organization, the Company believes that it is critical for its future success that new clubs introduced by the Company comply with USGA standards.

History of Net Losses

Although, the Company generated net income during the years ended December 31, 1996 and 1998 it has historically experienced net losses from operations.  Although the Company experienced a modest increase in revenues for the year ended December 31, 2001, for the years ended December 31, 1999 and 2000, the Company experienced declining sales and increasing operating losses.  There can be no assurance that the Company will be able to continue to increase revenues or resume profitability on a quarterly or annual basis in the future.  Further, there can be no assurance that the Company's projected cash resources will be sufficient to fund the Company's cash requirements in the future.  Accordingly, to remain viable, the Company must maintain revenues near current levels, maintain the current levels of uncollectible accounts, raise additional capital, and/or further reduce its operating expenses, notwithstanding the liquidity available through the Company's revolving credit facility.  Thus, the Company may need to raise additional funds through the issuance of equity securities, in which case the percentage ownership of the stockholders of the Company will be reduced, stockholders may experience additional dilution, or such equity securities may have rights, preferences or privileges senior to common stock. Further, there can be no assurance that additional financing will be available when needed on terms favorable to the Company or at all.  If adequate funds are not available or not available on acceptable terms, the Company may be unable to continue operations, develop, enhance and market products, retain qualified personnel, take advantage of future opportunities, or respond to competitive pressures, any of which could have a material adverse effect on the Company's business, operating results, financial condition or liquidity.

Need for Additional Capital

Although management believes that sufficient resources will be available to meet the Company's cash requirements through the next twelve months, no assurances can be given that the Company will have sufficient cash resources beyond twelve months.  Further, to the extent our cash requirements change or the assumptions on which management's expectations are based prove to be in error, we may need additional working capital resources within the year.  The Company cannot assure you that additional financing will be available on favorable terms, or at all.  Given the current market price for the Company's common stock and the state of the capital markets generally, we do not expect that we would be able to raise funds through the issuance of our capital stock.  The Company may also find it difficult to secure debt financing.  To the extent the Company was able to arrange to pay dividends, to

21

 create liens, to sell or purchase our capital stock, to sell assets or to make acquisitions or enter into other specified transactions.  It is reasonably foreseeable that the Company's only source of future funding is cash on hand and its current credit facility.  If adequate funds are not available or not available on acceptable terms, the Company may be unable to continue operations, develop, enhance and market products, retain qualified personnel, take advantage of future opportunities, or respond to competitive pressures, any of which could have a material adverse effect on the Company.

Competition

The golf club market is highly competitive.  The Company competes with a number of established golf club manufacturers, some of which have greater financial and other resources.  The Company's competitors include Callaway Golf Company, adidas-Saloman AG (Taylor Made - adidas Golf), Fortune Brands, Inc. (Titleist and Cobra) and Karsten Manufacturing Company (PING), among others.  The Company competes primarily on the basis of performance, brand name recognition, quality and price.  The Company believes that its ability to market its products through multiple distribution channels, including on- and off- course golf shops and selected sporting goods retailers is important to the manner in which the Company competes.  The purchasing decisions of many golfers are often the result of highly subjective preferences, which can be influenced by many factors including, among others, advertising, media, promotions and product endorsements.  These preferences m ay also be subject to rapid and unanticipated changes.  The Company could face substantial competition from existing or new competitors who introduce and successfully promote golf clubs that achieve market acceptance.  Such competition could result in significant price erosion or increased promotional expenditures, either of which could have a material adverse effect on the Company's business, operating results and financial condition.  There can be no assurance that Adams Golf will be able to compete successfully against current and future sources of competition or that its business, operating results or financial condition will not be adversely affected by increased competition in the market in which it operates.

The golf club industry is generally characterized by rapid and widespread imitation of popular technologies, designs and product concepts.  Due to the success of the Tight Lies fairway woods, the Company experienced several competitors introducing products similar to the Tight Lies fairway woods.  The Company may face competition from manufacturers introducing other new or innovative products or successfully promoting golf clubs that achieve market acceptance.  The failure to successfully compete in the future could result in a material deterioration of customer loyalty and the Company's image, and could have a material adverse effect on the Company's business, results of operations, financial position or liquidity.

The introduction of new products by the Company or its competitors can result in closeouts of existing inventories at both the wholesale and retail levels.  Such closeouts are likely to result in reduced margins on the sale of older products, as well as reduced sales of new products given the availability of older products at lower prices.

Dependence on Key Personnel and Endorsements

The Company's success depends to an extent upon the performance of the senior management team, which includes the Company's founder and Chairman, B.H. (Barney) Adams who participates in the Company's product development efforts.  The loss or unavailability of Mr. Adams could adversely affect the Company's business and prospects.  With the exception of the Company's President and Chief Executive Officer, Oliver G. (Chip) Brewer, none of the Company's officers and employees including Mr. Adams, are bound by employment agreements and the relations of such officers and employees are, therefore, at will.  The Company has a $4.0 million key-man life insurance policy on the life of Mr. Adams; however, there can be no assurance that the proceeds of this policy could adequately compensate the Company for the loss of his services.  In addition, there is strong competition for qualified personnel in the golf club industry, and the inability to continue to attract, retain and moti vate other key personnel could adversely affect the Company's business, operating results or financial condition.

The Company believes that acceptance of its products by touring professionals is an important aspect of its marketing strategy and ultimately validates the products in the mind of the consumer.  The Company has entered into endorsement arrangements with certain members of the PGA Tour and the Senior PGA Tour including Tom Watson, Bruce Lietzke, Larry Nelson and other notable players.  As is typical in the golf industry generally, the agreements with these professional golfers do not necessarily require that they use the Company's golf clubs at all 

22

times during the terms thereof, including, in certain circumstances, at times when the Company is required to make payments to them.  The failure of certain individuals to use the Company's products on one or more occasions has resulted in negative publicity involving the Company.  While the Company does not believe this publicity has resulted in any significant erosion in the net sales of the Company's products to date, no assurance can be given that the Company's business would not be adversely affected in a material way by further such publicity or by the failure of its known professional endorsers to carry and use its products.

Historical Dependence on Television Advertising

The Company current marketing strategy is to continue to build brand awareness with consumers though the utilization of targeted image-based advertising such as television commercials, national magazines and newspaper ads.  For the years ended December 31, 2001, 2000 and 1999, the Company spent approximately $7.8 million, $16.6 million and $24.6 million, respectively on image based advertising.  However, the Company expects to reduce its expenditures in this category as compared to historical periods.  This Company's image-based approach supplements the Company's emphasis on establishing viable relationships with its wholesale customers and generating product awareness and acceptance through consumer interaction.  Failure to actively support the Company's current image-based advertising campaign and establish viable relationships with its wholesales customers could have a material adverse effect on the Company's business, operating results and financial condition.  ; Additionally, there can be no assurances that a decrease in the levels of advertising will not result in a material decline in sales of the Company's products.

Risks Associated with the Events of September 11, 2001

The domestic and worldwide economy has experienced a significant economic downturn in the period subsequent to the events of September 11, 2001 in New York City and Washington D.C.  Considering the economic instability, the future is uncertain as to future consumer buying trends, levels of discretionary spending and travel to leisure destinations.  Accordingly, the Company could experience reduced levels of sales in future periods which would have a material adverse effect on the Company's results of operations, financial condition or liquidity.  In addition, due to the heightened security risk worldwide and new or proposed security measures, the Company could experience delays in the receipt of component part and finished goods inventories from overseas, which, in turn could impede the Company's ability to meet future customer demand.  Also, due to safety concerns regarding the mail service in the United States, the Company could experience delays in receiving cash re ceipts from customers which could have a material adverse effect on the Company's results of operations, financial condition or liquidity.

Source of Supply

The Company has redundant sources of supply for each of the component parts used in the manufacture of the original Tight Lies.  However, the components used in the manufacture of all other product lines are generally selected from a small number of suppliers each of which is sourced from a single supplier within that group.  Therefore, for all products other than the original Tight Lies, the Company effectively has a single source of supply.  Substantially all of the Company's fairway wood, driver and iron component parts are manufactured in Taiwan, China and Mexico.  Both multi-material shafts, graphite tip (GT) and Bi-Matrx steel tip (ST) shafts used in some of the Company's product lines are available from a sole supplier, True Temper Sports   The Company has not entered into a long-term supply agreement with any of its component part suppliers, including True Temper Sports.

The Company could, in the future, experience shortages of components or periods of increased price pressures which could have a material adverse effect on the Company's business, results of operations, financial position or liquidity.  In the event that the Company was unable to obtain adequate supplies or experienced a supply interruption of its proprietary graphite tip (GT) shaft from the sole manufacturer, True Temper Sports, the Company could experience up to a 25% reduction in its annual net sales focused primarily in the iron and wedge product class.  With respect to other component parts utilized in the manufacture of its current products, although the Company would be able to identify alternative manufacturers to source the materials, it would likely result in delays during the transition period which could have a material adverse impact on the Company's business, results of operations, financial position and liquidity.  In addition, any failure to obtain adequate suppli es or fulfill customer orders on a timely basis could have a material adverse effect on the Company's business, results of operations, financial position or liquidity.

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Product Warranties

The Company provides a limited one year product warranty on all of its golf clubs with the exception of the graphite tip (GT) and steel tip Bi-Matrx (ST) shafts used in variety of the Company's product lines.  These shafts carry a five year warranty for defects in quality and workmanship.  The Company closely monitors the level and nature of warranty claims, and where appropriate, seeks to incorporate design and production changes to assure its customers of the highest quality available in the market.  Significant increases in the incidence of such claims may adversely affect the Company's sales and its reputation with golfers.  The Company establishes a reserve for warranty claims which it believes is sufficient to meet future claims.  However, there can be no assurance that these reserves will be sufficient if the Company were to experience an unusually high incidence of problems with its products.

Risks Associated with Intellectual Property

Imitation of popular club design is widespread in the golf industry.  No assurance can be given that other golf club manufacturers will not be able to successfully sell golf clubs that imitate the Company's products without infringing on the Company's copyrights, patents, trademarks or trade dress.  Many of the Company's competitors have obtained patent, trademark, copyright or other protection of intellectual property rights pertaining to golf clubs.  No assurance can be given that the Company will not be adversely affected by the assertion by competitors of intellectual property rights.  This effect could include alteration or withdrawal of existing products and delayed introduction of new products.

The Company attempts to maintain the secrecy of its confidential business information including the practice of having prospective vendors and suppliers sign confidentiality agreements.  No assurance can be given that the Company's confidential business information will be adequately protected in all instances.  The unauthorized use of the Company's confidential business information could adversely affect the Company.

Unauthorized Distribution of Counterfeit Clubs

Despite the Company's efforts to limit its distribution to selected retailers, some quantities of the Company's products have been found in unapproved outlets or distribution channels.  The existence of a "gray market" in the Company's products can undermine the sales of authorized retailers and foreign wholesale distributors who promote and support the Company's products, and can injure the Company's image in the minds of its customers and consumers.  Adams Golf makes efforts to limit or deter unauthorized distribution of its products, but does not believe the unauthorized distribution of its products can be totally eliminated.  The Company does not believe that the unauthorized distribution of its clubs has had or will have a material adverse effect on the Company's results of operations, financial condition or competitive position, although there can be no assurance as to future results.

In addition, the Company is occasionally made aware of the existence of counterfeit copies of its golf clubs particularly in foreign markets.  The Company takes action in these situations through local authorities and legal counsel where practical.  The Company does not believe that the availability of counterfeit clubs has had or will have a material adverse effect on the Company's results of operations, financial condition or competitive position, although there can be no assurance as to future results.

Industry Specific Requirements

The Company performs ongoing credit evaluation of its wholesale customers' financial condition and generally provides credit without the requirement of collateral from these customers.  The Company believes it has adequate reserves for potential credit losses. For the year ended December 31, 2001, the Company experienced a reduced level of delinquent or uncollectible accounts as compared to 2000.  However, Company does not anticipate that current trends will continue given the current domestic economic conditions.  Additionally, approximately 28.5% of the Company's net sales for the year ended December 31, 2001 were derived from nine customers.  Should these or the Company's other customers fail to meet their obligations to the Company, the Company's results of operations and cash flows would be adversely impacted.  Due to industry sensitivity to consumer buying trends and available disposable income, the Company has in the past extended payment terms for sp ecific retail customers.  Issuance of these terms (i.e. greater than 30 days or specific dating) is dependent on the Company's relationship with the 

24

customer and the customer's payment history.  Payment terms are extended to selected customers typically during off-peak times in the year in order to promote the Company's brand name and to assure adequate product availability often to coincide with planned promotions or advertising campaigns.  Although a significant amount of the Company's sales are not affected by these terms, the extended terms do have a negative impact on the Company's financial position and liquidity.  The Company expects to continue to selectively offer extended payment terms in the future, depending upon known industry trends and the Company's financial plans.

In addition to extended payment terms, the nature of the industry also requires that the Company carry a substantial level of inventory due to the lead times associated with purchasing components overseas coupled with the seasonality of customer demand. The Company's inventory balances were $17,418,000 and $13,779,000 at December 31, 2001 and 2000, respectively.

Certain Risks of Conducting Business Abroad

The Company imports a significant portion of its component parts, including heads, shafts, headcovers, and grips from companies in Taiwan, China and Mexico.  In addition, the Company sells its products to certain distributors located outside the United States.  The Company's international business is currently centered in Canada and Europe and management intends to focus its international expansion efforts through its European subsidiary as well as through agency and distributor relationships.  The Company's business is subject to the risks generally associated with doing business abroad, such as foreign government relations, foreign consumer preferences, import and export control, political unrest, disruptions or delays in shipments and changes in economic conditions and exchange rates in countries in which the Company purchases components or sells its products.

Seasonality and Quarterly Fluctuations

Golf generally is regarded as a warm weather sport and net sales of golf equipment have been historically strongest for the Company during the first and second quarters which ensures adequate levels of inventory at retail for the golf season. In addition, net sales of golf clubs is dependent on discretionary consumer spending, which may be affected by general economic conditions.  A decrease in consumer spending generally could result in decreased spending on golf equipment, which could have a material adverse effect on the Company's business, operating results and financial condition.  In addition, the Company's future results of operations could be affected by a number of other factors, such as unseasonable weather patterns; demand for and market acceptance of the Company's existing and future products; new product introductions by the Company's competitors; competitive pressures resulting in lower than expected selling prices; and the volume of orders that are received and that can be fulfilled in a quarter.  Any one or more of these factors could adversely affect the Company or result in the Company failing to achieve its expectations as to future sales or net income.

Because most operating expenses are relatively fixed in the short term, the Company may be unable to adjust spending sufficiently in a timely manner to compensate for any unexpected sales shortfall which could materially adversely affect quarterly results of operations and liquidity.  If technological advances by competitors or other competitive factors require the Company to invest significantly greater resources than anticipated in research and development or sales and marketing efforts, the Company's business, operating results or financial condition could be materially adversely affected.  Accordingly, the Company believes that period-to-period comparisons of its results of operations should not be relied upon as an indication of future performance.  In addition, the results of any quarter are not indicative of results to be expected for a full fiscal year.  As a result of fluctuating operating results or other factors discussed above and below, in certain future q uarters the Company's results of operations may be below the expectations of public market analysts or investors.  In such event, the market price of the Company's common stock could be materially adversely affected.

Anti-Takeover Provisions

The Company's Certificate of Incorporation and Amended and Restated Bylaws (the "Bylaws") contain, among other things, provisions establishing a classified Board of Directors, authorizing shares of preferred stock with respect to which the Board of Directors of the Company has the power to fix the rights, preferences, privileges and restrictions without any further vote or action by the stockholders, requiring that all stockholder action be taken at a stockholders' meeting and establishing certain advance notice requirements in order for stockholder proposals or

25

director nominations to be considered at such meetings.  In addition, the Company is subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law (the "DGCL").  In general this statute prohibits a publicly-held Delaware corporation from engaging 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.  Such provision could delay, deter or prevent a merger, consolidation, tender offer, or other business combination or change of control involving the Company that some or a majority of the Company's stockholders might consider to be in its best interest, including offers or attempted takeovers that might otherwise result in such stockholders receiving a premium over the market price for the common stock.  The potential issuance of preferred stock may hav e the effect of delaying, deferring or preventing a change of control of the Company, may discourage bids for the common stock at a premium over the market price of the common stock and adversely affect the market price of and voting and other rights of the holders of the common stock.  The Company has not issued and currently has no plans to issue shares of preferred stock.

Forward-Looking Statements

This Annual Report contains "forward-looking statements" made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.  The statements include, but are not limited to:  statements concerning the potential benefits to be achieved from our internal restructurings; statements regarding our ability to increase in revenues or achieve satisfactory operating performance; statements regarding our future capital requirements and our ability to satisfy our capital needs; statements regarding our ability to manufacture products commercially acceptable to market consumers; statements regarding our ability to source component parts from other suppliers if necessary; and statements using terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "plan," "seek" or "believe."  Such statements reflect the current view of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions related to cer tain factors including, without limitation, product development difficulties, manufacturing difficulties; product introductions; market demand and acceptance of products; the impact of changing economic conditions; the effects of the events on September 11, 2001 in New York City and Washington D.C.; business conditions in the golf industry; reliance on third parties including suppliers; the impact of market peers and their products; the actions of competitors, including pricing, advertising and product development risks concerning future technology; and the impact of operational restructuring on operating results and liquidity and one-time events and other factors detailed in this report under "Business Risks."  Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.  Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein.  Except as required by federal securities laws, Adams Golf undertakes no obligation to publicly update or revise any written or oral forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this report.  All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the applicable cautionary statements.

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

The Company, in the normal course of doing business, is exposed to market risk through changes in interest rates with respect to its cash equivalents.  

		Fair
	2001	Value
	(Dollars in Thousands)
Cash equivalents
Fixed rate	$ 9,245	$ 9,245
Average interest rate	1.37%

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Item 8.   Financial Statements and Supplementary Data

The financial statements are set forth herein under Item 14 commencing on page F-1.  Schedule II to the financial statements is set forth herein under Item 14 on page S-1.  In addition, supplementary financial information is required pursuant to the provisions of Regulation S-K, Item 302, and is set forth herein under Item 14, note 16.

Item 9.   Changes in and Disagreements with Accountants and Accounting and Financial Disclosure

Not Applicable.

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PART III

Item 10.   Directors and Executive Officers of the Registrant

The information required by this Item is incorporated by reference from pages 3 through 8, inclusive, of the Company's Proxy Statement dated April 3, 2002 for the Annual Meeting of the Stockholders on May 1, 2002 ("the 2002 Proxy Statement") under the respective captions, "Elections of Directors", "Stock Ownership - Section 16(a) Beneficial Ownership Reporting Compliance" and "Management-Executive Officers".

Item 11.   Executive Compensation

The information required by this Item is incorporated by reference from pages 8 through 12, inclusive, of the Company's 2002 Proxy Statement under the caption "Management-Compensation of Executive Officers".

Item 12.   Security Ownership of Certain Beneficial Owners and Management

The information required by this Item is incorporated by reference from pages 6 through 8 of the Company's 2002 Proxy Statement under the caption "Stock Ownership-Beneficial Ownership of Certain Stockholders, Directors and Executive Officers".

Item 13.   Certain Relationships and Related Transactions

The information required by this Item is incorporated by reference from pages 7 through 12, inclusive, of the Company's 2002 Proxy Statement under the captions "Management-Employment Contracts and Change in Control Agreements," "-Compensation Committee Interlocks and Insider Participation" and "-Certain Transactions".

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PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)  The following documents are filed as a part of this report:

(1)  Consolidated Financial Statements
Item			Page
Index to Consolidated Financial Statements and Related Financial Statement Schedule			F-1
Independent Auditors' Report			F-2
Consolidated Balance Sheets as of December 31, 2001 and 2000			F-3
Consolidated Statements of Operations for the years ended December 31, 2001, 2000    and 1999			F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31,    2001, 2000 and 1999			F-5 - F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000    and 1999			F-7
Notes to Consolidated Financial Statements			F-8 - F-25
(2)  Financial Statement Schedule
The following financial statement schedule of the Company for the years ended December 31, 2001, 2000 and 1999 is filed as part of this Annual Report and should be read in conjunction with the Consolidated Financial Statement of the Company.  All other schedules have been omitted because said schedules are not required under the related instructions or are not applicable, or because the information required is included in the Company's consolidated financial statements or notes thereto.
Schedule II - Valuation and Qualifying Accounts			S-1
(3)  Exhibits
The exhibits listed below are filed as a part of or incorporated by reference in this Annual Report.  Where such filing is made by incorporation by reference to a previously filed document, such documents is identified in parenthesis.  See the Index of Exhibits included with the exhibits filed as a part of this Annual Report.
Exhibit	Description	Location
Exhibit 3.1	Amended and Restated Certificate of Incorporation	Incorporated by reference to Form S-1 (Exhibit 3.1)
Exhibit 3.2	Amended and Restated By-laws	Incorporated by reference to Form S-1 (Exhibit 3.2)
Exhibit 4.1	1998 Stock Incentive Plan of the Company dated February 26, 1998, as amended	Incorporated by reference to Form S-8 (Exhibit 4.1)
Exhibit 4.2	1996 Stock Option Plan dated April 10, 1998	Incorporated by reference to Form S-1 (Exhibit 4.2)
Exhibit 4.3	Adams Golf, Ltd. 401(k) Retirement Plan	Incorporated by reference to Form S-1 (Exhibit 4.3)

29

Exhibit 4.4	1999 Non-Employee Director Plan of Adams Golf, Inc.	Incorporated by reference to 1999 Form 10-K (Exhibit 4.4)
Exhibit 4.5	1999 Stock Option Plan for Outside Consultants of Adams Golf, Inc.	Incorporated by reference to 1999 Form 10-K (Exhibit 4.5)
Exhibit 10.1	Agreement between the Registrant and Nick Faldo, dated April 22, 1998	Incorporated by reference to Form S-1 (Exhibit 10.1)
Exhibit 10.2	Amended and Restated Revolving Credit Agreement dated February 26, 1999, between Adams Golf Direct Response, Ltd. and NationsBank of Texas N.A. and related promissory note and guarantee	Incorporated by reference to 1998 Form 10-K (Exhibit 10.2)
Exhibit 10.3	Commercial Lease Agreement dated December 5, 1997, between Jackson-Shaw Technology Center II and the Company	Incorporated by reference to Form S-1 (Exhibit 10.3)
Exhibit 10.4	Commercial Lease Agreement dated April 6, 1998, between Jackson-Shaw Technology Center II and the Company	Incorporated by reference to Form S-1 (Exhibit 10.4)
Exhibit 10.5	Letter agreement dated April 13, 1998 between the Company and Darl P. Hatfield	Incorporated by reference to Form S-1 (Exhibit 10.5)
Exhibit 10.6	Amendment to Amended and Restated Revolving Credit Agreement dated August 13, 1999 between Adams Golf Direct Response, Ltd., Adams Golf, Ltd. and Bank of America, N.A.	Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 (Exhibit 10.6)
Exhibit 10.7	Revolving Credit Agreement between Adams Golf, Ltd. and Legacy Bank of Texas	Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 (Exhibit 10.7)
Exhibit 10.8	Termination Letter - Revolving Credit Agreement between Adams Golf, Ltd. and Legacy Bank of Texas	Incorporated by reference to 2000 Form 10-K (Exhibit 10.8)
Exhibit 10.9	Revolving Credit Agreement between Adams Golf, Ltd. and General Electric Capital Corporation	Incorporated by reference to 2000 Form 10-K (Exhibit 10.9)
Exhibit 10.10	Change of Control Agreement - Oliver G. (Chip) Brewer	Incorporated by reference to 2000 Form 10-K (Exhibit 10.10)
Exhibit 10.11	Change of Control Agreement - Russell Fleischer	Incorporated by reference to 2000 Form 10-K (Exhibit 10.11)

30

Exhibit 10.12	Change of Control Agreement - Terry Marshall	Incorporated by reference to 2000 Form 10-K (Exhibit 10.12)
Exhibit 10.13	Change of Control Agreement - Joseph Wooster	Incorporated by reference to 2000 Form 10-K (Exhibit 10.13)
Exhibit 10.14	Change of Control Agreement - Timothy Reed	Incorporated by reference to 2000 Form 10-K (Exhibit 10.14)
Exhibit 10.15	Change of Control Agreement - Henry Lange	Incorporated by reference to 2000 Form 10-K (Exhibit 10.15)
Exhibit 10.16	Change of Control Agreement - Cindy Herington	Incorporated by reference to 2000 Form 10-K (Exhibit 10.16)
Exhibit 10.17	Change of Control Agreement - Jon Parsons	Incorporated by reference to 2000 Form 10-K (Exhibit 10.17)
Exhibit 10.18	Amended Commercial Lease Agreement dated April 6, 1998 between Jackson-Shaw Technology Center II and the Company	Incorporated by reference to 2000 Form 10-K (Exhibit 10.18)
Exhibit 10.19	Settlement Agreement between Adams Golf, Ltd. and Nicholas A. Faldo	Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 (Exhibit 10.19)
Exhibit 10.20	Change of Control Agreement - Russell Fleischer	Included in this filing
Exhibit 10.21	Employment Agreement - Oliver G. (Chip) Brewer	Included in this filing
Exhibit 10.22	Amendment to Revolving Credit Agreement between Adams Golf, Ltd. and General Electric Capital Corporation	Included in this filing
Exhibit 10.23*	Golf Consultant Agreement - Thomas S. Watson	Included in this filing
Exhibit 21.1	Subsidiaries of the Registrant	Included in this filing
Exhibit 23.1	Consent of KPMG LLP	Included in this filing

___________________

*  Confidential treatment has been requested with respect to certain provisions of this agreement.

(b)  Reports on Form 8-K

On January 15, 2002, the Company filed a Current Report on Form 8-K disclosing a press release indicating the promotion of Oliver G. "Chip" Brewer III to Chief Executive Officer with Barney H. Adams remaining as Chairman of the Board.

31

Signatures

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

	ADAMS GOLF, INC., a Delaware corporation
Date:  March 29, 2002	By:  /S/ B.H. (BARNEY) ADAMS
	B.H. (Barney) Adams, Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date:  March 29, 2002	By:  /S/ B.H. (BARNEY) ADAMS
	B.H. (Barney) Adams, Chairman of the Board
Date:  March 29, 2002	By:  /S/ OLIVER G. BREWER III
	Oliver G. (Chip) Brewer III
	Chief Executive Officer, President and Director
Date:  March 29, 2002	By:  /S/ RUSSELL L. FLEISCHER
	Russell L. Fleischer
	Chief Financial Officer, Secretary and Treasurer
	(Principal Financial Officer)
Date:  March 29, 2002	By:  /S/ GABRIEL J. NILL
	Gabriel J. Nill
	Controller and Manager of Financial Services
	(Principal Accounting Officer)
Date:  March 29, 2002	By:  /S/ MARK R. MULVOY
	Mark R. Mulvoy
	Director
Date:  March 29, 2002	By:  /S/ PAUL F. BROWN, JR.
	Paul F. Brown, Jr.
	Director
Date:  March 29, 2002	By:  /S/ STEPHEN R. PATCHIN
	Stephen R. Patchin
	Director
Date:  March 29, 2002	By:  /S/ ROBERT F. MACNALLY
	Robert F. MacNally
	Director

32

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND RELATED FINANCIAL STATEMENT SCHEDULE

	Page
Consolidated Financial Statements
Independent Auditors' Report	F-2
Consolidated Balance Sheets as of December 31, 2001 and 2000	F-3
Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and    1999	F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2001,    2000 and 1999	F-5 - F-6
Consolidated Statements of Cash Flows the years ended December 31, 2001, 2000 and    1999	F-7
Notes to Consolidated Financial Statements	F-8 - F-25

Financial Statement Schedule

The following financial statement schedule of the Company for the years ended December 31, 2001, 2000 and 1999 is filed as part of this Report and should be read in conjunction with the Consolidated Financial Statements of the Company.

Schedule II - Valuation and Qualifying Accounts S-1

All other schedules are omitted since the required information is not present, or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.

F-1

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Adams Golf, Inc.

We have audited the consolidated financial statements of Adams Golf, Inc. and subsidiaries as listed in the accompanying index.  In connection with our audits of the consolidated financial statements, we have also audited the financial statement schedule as listed in the accompanying index.  The consolidated financial statements and financial statement schedule are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Adams Golf, Inc. and subsidiaries as of December 31, 2001 and 2000 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America.  Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

	KPMG LLP
Dallas, Texas
February 2, 2002, except as to      Note 12, which is as of March 29, 2002

F-2

ADAMS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

ASSETS
	December 31,
	2001	2000
Current assets:
Cash and cash equivalents	$    9,245	$    6,488
Marketable securities (note 2)	--	14,489
Trade receivables, net (note 3)	3,104	4,701
Inventories (note 4)	17,418	13,779
Prepaid expenses	822	713
Income tax receivable	18	76
Other current assets	102	723
Total current assets	30,709	40,969
Property and equipment, net (note 5)	3,744	5,733
Other assets, net (note 6)	357	1,084
	$  34,810	$  47,786
	=======	=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$       458	$    1,255
Accrued expenses (notes 7, 8 and 9)	6,020	5,213
Total current liabilities	6,478	6,468
Non-current liabilities (note 9)	710	66
Total liabilities	7,188	6,534
Stockholders' equity:
Preferred stock, $0.01 par value; authorized 5,000,000 shares; none issued	--	--
Common stock, $.001 par value; authorized 50,000,000 shares; 23,137,571 shares issued and 22,480,071 shares outstanding	23	23
Additional paid-in capital	86,140	86,037
Common stock subscription	(22)	(22)
Deferred compensation	(140)	(221)
Accumulated other comprehensive loss	(700)	(295)
Accumulated deficit	(54,543)	(41,134)
Treasury stock, 657,500 common shares, at cost	(3,136)	(3,136)
Total stockholders' equity	27,622	41,252
Commitments and Contingencies (note 10)
	$  34,810	$  47,786
	=======	=======

See accompanying notes to consolidated financial statements.

F-3

ADAMS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

	Years Ended December 31,
	2001	2000	1999
Net sales	$  49,170	$   42,449	$   54,652
Cost of goods sold (note 4)	24,442	19,680	18,528
Gross profit	24,728	22,769	36,124
Operating expenses:
Research and development expenses	1,008	2,083	2,092
Selling and marketing expenses	24,548	37,140	41,742
General and administrative expenses:
Provision for bad debts	613	4,441	1,709
Other	8,516	10,020	9,316
Write-off of prepaid professional services agreement (note 9)	--	7,594	--
Settlement expense (note 9)	1,579	--	--
Restructuring expense (notes 6 and 8)	1,649	--	--
Total operating expenses	37,913	61,278	54,859
Operating loss	(13,185)	(38,509)	(18,735)
Other income (expense):
Interest income	443	1,372	1,714
Interest expense	(51)	(26)	(37)
Other	(34)	159	--
Loss before income taxes	(12,827)	(37,004)	(17,058)
Income tax expense (benefit) (note 13)	582	237	(6,469)
Net loss	$ (13,409)	$  (37,241)	$  (10,589)
	=======	=======	=======
Loss per common share - basic and diluted (note 1(k))	$     (0.60)	$      (1.66)	$      (0.47)
	=======	=======	=======

See accompanying notes to consolidated financial statements

F-4

ADAMS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
Years ended December 31, 2001, 2000 and 1999

							Retained
	Shares of		Additional	Common		Accumulated Other	Earnings/		Cost of	Total
	Common	Common	Paid-in	Stock	Deferred	Comprehensive	(Accumulated	Comprehensive	Treasury	Stockholders'
	Stock	Stock	Capital	Subscription	Compensation	Loss	Deficit)	Loss	Stock	Equity
Balance, December 31, 1998	23,136,782	$ 23	$ 85,183	$ (22)	$ (704)	$  150	$     6,696		$  (3,136)	$  88,190
Comprehensive loss:
Net loss	--	--	--	--	--	--	(10,589)	$ (10,589)	--	(10,589)
Other comprehensive loss, net      of tax:
Unrealized loss on           marketable securities	--	--	--	--	--	(194)	--	(194)	--	(194)
Comprehensive loss	--	--		--	--	--	--	$ (10,783)	--	--
								=======
Stock option forfeiture	--	--	(38)	--	38	--	--		--	--
Stock option exercises	789	--	2	--	--	--	--		--	2
Tax benefit from exercise of    stock options	--	--	772	--	--	--	--		--	772
Amortization of deferred      compensation	--	--	--	--	190	--	--		--	190
Balance, December 31, 1999	23,137,571	$ 23	$ 85,919	$ (22)	$  (476)	$   (44)	$   (3,893)		$ (3,136)	$   78,371
	=========	====	=======	=====	======	======	=======		=======	========
Comprehensive loss:
Net loss	--	--	--	--	--	--	(37,241)	$ (37,241)	--	(37,241)
Other comprehensive loss, net      of tax:
Unrealized gain on marketable           securities	--	--	--	--	--	47	--	47	--	47
Unrealized loss on foreign           currency translation	--	--	--	--	--	(298)	--	(298)	--	(298)
Comprehensive loss	--	--		--	--	--	--	$ (37,492)	--	--
								=======
Stock option forfeiture	--	--	(53)	--	53	--	--		--	--
Issuance of stock options	--	--	171	--	(171)	--	--		--	--
Amortization of deferred      compensation	--	--	--	--	373	--	--		--	373
Balance, December 31, 2000	23,137,571	$ 23	$ 86,037	$ (22)	$  (221)	$ (295)	$ (41,134)		$ (3,136)	$   41,252
	=========	====	=======	=====	======	=====	=======		=======	=========
See accompanying notes to consolidated financial statements
										(continued)

F-5

ADAMS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
Years ended December 31, 2001, 2000 and 1999

	Shares of		Additional	Common		Accumulated Other			Cost of	Total
	Common	Common	Paid-in	Stock	Deferred	Comprehensive	Accumulated	Comprehensive	Treasury	Stockholders'
	Stock	Stock	Capital	Subscription	Compensation	Loss	Deficit	Loss	Stock	Equity
Balance, December 31, 2000	23,137,571	$ 23	$ 86,037	$ (22)	$  (221)	$ (295)	$ (41,134)		$ (3,136)	$   41,252
Comprehensive loss:
Net loss	--	--	--	--	--	--	(13,409)	$ (13,409)	--	(13,409)
Other comprehensive loss, net      of tax:
Reclassification of losses on           marketable securities to           general and administrative           expense	--	--	--	--	--	(4)	--	(4)	--	(4)
Unrealized loss on foreign           currency translation	--	--	--	--	--	(401)	--	(401)	--	(401)
Comprehensive loss	--	--		--	--	--	--	$ (13,814)	--	--
								=======
Stock option forfeiture	--	--	(10)	--	10	--	--		--	--
Issuance of stock options	--	--	113	--	(113)	--	--		--	--
Amortization of deferred     compensation	--	--	--	--	184	--	--		--	184
Balance, September 30, 2001	23,137,571	$ 23	$ 86,140	$ (22)	$  (140)	$ (700)	$ (54,543)		$ (3,136)	$   27,622
	=========	====	=======	=====	======	=====	========		=======	========

See accompanying notes to consolidated financial statements

F-6

ADAMS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Years Ended December 31,
	2001	2000	1999
Cash flows from operating activities:
Net loss	$ (13,409)	$ (37,241)	$  (10,589)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment and intangible assets	3,162	3,708	3,447
Loss on write-off of professional services agreement	--	7,594	--
Adjustment of inventory to lower of cost or market	--	2,513	--
Amortization of deferred compensation	184	373	190
Gain on sale of marketable securities	(50)	(12)	--
Deferred income taxes	--	292	(903)
Allowance for doubtful accounts	613	4,441	1,709
Changes in assets and liabilities:
Trade receivables	984	1,870	(10,699)
Inventories	(3,639)	2,809	(5,789)
Prepaid expenses	(109)	171	1
Income tax receivable	57	4,760	(2,748)
Other current assets	628	(103)	666
Other assets	(440)	(1,249)	326
Accounts payable	(797)	(726)	829
Accrued expenses	797	2,635	(1,902)
Other non-current liabilities	702	--	--
Net cash used in operating activities	(11,317)	(8,165)	(25,462)
Cash flows from investing activities:
Purchase of equipment	(268)	(693)	(2,635)
Purchases of marketable securities	(2,944)	(22,481)	(143,471)
Maturities of marketable securities	10,440	29,100	80,939
Sales of marketable securities	7,050	5,999	69,900
Net cash provided by investing activities	14,278	11,925	4,733
Cash used in financing activities:
Principal payments under capital lease obligation	(66)	(58)	--
Debt financing costs	(138)	--	--
Repayment of notes payable to shareholder	--	--	(175)
Issuance of common stock	--	--	2
Net cash used in financing activities	(204)	(58)	(173)
Net increase (decrease) in cash and cash equivalents	2,757	3,702	(20,902)
Cash and cash equivalents at beginning of period	6,488	2,786	23,688
Cash and cash equivalents at end of period	$   9,245	$     6,488	$    2,786
	=======	=======	=======
Supplemental disclosure of cash flow information:
Interest paid	$        51	$          12	$           3
	=======	=======	=======
Income taxes paid (refunded)	$        82	$   (4,849)	$  (3,094)
	=======	=======	=======
Supplemental disclosure of non-cash investing and financing activities - equipment financed with    capital lease	$        20	$        186	$          --
	=======	=======	=======

See accompanying notes to consolidated financial statements.

F-7

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(1)   Summary of Significant Accounting Policies

(a)   General

Adams Golf, Inc. (the "Company") was founded in 1987.  The Company designs, manufactures, markets and distributes premium quality, technologically innovative golf clubs, and provides custom golf club fitting technology.  The Company's products are primarily marketed under the names Tight Lies GT irons and
i-Woods, the Tight Lies family of fairway woods and drivers, the Tom Watson signature series of wedges and the GT Spec Putters.

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned.  All significant intercompany accounts and transactions have been eliminated in consolidation.

(b)   Marketable Securities

Marketable securities, primarily consisting of commercial paper and governmental and corporate bonds, are managed under agreements with investment managers.  The agreements provide terms related to the quality, diversification and maturities of the investments in the managed portfolios.  The investments are classified as available-for-sale and are carried at fair value, with unrealized gains and losses, net of the related tax effect, reported as other comprehensive income in the consolidated statements of stockholders' equity.  The balance sheet classification of the Company's marketable securities is based upon the contractual maturity date of such securities.

(c)   Inventories

Inventories are valued at the lower of cost or market and primarily consist of finished golf clubs and component parts.  Cost is determined using the first-in, first-out method.

(d)   Property and Equipment

Property and equipment are stated at cost.  Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the respective assets, which range from three to seven years.

(e)   Revenue Recognition

The Company recognizes revenue when the product is shipped and collectibility is reasonably assured.  Collectibility is evaluated on an individual customer basis taking into consideration historical payment trends, current financial position, results of independent credit evaluations and payment terms.  Additionally, an estimate of product returns and warranty costs are recorded when revenue is recognized.  Estimates are based on historical trends taking into consideration current market conditions.

F-8

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(1)   Summary of Significant Accounting Policies (continued)

(f)   New Accounting Pronouncement

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets, which addresses the financial accounting and reporting for acquired goodwill and other intangible assets. The Company will adopt the provisions of SFAS No. 142 on January 1, 2002.

As of the date of adoption of SFAS No. 142, the Company expects to have unamortized goodwill in the amount of $97,000 and no remaining unamortized identifiable intangible assets.  The unamortized goodwill will be subject to the transition provisions of SFAS No. 142.  Amortization expense related to goodwill was $237,000 exclusive of impairments of $613,000, and $202,000 for the years ended December 31, 2001 and 2000, respectively.  The impact of adopting SFAS No. 142 is not expected to have a material impact on the Company's results of operations or financial position.

(g)   Research and Development

Research and development costs consist of all costs incurred in planning, designing and testing of golf equipment, including salary costs related to research and development and are expensed as incurred.

(h)   Advertising Costs

Advertising costs, other than direct commercial costs, are expensed as incurred and aggregated to approximately $7,810,000, $16,547,000 and $24,606,000 in 2001, 2000 and 1999, respectively.

(i)   Product Warranty

The Company's golf equipment is sold under warranty against defects in material and workmanship for a period of one year with the exception of the graphite tipped (GT) and Bi-matrx steel tipped (ST) shafts which carry a five year warranty.  An allowance for estimated future warranty costs is recorded in the period products are sold.

(j)   Income Taxes

The Company accounts for income taxes using the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted rates recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

F-9

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(1)   Summary of Significant Accounting Policies (continued)

(k)   Income (Loss) Per Share

The weighted average common shares used for basic net income (loss) per common share were 22,480,071 for 2001 and 2000 and 22,479,915 for 1999.  All warrants and options to purchase shares of the Company's common stock of 1,817,670, 1,602,297 and 979,107, which were outstanding during 2001, 2000 and 1999, respectively, were not included in the computation of diluted earnings per share as their effect would have been antidilutive.

(l)   Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to the short maturity of these instruments.  The carrying amount of marketable securities is based on quoted market prices.

(m)   Impairment of Long-Lived Assets

The Company reviews long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows to be generated by the asset.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

(n)   Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss), unrealized gains and losses of $298 and $401, net of related tax effect, on foreign currency translation gains and losses at December 31, 2001 and 2000, respectively.

(o)   Statements of Cash Flows

The Company considers all short-term highly liquid instruments, with an original maturity of three months or less, to be cash equivalents.

(p)   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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

F-10

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(1)   Summary of Significant Accounting Policies (continued)

(q)   Classification of Shipping and Handling Fees and Costs

In July 2000, the Emerging Issues Task Force ("EITF") finalized its consensus on Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs".  Pursuant to EITF Issues No. 00-10, all amounts billed to customers for shipping and handling should be included in "net sales" and costs incurred related to shipping and handling should be included in "cost of goods sold".  Prior to adoption, the Company had included shipping and handling revenues and costs in "selling and marketing" expenses.  The Company's Statements of Operations for the years ended December 31, 2000 and 1999 have been reclassified to reflect the presentation required by EITF Issue No. 00-10.  For the years ended December 31, 2000 and 1999 net sales includes shipping and handling fees of $470,000 and $652,000, respectively.  For the years ended December 31, 2000 and 1999 cost of goods sold includes shipping and handling costs of $687,000 and $957,000, respectively.

(r)  Segment Reporting

The Company is organized by functional responsibility and operates as a single segment and within that segment offers more than one class of product

(s)  Stock Compensation

The Company accounts for stock options granted to employees using the intrinsic-value method as outlined under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related interpretations, including FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation and Interpretations of APB No. 25, issued in March 2000, to account for its fixed plan stock options.  Under this method, compensation expense is recorded on the date of the grant only if the current market price of the underlying stock exceeds the exercise price.  SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123), established accounting and disclosure requirements using a fair-value based method of accounting for stock-based employee compensation plans.  As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above for employee stock option grants, and has ado pted the disclosure requirements of SFAS No. 123.  Non-employee director option grants are accounted for using the fair-value based method

F-11

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(2)   Marketable Securities

During the year ended December 31, 2001, the Company's marketable securities reached their respective maturity dates and the proceeds received were reinvested in cash equivalents.  At December 31, 2000, marketable securities consisted of the following:

		Unrealized
		Gains/	Fair
	Cost	(Losses)	Value
Commercial paper	$   3,981	$       (1)	$    3,980
Governmental bonds	8,500	9	8,509
Corporate bonds	2,000	--	2,000
	14,481	8	14,489
Less: current maturities	(14,481)	(8)	(14,489)
	$         --	$        --	$          --
	======	======	=======

During the year ended December 31, 2001, there were approximately $10,440,000 in proceeds received from maturities of available-for-sale securities and approximately $2,944,000 in purchases of securities.  In addition, there were approximately $7,050,000 in proceeds received from sales of available-for-sale securities which included realized gains of approximately $50,000.

(3)   Trade Receivables

Trade receivables consist of the following at December 31, 2001 and 2000:

	2001	2000
Trade receivables	$   3,879	$   6,232
Allowance for doubtful accounts	(775)	(1,531)
	$   3,104	$   4,701
	======	======

F-12

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(4)   Inventories

Inventories consist of the following at December 31, 2001 and 2000:

	2001	2000
Finished goods	$     6,970	$    4,407
Component Parts	10,448	9,372
	$   17,418	$  13,779
	=======	=======

During the fourth quarter of 2000, the Company adjusted the carrying value of the finished good and component part inventories to net realizable value.  The impact of the adjustment reduced inventory and increased cost of goods sold for the year ended December 31, 2000 by $2,513,000.

At December 31, 2001 and 2000, Inventories included $245,000 and $40,000 of consigned inventory, respectively.

(5)   Property and Equipment, net

Property and equipment consist of the following at December 31, 2001 and 2000:

	2001	2000
Equipment	$    1,129	$   1,000
Computers and software	9,196	9,210
Furniture and fixtures	704	703
Leaseholds	249	249
Accumulated depreciation and amortization	(7,534)	(5,429)
	$    3,744	$   5,733
	=======	=======

             (6)   Other Assets, net

Other assets, net, consist of the following at December 31, 2001 and 2000:

	2001	2000
Goodwill, net of amortization of $131 and $227	$       97	$      944
Deposits, including amounts for fixed assets purchased	137	22
Credit facility origination fees, net of amortization of $36	103	--
Other	20	118
	$     357	$   1,084
	======	=======

F-13

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(6)   Other Assets, net (continued)

During 2001, the Company recorded a charge of $613,000 to write-down the remaining goodwill associated with its Japanese subsidiary (Adams Golf Japan, Inc.) to the estimated fair value.  The write-down resulted from the Company modifying its business model with regard to the Japanese market, whereby management elected to utilize a distributor relationship in lieu of continuing the operation of its current wholly-owned subsidiary.  The impairment loss is included in restructuring expense in the accompanying statement of operations.

Goodwill and credit facility origination fees have amortization periods of five and three years, respectively.

(7)   Accrued Expenses

Accrued expenses consist of the following at December 31, 2001 and 2000:

	2001	2000
Payroll and commissions	$     184	$     235
Royalties	55	1,143
Advertising	763	1,238
Product warranty expense and sales returns	801	535
Professional services	142	85
Settlement costs	1,472	--
Restructuring costs	393	--
Deferred revenue	434	64
Other	1,776	1,913
	$   6,020	$   5,213
	======	=======

(8)   Restructuring

During 2001, the Company executed an operational restructuring plan, which reduced its employee staff by 55 exempt positions primarily associated with the conversion of its sales staff to independent (non-employee) sales representatives and 76 non-exempt positions associated with the outsourcing of the Company's golf club assembly process.  The operational restructuring plan resulted in severance related costs of approximately $1,036,000 of which approximately $644,000 has been paid as of December 31, 2001.  The plan also included $613,000 of costs associated with the write-off of goodwill associated with the Company's wholly-owned subsidiary in Japan.  At December 31, 2001, approximately $393,000 remains in accrued expenses associated with the operational restructuring which represents remaining severance costs yet to be paid.

F-14

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(9)   Professional Services Agreement and Settlement Expense

In May 1998, Adams Golf, Ltd. entered into an agreement with Nicholas A. Faldo.  The agreement provided that Mr. Faldo provide a variety of services to Adams Golf, Ltd. including endorsement and use of certain of Adams Golf Ltd.'s products.  This agreement required Adams Golf, Ltd. to make certain payments to Mr. Faldo, whether or not his endorsement resulted in increased sales of Adams Golf, Ltd.'s products.  Specifically, Mr. Faldo was entitled to receive a royalty of 5% of the net sales price of all Adams Golf's clubs (other than certain specialty items for which the royalty equaled 10% of the net sales price) sold outside the U.S. throughout the term of the agreement.  The agreement provided for a minimum royalty of $1,875,000 in 2000 escalating to $4,000,000 for the years 2004 through 2008.  From 2009 through 2014, the agreement did not provide a minimum royalty.  On November 6, 2000, Adams Golf, Ltd. announced th at Mr. Faldo was in material breach of his contract for failure to use certain of the Company's products.  From March 31, 2000 through November 6, 2000 (date declared in material breach), the Company ceased making royalty payments under the professional services agreement during which time the Company corresponded with Mr. Faldo in an attempt to cure performance deficiencies.  The Company continued to accrue royalty payments during this time as the expectation was that amicable consensus would be reached with Mr. Faldo.  On November 6, 2000, it became clear that an amicable consensus could not reached and that the performance deficiencies had reached a level that constituted a material breach.  The Company had made royalty payments of $0, $468,750 and $1,500,000 associated with each of the years ended December 31, 2001, 2000 and 1999, respectively.  Accordingly, the professional services agreement no longer had future benefit to the Company and the remaining unamortized balance of the value of the stock of $7,594,000 was written off as a component of operating expenses in the year ended December 31, 2000.  In addition, the Company ceased making royalty payments as of March 31, 2000.

On August 25, 2001, an agreement was reached with Mr. Faldo in settlement of the dispute regarding provisions of his prior professional services agreement with Adams Golf, Ltd..  The terms of settlement are such that Mr. Faldo received $0.5 million upon execution.  In addition, Mr. Faldo will receive $0.5 million on July 15, 2002 and a series of annual installments for the years 2003 through 2011 aggregating to $2.0 million.  As a result, the Company established a liability representing the present value of the future obligation, which approximated $2,673,000, utilizing the Company's incremental borrowing rate of 6.04%.  In addition, Mr. Faldo is entitled to receive up to an additional $2.0 million contingent on the Company reaching certain future financial performance thresholds.  In accordance with the terms of the settlement, Mr. Faldo waived all future rights to accrued and unpaid royalties of $1.1 million associated with his prior professional services a greement with the Company

(10)  Commitments and Contingencies

The Company is obligated under certain noncancellable operating leases for manufacturing, warehouse and office space.  A summary of the minimum rental commitments under noncancellable leases is as follows:

Years ending
December 31,
2002	697
2003	677
2004	85
	$    1,459
	=======

F-15

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(10)  Commitments and Contingencies (continued)

Rent expense was approximately $846,000, $710,000 and $947,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

Beginning in June 1999, the first of seven class action lawsuits was filed against the Company, certain of its current and former officers and directors, and the three underwriters of the Company's initial public offering in the United States District Court of the District of Delaware.  The complaints allege violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, in connection with the Company's IPO.  In particular, the complaints allege that the Company's prospectus, which became effective July 9, 1998, was materially false and misleading in at least two areas.  Plaintiffs allege that the prospectus failed to disclose that unauthorized distribution of the Company's products (gray market sales) allegedly threatened the Company's long-term profits. Plaintiffs also allege that the prospectus failed to disclose that the golf equipment industry suffered from an oversupply of inventory at the retail level, which had an adverse impact on the Company's sa les.  On May 17, 2000, these cases were consolidated into one amended complaint, and a lead plaintiff was appointed.  The plaintiffs are seeking unspecified amounts of compensatory damages, interests and costs, including legal fees.  On July 5, 2000, the Company filed a motion to dismiss the consolidated, amended complaint.  On December 10, 2001, the United States District Court for the District of Delaware dismissed the consolidated, amended complaint citing the plaintiffs failed to plead any facts supporting their claim that the Company or its officers and directors violated the federal securities laws.  On January 14, 2002, the plaintiffs filed a motion for leave an amended claim to file an amended complaint.  In the motion, Plaintiffs allege that, if given another opportunity, they would be able to amend the original causes of action to state actionable claims.  On January 24, 2002, the Company filed an opposition to the plaintiff's mo tion and is awaiting a response from the court.

The Company maintains directors' and officers' and corporate liability insurance to cover risks associated with these securities claims filed against the Company or its directors and officers.

At this time it is not possible to predict whether the Company will incur any liability or to estimate the damages, or the range of damages, that the Company might incur in connection with the action.  The Company is also not able to estimate the amount, if any, of reimbursements that it would receive from insurance policies should damages with respect to the above actions be incurred.

In January 2001, the Company was notified that it was part of an investigation by the Federal Trade Commission concerning practices surrounding manufacturers' minimum advertised price policies and Internet retailers.  As of March 29, 2002, the Company has yet to receive any additional correspondence beyond the initial request for information submitted in January 2001.  Management does not anticipate future inquiries regarding the matter and in that context does not anticipate any potential liability.  No assurance can be given that the Commission will not continue to assess the competitive landscape of the industry and direct future inquiries to the Company.  Given those circumstances, no assurance can be given that the future inquiries by the Commission will not have a material adverse effect on the Company's results of operations, financial condition, or competitive position.

From time to time the Company is engaged in various legal proceedings in the normal course of business.  The ultimate liability, if any, for the aggregate amounts claimed cannot be determined at this time.  However, the Company, based on consultation with legal counsel, is of the opinion that there are no matters pending or threatened which could have a material adverse effect on the Company's financial condition, results of operations or liquidity.

F-16

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(11)  Retirement Plan

In February 1998, the Company adopted the Adams Golf, Ltd. 401(k) Retirement Plan (the "Plan") which covers substantially all employees.  The Company matches 50% of employee contributions up to a maximum of 6% of the employee's compensation.  For the years ended December 31, 2001, 2000 and 1999, the Company contributed approximately $182,000, $198,000 and $162,000, respectively, to the Plan.

(12)  Liquidity

Prior to the year ended December 31, 2001, the Company experienced declining sales and increasing operating losses.  Despite an increase in net sales and reduction in the operating losses for the year ended December 31, 2001 as compared to the similar period of 2000, the Company executed a corporate restructuring plan and subsequent modification of its business model to further reduce infrastructure costs and costs associated with the assembly of its products.

The Company's primary sources of liquidity are existing cash reserves, cash projected to be generated from operations, if necessary, its existing credit facility.  The adequacy of these sources is dependent upon, among other things, the consumer acceptance of the Company's products, the Company's ability to manage working capital requirements, changes in the current economic environment, and changes in the competitive landscape of the golf industry.  These and other factors within and outside the Company's control could impact the cash projected to be generated from operations in future periods.  Management believes however, that these sources of liquidity will provide cash resources sufficient to meet the Company's requirements through the next twelve months.  Should the Company at some point in the future require additional financing, no assurance can be given that any additional financing will be available on acceptable terms.  Should the Company be unable to obtain additional financing, it may be required to halt capital expenditure programs, continue to reduce costs associated with its current infrastructure, decrease the level of expenditures necessary to support marketing efforts and advertising campaigns, curtail component part purchasing and research and development programs and halt all other discretionary spending programs which could further reduce sales and adversely affect the Company's liquidity.

On March 27, 2001, the Company executed a $10.0 million revolving credit facility ("the facility") with General Electric Capital Corporation, which expires in March 2004.  During the quarter ended September 30, 2001, the Company violated a maximum monthly net loss covenant due primarily to incremental costs associated with the Company's settlement with Nick Faldo and the operational restructuring described in note 8.  In addition, the Company did not comply with the December 31, 2001 minimum working capital and cash requirements required at December 31, 2001.  For each of the covenant violations noted, General Electric Capital Corporation granted the Company a waiver in each circumstance and considers the Company in good standing with regard to the provisions of the agreement.  Currently, the Company does not have any borrowings outstanding under the facility.

On March 28, 2002, the facility was amended to allow for special revolving credit advances up to the lesser of a borrowing base amount or $3.0 million.  The borrowing base for the special revolving credit advances is limited to the sum of i) the lesser of 50% of eligible accounts receivable or 85% of the estimated net forced liquidation value of eligible inventory, as determined by the lender, plus ii) 85% of the net forced liquidation value of eligible finished goods inventory, as determined by the lender.  Borrowings outstanding are secured by substantially all of the Company's property and assets.

F-17

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(12)  Liquidity (continued)

The facility requires the Company to maintain a lock-box arrangement whereby cash receipts from accounts receivable are used to first pay down outstanding advances under the facility.  Daily cash required to fund operations in excess of the amounts remaining after repaying outstanding advances must be borrowed in the form of additional advances under the facility.  In any event, the special revolving credit advances must be repaid no later than August 31, 2002.  Additional amounts are not anticipated to be available under the facility after August 31, 2002.

The amended facility requires the Company to comply with a number of restrictive covenants, including restrictions on the amount capital expenditures of $0.5 million for any fiscal year, incurrence of other debt and sales of assets.  Additionally, the facility requires the Company to maintain compliance with various financial covenants, including, among other things, minimum tangible net worth and cash balances of $30 million and $15 million, respectively, at December 31, 2002 and net borrowing availability of $3 million.

The amended terms call for borrowings to bear interest at the GE Capital Commercial Paper rate plus 5.75% per year.  At March 14, 2002, the GE Capital Commercial Paper Rate was 1.82%.  The unused portion of the revolving credit facility is subject to a commitment fee of 0.25% per year.  There were no borrowings outstanding under the facility at December 31, 2001.  The maximum availability under the amended facility as of March 29, 2002 was $3.0 million.

(13)  Income Taxes

Income tax expense (benefit) for the years ended December 31, 2001, 2000 and 1999 consists of the following:

	2001	2000	1999
Federal - current	$   508	$      --	$   (5,671)
Federal - deferred	--	318	(798)
State - current	74	(81)	--
	$   582	$    237	$   (6,469)
	=====	=====	=======

Actual income tax expense differs from the "expected" income tax expense (benefit) (computed by applying the U.S. federal corporate tax rate of 35% to income (loss) before income taxes) for the years ended December 31, 2001, 2000 and 1999 as follows:

	2001	2000	1999
Computed "expected" tax benefit	$  (4,489)	$  (12,951)	$   (5,970)
State income taxes, net of federal tax benefit	(128)	(364)	--
Non-taxable interest income	--	--	(350)
Change in valuation allowance for deferred tax assets	4,325	13,634	--
Other	874	(82)	(149)
	$       582	$         237	$   (6,469)
	======	=======	=======

F-18

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(13)  Income Taxes (continued)

The tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities at December 31, 2001 and 2000 are presented below:

	2001	2000
Deferred tax assets:
Allowance for doubtful accounts receivable	$     279	$     551
Restructuring reserve	141	--
Rebate allowance	--	54
Product warranty and sales returns	288	193
Lower of cost or market inventory writedown	--	905
Other reserves	6	34
Settlement reserve	782	--
Research and development tax credit carryforwards	306	556
Net operating loss carryforwards	16,425	11,345
Total deferred tax assets	18,227	13,638
Valuation allowance	(17,959)	(13,634)
Net deferred tax assets	268	4
Deferred tax liabilities:
Unrealized gain on marketable securities	--	4
Property and equipment	237	--
Other	31	--
Total gross deferred tax liabilities	268	4
Net deferred taxes assets	$         --	$        --
	======	=====

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax asset will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

At December 31, 2001, the Company cannot determine based on a weighting of objective evidence that it is more likely than not that the remaining net deferred tax assets will be realized.  As a result, as of December 31, 2001, the Company has established a valuation allowance for the deferred tax assets in excess of existing taxable temporary differences.  The net change in the valuation allowance for the years ended December 31, 2001 and 2000 was $4,325,000 and $13,634,000, respectively.

At December 31, 2001, the Company has net operating loss carryforwards for federal foreign and state income tax purposes of approximately $45,626,000 and tax credit carryforwards of $306,000 which are available to offset future federal taxable income through 2020.  The availability of approximately $785,000 of the net operating loss carryforwards to reduce future taxable income is limited to approximately $71,000 per year for the remaining life of the net operating losses, as a result of a change in ownership.

F-19

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(14)  Stockholders' Equity

(a)   Employee Stock Option Plans

In April 1996, the Company adopted the 1996 Stock Option Incentive Plan (the "1996 Stock Option Plan"), pursuant to which stock options covering an aggregate of 800,000 shares of the Company's common stock may be granted.  Options awarded under the 1996 Stock Option Plan (i) are generally granted at prices that equate to or are above fair market value on the date of grant; (ii) generally become exercisable over a period of one to four years; and (iii) generally expire ten years subsequent to award.  At December 31, 2001, there were 140,310 shares available for grant under the 1996 Stock Option Plan.  For the years ended December 31, 2001, 2000 and 1999 there were no stock options granted, nor does the Company intend to make future grants under the 1996 Stock Option Plan.

In February 1998, the Company adopted the 1998 Stock Incentive Plan (the "1998 Stock Option Plan"), pursuant to which stock options covering an aggregate of 1,800,000 shares (of which 900,000 shares were utilized as a direct stock grant to Mr. Faldo) of the Company's common stock may be granted.  In May 2000, the Company's shareholders approved a request to increase the aggregate number of shares in the 1998 Stock Option Plan to 2,700,000.  Options awarded under the Plan (i) are generally exercisable over a period of two to four years;(ii) generally become exercisable over a period of two to four years and (iii) generally expire five years subsequent to award.  At December 31, 2001, 527,341 shares remain available for grant, including forfeitures.  At December 31, 2001, 1,271,870 options had been granted at prices ranging from $0.75 to $11.25 of which 1,072,500 were made with exercise prices equal to the fair market value of the Company's stock at the date of grant.&nb sp; The 1998 grants were granted with exercise prices that were less than the fair market values of the Company's stock by amounts ranging from $2.50 to $11.25 per share at the date of grant.  Accordingly, the Company has recorded deferred compensation of approximately $13,000 and $221,000, net of amounts amortized and forfeited, at December 31, 2001 and 2000, respectively associated with these grants.  The deferred compensation is being amortized to expense over the vesting periods of the options.

In May 1999, the shareholders of the Company adopted the 1999 Non-Employee Director Plan of Adams Golf, Inc. (the "Director Plan") which allows for 200,000 shares of the Company's stock to be issued to non-employee directors.  At December 31, 2001, 90,000 options had been granted to various board members at exercise prices ranging from $0.63 to $4.75, which equaled the fair market value of the Company's common stock on the date of grant.  These options vest equally on each of the first four anniversary dates from the date of grant and expire five years from the date of grant.  At December 31, 2001, 110,000 shares remain available for grant, including forfeitures.

In November 1999, the Company adopted the 1999 Stock Option Plan for Outside Consultants (the "Consultant Plan").  The Consultant Plan allows for the granting of up to 1,000,000 shares of the Company's common stock.  At December 31, 2001, 355,800 options had been granted with exercise prices ranging from $0.38 to $2.27 per share at the date of grant.  The vesting period varies from two to four years with options vesting equally on each of the anniversary dates from the date of grant and expire five years from the date of grant.  At December 31, 2001, 644,200 shares remain available for grant, including forfeitures.

F-20

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(14)  Stockholders' Equity (continued)

The following is a summary of stock options outstanding as of December 31, 2001:

		Weighted	Weighted		Weighted
Range of		average	average		Average
exercise	Options	remaining	exercise price	Options	exercise price
prices	outstanding	contractual life	per share	exercisable	per share
$0.38 - $0.75	460,000	4.04 years	$      0.71	--	$        --
$1.06 - $2.50	995,170	2.87 years	1.82	518,953	2.09
$3.57 - $5.50	252,500	1.95 years	4.47	146,250	4.58
$11.25	10,000	1.33 years	11.25	7,500	11.25
	1,717,670	3.04 years	$      1.95	672,703	$    2.73
	=======	========	=======	======	======

The Company accounts for the Director Plan and Consultant Plan under SFAS No. 123.  Compensation expense for the options granted under these plans for the year ended December 31, 2001 was not material.  The Company applies Accounting Principles Board Opinion No. 25 in accounting for its employee stock options, and for those stock options granted with exercise prices equal to the fair market value, no compensation costs have been recognized in the consolidated financial statements.  Had the Company determined compensation cost based on the fair value at the grant date for its employee stock options under SFAS No. 123, the Company's net income (loss) would have been the pro forma amounts indicated.

	2001	2000	1999
Net income (loss):
As reported	$   (13,409)	$   (37,241)	$   (10,589)
Pro forma	(13,479)	(37,329)	(10,650)
Diluted income (loss) per common share:
As reported	$       (0.60)	$       (1.66)	$       (0.47)
Pro forma	(0.60)	(1.66)	(0.47)

The per share weighted-average fair value of stock options granted during 2001, 2000 and 1999 was $0.50, $0.63 and $0.83, respectively, on the date of grant using the Black Scholes option pricing model with the following weighted-average assumptions:  Risk free interest rate, 6%; expected life, 5 years; expected dividend yield, 0%; volatility, 6.5%, 5.6% and 7.4% in 2001, 2000 and 1999, respectively.

Operating Expenses included in the Statements of Operations for years ended December 31, 2001, 2000 and 1999 include total compensation expense associated with stock options and warrants of $184,000, $373,000 and $190,000, respectively, inclusive compensation expense recorded under the provisions of SFAS 123 of $90,000, $57,000 and $0 for each of the years indicated.

F-21

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(14)  Stockholders' Equity (continued)

A summary of stock option activity follows:

		Weighted
	Number of	average
	shares	exercise price
Options outstanding at December 31, 1998	358,740	$  3.67
Options granted	741,050	3.17
Options exercised	(789)	2.50
Options forfeited	(119,894)	4.28
Options outstanding at December 31, 1999	979,107	3.22
Options granted	758,000	1.41
Options forfeited	(234,810)	2.54
Options outstanding at December 31, 2000	1,502,297	2.41
Options granted	688,000	0.72
Options forfeited	(472,627)	1.63
Options outstanding at December 31, 2001	1,717,670	$  1.95
	=======	=====

(b)  Warrants

In March 2000, the Company issued warrants to purchase 100,000 shares of common stock at an exercise price of $1.69 per share for certain advertising services provided by non-employees.  These warrants are immediately exercisable and will expire on the fifth anniversary of the date of grant.  The Company accounts for the warrants under SFAS No. 123.  Expense for these warrants for the years ended December 31, 2001 and 2000 was not material.

(c)  Common Stock Repurchase Program

In October 1998, the Board of Directors approved a plan whereby the Company is authorized to repurchase from time to time on the open market up to 2,000,000 shares of its common stock.  At December 31, 1998, the Company had repurchased 657,500 shares of common stock at an average price per share of $4.77 for a total cost of approximately $3,136,000.  The repurchased shares are held in treasury.  No shares were repurchased during the years ended December 31, 2001, 2000 or 1999.

F-22

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(15)  Segment Information

The Company generates substantially all revenues from the design, marketing and distribution of premium quality, technologically innovative golf clubs.  The Company's products are distributed in both domestic and international markets.  Net sales by customer domicile for these markets consisted of the following for the years ended December 31, 2001, 2000 and 1999:

	2001	2000	1999
United States	$  39,675	$  35,743	$  47,175
Rest of world	9,495	6,706	7,477
	$  49,170	$  42,449	$  54,652
	=======	=======	=======

The following table sets forth net sales by product class for the years ended December 31, 2001, 2000 and 1999.

	2001	2000	1999
Fairway Woods	$   22,857	$   29,909	$   34,759
Drivers	12,517	9,687	17,762
Irons, Wedges and Other	13,796	2,853	2,131
Total	$   49,170	$   42,449	$   54,652
	=======	=======	=======

At December 31, 2001 and 2000, the Company had approximately $196,000 and $125,000, respectively in long lived assets, exclusive of goodwill, outside the United States.

F-23

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(16)  Quarterly Financial Results (unaudited)

Quarterly financial results for the years ended December 31, 2001 and 2000 are as follows:

	2001                                                                                     ;
		1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Net sales (1)		$  20,699	$   18,764	$   6,689	$    3,018
		=======	=======	======	=======
Gross profit (2)		$  11,750	$     9,821	$   2,884	$       273
		=======	=======	======	=======
Net income (loss)		$       366	$   (1,556)	$  (7,013)	$   (5,206)
		=======	=======	======	=======
Loss per share - basic and diluted (5)(6)		$      0.02	$     (0.07)	$    (0.31)	$     (0.24)
		=======	=======	======	=======
	2000                                                                                      ;
		1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Net sales (1)		$  15,875	$   12,400	$   8,560	$    5,614
		=======	=======	======	=======
Gross profit (loss) (2)(3)		$  11,502	$     7,666	$   4,381	$     (780)
		=======	=======	======	=======
Net loss		$  (2,041)	$   (7,542)	$  (6,233)	$ (21,425)
		=======	=======	======	=======
Loss per share - basic and diluted (4)		$    (0.09)	$     (0.34)	$    (0.28)	$     (0.95)
		=======	=======	======	=======

_________________________

(1)	Reflects reclassification of shipping revenue (see Note 1(q))
(2)	Reflects reclassification of shipping revenue and costs (see Note 1(q))
(3)	The fourth quarter includes an adjustment of inventories to net realizable value which reduced gross profit (loss) by $2,513,000 or $(0.11) per share (see Note 4)
(4)	The fourth quarter includes the write-off of a prepaid professional services agreement (see Note 6), the adjustment of certain inventories discussed in item 3 above, and the adjustment of deferred tax assets to an amount more likely than not to be realized (see Note 13).  The impact of these items was to increase the net loss by $7,594,000, $2,513,000 and $1,433,000 or $(0.34), $(0.11) and $(0.06) per share, respectively.  The aggregate impact was an increase to net loss of $11,540,000 or $(0.51) per share.
(5)	The third quarter includes approximately $1,036,000 or $(0.05) per share associated with an operational restructuring executed whereby the domestic employee sales force was converted to independent sales representatives and substantially all the manufacturing of the Company was outsourced to a third party.
(6)	The fourth quarter includes approximately $613,000 or $(0.03) per share representing the write-off of the remaining unamortized goodwill associated with the Company's Japanese subsidiary. During the fourth quarter, the Company further modified its business strategy resulting in the closure of the Company's Japanese subsidiary effective December 31, 2001 in favor of a distributor relationship.

F-24

ADAMS GOLF, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Tables in thousands, except share and per share amounts)

(17)  Business and Credit Concentrations

The Company is currently dependent on nine customers, which collectively comprised approximately 28.5% of net revenues for the year ended December 31, 2001.  Of these customers three customers individually represent greater than 5% of net revenues for the year ended December 31, 2001.  The loss of an individual or a combination of these customers would have a material adverse effect on consolidated revenues.

F-25

Schedule II

ADAMS GOLF, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
For the years ended December 31, 2001, 2000 and 1999

(Table in thousands)

	Balance at	Charged to	Charged to		Balance at
	beginning	cost and	other		end of
Description	of period	expenses	accounts	Deductions(1)	period
Allowance for doubtful accounts:
Year ended December 31, 2001	$  1,531	613	--	1,369	$    775
Year ended December 31, 2000	$     966	4,441	--	3,876	$ 1,531
Year ended December 31, 1999	$  1,294	1,709	--	2,037	$    966
Product warranty and sales returns:
Year ended December 31, 2001	$     535	1,461	--	1,195	$    801
Year ended December 31, 2000	$     530	1,226	--	1,221	$    535
Year ended December 31, 1999	$     736	1,877	--	2,083	$    530
Inventory obsolescence (2):
Year ended December 31, 2001	$  2,530	--	--	2,278	$    252
Year ended December 31, 2000	$       25	2,532	--	27	$ 2,530
Year ended December 31, 1999	$     221	1	--	197	$      25

(1)	Represents uncollectible accounts charged against the allowance for doubtful accounts, actual costs incurred for warranty repairs and sales returns and inventory items deemed obsolete charged against the inventory obsolescence reserve.
(2)	For the year ended December 31, 2000 costs charged to expenses includes $2,513,000 of expense associated with the write-down of certain inventories to net realizable value.

S-1

EX-23.1

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Adams Golf, Inc.:

We consent to incorporation by reference in Registration Statement Nos. 333-68129, 333-79495, 333-90391 and 333-37320 on Form S-8 of Adams Golf Inc. of our report dated February 2, 2002, except as to Note 12 which is as of March 29, 2002 relating to the consolidated balance sheets of Adams Golf, Inc. and subsidiaries as of December 31, 2001 and 2000 and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2001, and the related financial statement schedule, which report is included in the December 31, 2001 Annual Report on Form 10-K of Adams Golf, Inc.

KPMG LLP

Dallas, Texas

March 29, 2002

EX-10.20

ONE YEAR EMPLOYMENT AND
CHANGE OF CONTROL AGREEMENT

     THIS AGREEMENT (the "Agreement") is made and entered into as of this 12^th day of February 2002 by and between Adams Golf Management Corp, a Delaware corporation, and the corporation's Chief Financial Officer, Russell Fleischer (the "Executive").  Adams Golf Management Corp. is sometimes referred to herein as the "Employer".

WITNESSETH

     WHEREAS, the Board of Directors of Management Corp. (the Board") has determined that it is in the best interests of Management Corp. and its group of affiliated entities, the ultimate parent of which is Adams Golf, Inc., a Delaware Corporation ("Adams Golf," collectively with the affiliated entities, the "Company") as well as the shareholders of Adams Golf, for Management Corp. to agree, for a period of one (1) year, to assure either employment or the equivalent benefits of employment to Executive, who is responsible for critical policy-making functions of the Company; and
     WHEREAS, the Board believes that if the Company is faced with changing its present size or nature within the next year, it is important to enable Executive, without being distracted by the uncertainties of his own employment situation, to perform his regular duties, and, where appropriate, to assess such changes and advise the Board and/or the Board of Directors of Adams Golf (the "Adams Board") as to the best interests of the Company and its shareholders and to take such other action regarding such changes as the Board and/or the Adams Board determines to be appropriate;
     NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

Section	I	Definitions
	(a)	"Base Salary" means the Executive's annual base salary in effect
on the day prior to a Sale (as defined below), Change of Control (as defined below), or at the time of execution of this Agreement, whichever is higher,
	(b)	"Cause" means the following:
		(i)	the Executive's admission or conviction of a felony,
		(ii)	the Executive's commission of an act of dishonesty in the course of his duties,
		(iii)	the Executive's repeated disregard of policy directives of the Employer,
		(iv)	the Executive's repeated failure to satisfactorily perform assigned duties, or
		(v)	the Executive's breach of his fiduciary responsibilities or fiduciary duties as an employee of the Employer.
	(c)	"Termination" means the following (without the Executive's
express written consent) after written notice provided by the Executive and the failure of the Employer or its successors to remedy the following within thirty (30) days after receipt of such written notice:
		(i)	a reduction in the Executive's Base Salary;
		(ii)	a relocation of the Executive's principal place of business to any location which is not within the greater Dallas/Fort Worth metropolitan area;
		(iii)	the assignment to the Executive of any duties inconsistent with and inferior to the position with the Employer that the Executive held immediately prior to the execution of the Agreement, or a significant adverse alteration in the nature or status of the Executive's responsibilities or the conditions of the Executive's employment from those in effect immediately prior to the execution of this Agreement;
		(iv)	the failure by the Employer to continue in effect any compensation plan in which the Executive participates immediately prior to the execution of this Agreement that is material to the Executive's total compensation, including, but not limited to, Adams Golf Employee Stock Option Plan, or any additional or substitute plan adopted prior to the execution of this agreement, or the failure by the Employer to continue the Executive's participation in any compensation plan referred to above on a basis less favorable, both in terms of benefits provided and the level of the Executive's participation relative to other participants as existed at the time of execution of this Agreement;
		(v)	failure by the Employer to continue to provide the Executive with benefits substantially similar at a substantially similar cost to those enjoyed by the Executive under any of the Employer's life insurance, medical, health and accident, or disability plans in which the Executive was participating at the execution of this Agreement, the taking of any action by the Employer which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the executive of this Agreement.
		(vi)	firing or laying off the Executive.
		(vii)	any material breach of this Agreement by the Employer or its successors.
	(d)	"Sale Termination" means (1) within one year from the date this
contract is entered into, the Executive is terminated (as defined above) without cause (as defined above); and (2) at the time of termination, the following is imminently anticipated or actually takes place:
		(i)	a majority of the capital stock of Adams Golf is sold or transferred to an unaffiliated entity, or
		(ii)	Substantially all of the assets of Adams Golf are sold or transferred to an unaffiliated entity, or
	(e)	"Change of Control Termination" means (1) within one year from
the date this contract is entered into, the Executive is terminated (as defined above) without cause (as defined above); and (2) at the time of termination, the following is imminently anticipated or actually takes place:
		(i)	any person is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, or securities of Adams Golf, representing fifty-one (51%) percent or more of the combined voting power of Adams Golf's then outstanding securities;
		(ii)	the stockholders of Adams golf approve a merger or consolidation, a sale or disposition of all or substantially all of Adams Golf's assets or a plan of liquidation or dissolution of Adams Golf;
Section	2	Termination Resulting from Sale or Change of Control.
Upon a Sale or Change of Control Termination, the following shall apply:
	(a)	within 30 days of the date of termination, all unpaid Base Salary
(as defined below) accrued, and provide the Executive with all benefits and expense reimbursements to which the Executive would otherwise be entitled, through and including the date of termination, including, without limitation, compensation for vacation days accrued in the year of termination which are unused as of the termination date.
	(b)	in exchange for a General Release in form and substance
reasonably satisfactory to the Employer receive:
		(i)	payments of Base Salary to the Executive for the 12 month period following the date of termination at such times as salary payments were made to management employees of Adams golf;
		(ii)	continued substantially equal medical benefits for the 12 month period following the date of termination.
		(iii)	the immediate vesting of any stock options granted under the Adams Golf Employee Stock Option Plan or any substituted or amended plan prior to the execution of the Agreement.  Executive shall have 120 days thereafter to exercise those stock options.
	(c)	Any payments owed to the Executive pursuant to Section 2(b)
shall be offset by any severance payments paid to the Executive by the Employer or its successor.
Section	3	No Mitigation.  In the event of a Sale Termination, Change of
Control Termination, or Restructuring Termination, the Executive shall not be required to mitigate the payments or benefits to be received by the Executive hereunder by securing other employment or otherwise.
Section	4	Employment Terminable only For Goof Cause for a Period of
One Year.  In addition to a change of control agreement, this Agreement shall also serve as a
one-year contract of employment terminable only for cause (as defined above).  After the initial one year period from the date this contract is entered into, the employment status of Executive shall revert back to "at-will" and, from that point forward, Employer reserves all rights to cause the Executive's employment to be terminated at any time with or without cause.
Section	5	Successors Bound.  The rights and obligations of the Employer
hereunder shall inure to the benefit and are binding upon the successor of the Employer.
Section	6	Notices and Other Documents.  All payments, requests, notices
and the like may be made to the Executive by mailing the same to the Executive.  Notices, requests and the like sent by the Executive to Adams golf at Attn: Human Resources, Adams Golf, 2801 E. Plano Parkway, Plano, TX 75074, or to such other address as Adams Golf may furnish to the Executive for this purpose from time to time in writing.
Section	7	Employment Taxes.  All payments made under this Agreement
shall be subject to withholding tax, other employment taxes and other withholds and deductions as required by applicable law or regulation, as in effect from time to time.
Section	8	Term.  The term of this agreement shall last for a period of one
year from the date this contract is entered into.  If a Sale Termination, Change of Control Termination or Downsizing Termination or a Termination for Cause shall not have occurred within one year from the date this contract was entered into, this Agreement shall expire.  Executive shall, at that time, become an "at-will" employee and shall not have the employment or benefit rights as contemplated by this agreement.
MISCELLANEOUS PROVISIONS
Section	9	Assignment.  This Agreement and the Executive's rights and
obligations hereunder may not be assigned by the Executive.  The Employer may assign its right, together with its obligations hereunder (i) to any successor-in-interest, or (ii) to third parties in connection with any sale, transfer or other disposition of all or substantially all of the business or assets; in any event the obligations of the Employer hereunder shall be binding on its successor or permitted assign, whether by merger, consolidation or acquisition of all or substantially all of its businesses or assets.
Section	10	Significance Of Headings.  Section headings contained herein
are solely for the purpose of aiding in speedy location of subject matter and are not in any sense to be given weight in the construction of this Agreement.  Accordingly, in case of any question with respect to the construction of this Agreement, it is to be construed as though such section headings had been omitted.
Section	11	Applicable Law, Venue.  This Agreement shall be governed and
construed according to the laws of the State of Texas.  Any action brought by either party arising out of this agreement shall take place in Plano, Texas.
Section	12	Entire Agreement.  The provisions of this Agreement are
intended by the parties as a complete, conclusive and final expression of their agreement concerning the subject matter hereof.  This Agreement supersedes all prior agreements concerning the subject matter, and no other statement, representation, agreement or understanding, oral or written, made prior to or at the execution thereof, shall vary or modify the written terms hereof.  No amendments, modifications or releases from any provision hereof shall be effective unless in writing and signed by both parties.
Section	13	Waiver.  Unless otherwise mutually agreed in writing, no
departure from, waiver of, or omission to require compliance with any of the terms hereof by either party shall be deemed to authorize any prior or subsequent departure or waiver, or obligate either party to continue any departure or waiver.
Section	14	Severability.  Any provision or part of this Agreement prohibited
by applicable law shall be ineffective to the extent of such prohibition without invalidating the remaining provisions or parts hereof.
Section	15	Arbitration.  In the event a dispute arises under this Agreement
which cannot be resolved, such dispute shall be submitted to arbitration and resolved by a panel of three arbitrators (who shall be lawyers), in a decision required by a majority of the arbitrators.  If the parties cannot agree upon the panel of three arbitrators, then each party may pick an arbitrator and the two chosen arbitrators shall choose upon the three arbitrator panel.  The arbitration shall be conducted in accordance with the Arbitration Rules of the American Arbitration Association.  Venue shall be Plano, Texas.  The award or decision rendered by the arbitration panel shall be final, binding and conclusive and judgment may be entered upon such award by any court of competent jurisdiction.

               IN WITNESS WHEREOF, this Agreement has been duly executed by each of the parties hereto as of the date first written above.


                                                                (Employee)


                                                                /s/ Russell Fleischer____
                                                                Russell Fleischer
                                                                Chief Financial Officer



                                                                ADAMS GOLF


                                                                /s/ O.G. Brewer________
                                                                Oliver G. (Chip) Brewer, III
                                                                CEO & President

EX-10.21

EMPLOYMENT AGREEMENT

THIS AGREEMENT (the "Agreement") entered into as of the date signed by the parties below by and between Adams Golf, Inc. and its subsidiaries with its subsidiaries with its principal place of business at 2801 East Plano Parkway, Plano, Texas (the "Company") and Mr. Oliver Brewer (the "Executive");

RECITALS

     WHEREAS, the Executive is and has been employed by the Company for approximately three years, first as its Vice President of Sales and Marketing and then as President of the Company.  Through such experience, the Executive has acquired special skills and abilities and an extensive background in and knowledge of the Company'' business and the golf club manufacturing industry.

     WHEREAS, the Company's Board of Directors desires assurance of the continued association and services of the Executive in order to retain his experience, skills, abilities, background, and knowledge, and is therefore willing to engage his services on the terms and subject to the conditions set forth below.

     WHEREAS, the Executive desires and is willing to accept employment with the Company on the terms and subject to the conditions set forth below.

     NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties agree as follows:

AGREEMENT

1.   POSITION AND DUTIES

During the term of this Agreement, the Company shall employ the Executive as Chief Executive Officer.  The Executive's duties shall be those which shall be prescribed by the Board of Directors from time to time which shall be those reasonably expected of a chief executive officer of a similarly capitalized corporation and those performed by his predecessor.  The Executive shall use his best efforts to promote the best interest of the Company.  The Executive shall devote his knowledge, skill and, exclusively (other than as set for below), all of his professional time, attention and energies (reasonable absences for vacations and illness excepted), to the business of the Company in order to perform such assigned duties faithfully, competently and diligently.  Notwithstanding the foregoing, it is understood and agreed between the parties that the Executive may (i) engage in charitable and community activities, (ii) manage personal investments and affairs and (iii) serve o n the boards of directors of a reasonable number of other corporations or the boards of a reasonable number of trade associations, so long as such activities and investments do not interfere or conflict with the Executive's performance of his responsibilities and obligations to the Company.

2.   TERM OF EMPLOYMENT

The Company agrees to employ the Executive and the Executive agrees to serve the Company pursuant to the terms and conditions of this Agreement for a term of three (3) years, commencing on January 1, 2002 and expiring on December 31, 2004, unless earlier terminated pursuant to this Agreement.  Notwithstanding any contrary clause in this Agreement, the Executive shall serve at the pleasure of the Board of Directors and may be terminated at any time in accordance with the provisions of this Agreement.  The Executive's termination shall not, in any way, prejudice the Executive's rights under this Agreement.

3.   PLACE OF EMPLOYMENT

The place of employment shall be at the Company's principal office currently located in Plano, Texas; provided, however, that the Company may from time to time require the Executive to travel temporarily to other locations on Company business.

4.   COMPENSATION

The Executive shall receive, for all services rendered to the Company as an employee, the following compensation.

(a)	Salary.  The Executive shall be paid an Annual Base Salary in the amount of two hundred fifty thousand dollars ($250,000) or such greater amount as may be determined by the Board of Directors.  The Executive's Annual Base Salary shall be payable in equal installments in accordance with the Company's general salary payment policies, but no less frequently than monthly.
(b)	Incentive Compensation.  Each year, the Executive shall be eligible for two bonuses, each in an amount equal to one-half (1/2) his Annual Base Salary.  The first bonus is to be paid at the end of the first half of the calendar year but no later than July 20 and the second bonus is to be paid at the end of the second half of the year but no later than January 20 of the following year.  Each bonus shall be contingent upon the Company achieving its internal financial goals for the applicable half of the calendar year as stated by the Board of Directors.
			Example:     At the Board of Directors' third quarter meeting on
				October 29, 2001, the Board of Directors stated that the Company's 2002 internal financial goals were to achieve certain cash flow projections and come within ten percent (10%) of certain earnings projections for the first and second half of 2002.  If the Company achieves the goals for the first half of the year, the Executive shall receive a bonus equal to one-half (1/2) his Annual Base Salary.  If the Company achieves the goals for the second half of the year but not the first, the Executive shall receive a bonus of one-half (1/2) his Annual Base Salary for the second half of the year but not for the first half of the year.
(c)	Equity Participation.  The company shall provide the Executive with stock
	and/or stock options and contingent retention stock options and performance stock options as follows:
	(1)	For the calendar year 2002:
		a.	not later than the end of January 2002, the Company shall, at its option, either
			(i)	grant the Executive four percent (4%) of the Company's fully diluted common stock and gross up the Executive's Annual Base Salary to account for any taxable earnings as a result of the grant; or
			(ii)	grant the Executive four percent (4%) of the Company's fully diluted stock in stock options at an option strike price of one cent ($.01) per share; these stock options shall vest six months after the date of grant; notwithstanding any other clause in this Agreement to the contrary, if the Executive's employment is either terminated by the Company without cause or terminated by the Executive for good reason (as those terms are defined in this Agreement) prior to these stock options vesting, the stock options shall vest upon termination; additionally, if these stock options are granted but the Company is unable, for any reason, to cause these stock options to vest after six months, then the Company shall grant the Executive four percent (4%) of the Company's fully diluted common stock and gross up the Executive's Annual Base Salary to account for any taxable earnings as a result of the grant.
		b.	if the Company achieves its internal financial goals for the calendar year (as stated by the Board of Directors), the Executive shall be granted, not later than the end of January 2003, one and one-half percent (1 1/2%) of the Company's fully diluted stock in stock options at an option strike price of one cent ($.01) per share.  These stock options are contingent upon Company performance and shall vest six months after the date of grant;
		c.	if the Company achieves making a year end profit, the Executive shall be granted, not later than the end of January 2003, one-half percent (1/2%) of the Company's fully diluted stock in stock options at an option strike price of one cent ($.01) per share.  These stock options are contingent upon Company performance and shall vest six months after the date of grant;
	(2)	For the Calendar year 2003:
		a.	not later than the end of July of 2003, the Executive shall be granted one and eight-tenths percent (1.8%) of the Company's fully diluted stock in stock options at an option strike price of one cent ($.01) per share.  These stock options are to retain the Executive and shall vest six months after the date of grant;
		b.	not later than the end of January 2004, if the Company achieved its internal financial goals for 2003 (as stated by the Board of Directors), the Executive shall be granted one percent (1%) of the Company's fully diluted stock in stock options at an option strike price of one cent ($.01) per share.  These stock options are contingent upon Company performance and shall vest six months after the date of grant.
	(3)	For the Calendar year 2004:
		a.	not later than the end of July of 2004, the Executive shall be granted one and four-tenths percent (1.4%) of the Company's fully diluted stock in stock options at an option strike price of one cent ($.01) per share.  These stock options are to retain the Executive and shall vest six (6) months after the date of grant;
		b.	not later than the end of January 2005, if the Company achieved its internal financial goals for 2004 (as stated by the Board of Directors), the Executive shall be granted one percent (1%) of the Company's fully diluted stock in stock options at an option strike price of one cent ($.01) per share.  These stock options are contingent upon Company performance and shall vest six months after the date of grant.
	(4)	It is expressly understood between the Executive and the Company that any stock options granted Executive under this Agreement are conditional upon all of the following:
		a.	the Executive must revoke and rescind all of his current Company stock options whether or not vested;
		b.	the Company must acquire the necessary Board of Director and shareholder approval to authorize a new stock option plan providing for Executive's potential stock options; and
		c.	the Company must be able to comply with all applicable laws and regulations necessary to implement a stock option plan and provide the stock options.
			Example:     If the Company is unable to achieve the necessary Board
				of Directors' or shareholder approval or to comply with the applicable laws and regulations necessary to implement a stock option plan(s) that would enable the Company to provide the Executive with the granted stock options or proposed to be granted stock options, the Executive shall not be entitled to the stock options granted and/or proposed to be granted stock options in this Agreement.
			Example:     If, at the end of 2002, the Company achieved its internal
				financial goals (the cash flow goals and coming within the stated ten percent (10%) of the earnings goals, the Executive shall be granted one and one-half percent (1 1/2%) of the Company's fully diluted shares in stock options at a strike price of one cent ($.01) per share not later than January 20, 2003.  These stock options vest six months after the date of grant.
			Example:     If the Board of Directors do not state internal financial
				goals for the year 2004, the Executive shall not be entitled to any performance based stock options for the year 2004 under th terms of this Agreement.
	(5)	At any time during the term of this agreement, if a majority of the capital stock of the Company is to be sold or transferred to an unaffiliated entity or substantially all of the assets of the Company are to be sold or transferred to an unaffiliated entity, all of the Executive's potential stock options shall be granted and vested no later than the calendar day immediately preceding the sale or closing date of the sales or transfer transaction.
(d)	Employee Benefit Plans.  The Executive and his "dependents," as that term
	may be defined under the applicable employee benefit plan(s) of the Company, shall be included in all plans, programs and policies which provide benefits for Company employees and their dependents on a basis commensurate with the Executive's position and authorities, duties, powers and responsibilities.
(e)	Expenses.  The Executive is authorized to incur and shall be reimbursed by the
	Company for any and all reasonable and necessary business related expenses including, but not limited to, a company car, a local country club membership, expenses for auto, business travel, entertainment, gifts and similar matters.  The company car and local country club membership are subject to the compensation committee's approval, which shall not be unreasonably withheld.
5.   ABSENCES
The Executive shall be entitled to vacations in accordance with the Company's vacation policy in effect from time to time and to absences because of illness or other incapacity and shall also be entitled to such other absences as are granted to the Company's other senior executive officers or as are approved by the Board of Directors, which approval shall not be unreasonably withheld.
6.   TERMINATION
The Executive's employment with the Company may be terminated only as follows:
(a)	By the Company Without Cause.  The Company may at any time terminate the Executive's employment without Cause upon sixty- (60) day's prior written notice to the Executive.
(b)	By the Executive Without Good Reason.  The Executive may at any time terminate his employment for any reason upon sixty- (60) days written notice to the Company.
(c)	By the Company for Cause.  The Company may terminate the Executive's employment for Cause.  In such event, the Company shall give the Executive prompt written notice (in addition to any notice that may be required below) specifying in reasonable detail the basis for such termination.  For purposes of this Agreement, "Cause" shall mean any of the following conduct by the Executive:
	(1)	the deliberate and intentional breach of any material provision of this Agreement, which breach the Executive shall have failed to cure within thirty (30) days after the Executive's receipt of written notice from the Company specifying the specific nature of the Executive's breach; or
	(2)	the deliberate and intentional engaging by the Executive in gross misconduct that is materially and demonstrably harmful to the best interests, monetary or otherwise, of the Company; or
	(3)	conviction of a felony or conviction of any crime involving moral turpitude, fraud or deceit.
(d)	By the Executive for Good Reason.  The Executive may terminate his employment for Good Reason upon providing thirty (30) days written notice to the Company after the Executive reasonably becomes aware of the circumstances giving rise to such Good Reason.  For purposes of this Agreement, "Good Reason" means any of the following conduct of the Company, unless the Executive shall have consented thereto in writing:
	(1)	material breach of any material provision of this Agreement by the Company, which breach shall not have been cured by the Company within thirty (30) days after Company's receipt from the Executive or his agent of written notice specifying in reasonable detail the nature of the Company's breach; or
	(2)	the assignment to the Executive of any duties inconsistent in any material respect with the Executive's position including, but not limited to any diminution of the Executive's status and reporting requirements, authority, duties, powers or responsibilities, excluding for this purpose any isolated, insubstantial and inadvertent action respecting the Executive not taken in bad faith and which is remedied by the Company within thirty (30) days after receipt of written notice from the Executive to the Company; or
	(3)	the failure of the Company to obtain the assumption in writing of its obligations to perform this Agreement by any successor not less than five days prior to a merger, consolidation or sale as contemplated in Section 10; or
	(4)	a reduction in the Executive's total compensation.  For purposes of this subsection, a reduction in the overall level of compensation of the Executive resulting from the failure to achieve corporate, business unit and/or individual performance goals established for purposes of incentive compensation for any year or other period shall not constitute a reduction in the overall level of compensation of the Executive.
	(5)	the relocation of the Company's principal office to a site more than 75 miles from Plano, Texas.
(e)	Disability.  In the event that the Executive shall be unable to perform his duties hereunder on a full time basis for a period of sixty (60) consecutive calendar days by reason of incapacity due to illness, accident, physical or mental disability or otherwise, then the Company may, at its discretion, terminate the Executive's employment if the Executive, within ten (10) days after receipt of written notice of termination is given (which may occur before or after the end of the entire 60 day period), shall not have returned to the performance of all of his duties on a full-time basis.
(f)	Death.  The Executive's employment shall terminate upon his death.
(g)	Mutual Written Agreement.  This Agreement and the Executive's employment with the Company may be terminated at any time by the mutual written agreement of the Executive and the Company.
(h)	By the Executive due to the Company's failure to set internal financial goals or adopt a stock option plan.  In the event that the Board of Directors should fail to set internal financial goals for the calendar year(s) 2003 and/or 2004 or in the event the Company fails to acquire the necessary shareholder and Board of Director approval to authorize a new stock option plan to provide for the Executive's stock options or potential stock options, the Executive may elect to terminate his employment.
7.   COMPENSATION IN THE EVENT OF TERMINATION
In the event that the Executive's employment terminates prior to the expiration of this Agreement, the Company shall pay the Executive compensation and provide the Executive and his eligible dependents with benefits as follows:
(a)	Termination by Company Without Cause or Termination by Executive for Good Reason.  In the event that the Executive's employment is terminated by (i) the Company without Cause or (ii) the Executive for Good Reason, then the Company shall continue to pay or provide, as applicable, in accordance with the Company's normal payroll practices, the following compensation and benefits to the Executive:
	(1)	the Annual Base Salary of the Executive for a period of one (1) year after expiration of the notice period of termination, whichever is later;
	(2)	the retention stock options (the stock options to retain the Executive as opposed to the stock options based on Company performance) for which the Executive was potentially eligible in the calendar year of termination will be pro-rated for the months of service in the calendar year and will be granted and fully vested as of the date of termination;
	(3)	the performance based stock options that have been granted to the Executive (because the Company has met its performance goals) but have not yet vested, shall fully vest as of the date of termination;
	(4)	the semi-annual bonus(es) for which the Executive was potentially eligible in the calendar year of termination will be pro-rated for the months of service in the calendar year and paid as if the Company had achieved its internal financial goals;
	(5)	Continuing coverage for all purposes (including eligibility, coverage, vesting and benefit accruals, as applicable), for the salary continuation period described in subsection (a)(i) above, to the extent not prohibited by law, for the Executive and his eligible dependents under all of the employee benefit plans in effect and applicable to Executive and his eligible dependents as of the date of his termination.  In the event that the Executive and/or his eligible dependents, because of the Executive's terminated status, cannot be covered or fully covered under any or all of such plans, the Company shall continue to provide the Executive and/or his eligible dependents with the same level of such benefits and coverage in effect prior to termination, payable from the general assets of the Company if necessary.  Notwithstanding the foregoing, the Executive may elect (by giving written notice to the Company prior to the termination of his employment hereunder), on a benefit by b enefit basis to receive in lieu of continuing coverage, cash in an amount equal to the present value (using an 8% annual discount rate) of the projected cost to the Company of providing such benefit for such continuation period.  The aggregate amount of cash to which the Executive is entitled pursuant to the preceding sentence shall be payable by the Company to the Executive within sixty (60) days after the date of the termination of Executive's employment hereunder.
The Executive's subsequent death of disability shall in no way affect or limit the Company's obligations under this Section.
(b)	Termination by the Company for Cause.  In the event that the Company shall terminate the Executive's employment for Cause, this Agreement shall terminate and the obligations of the parties shall be as set forth in Section 8 of this Agreement.
(c)	Termination by the Executive Without Good Reason.  In the event that the Executive shall terminate employment hereunder other than for Good Reason, this Agreement shall forthwith terminate and the obligations of the parties shall be as set forth in Section 8 of this Agreement.
(d)	Disability.  In the event that the Company elects to terminate the Executive's employment pursuant to Section 6(e), the Executive shall continue to receive, from the date of such termination for a period of one year, one hundred percent (100%) of the Annual Base Salary, in accordance with the payroll practices of the Company for senior executive officers, reduced, however, by the amount of any proceeds from Social Security and disability insurance policies provided by and at the expense of the Company.
(e)	Death.  In the event of the death of the Executive during the term of this Agreement, (i) the Annual Base Salary to which the Executive is entitled shall be paid, in twelve (12) equal monthly installments following the date of death, to the last beneficiary designated by the Executive under the Company's group life insurance policy maintained by the Company or such other written designation expressly provided to the Company for the purposes hereof or, failing either such designation, to his estate.
(f)	Mutual Written Consent.  In the event that the Executive and the Company shall terminate the Executive's employment by mutual written agreement, the Company shall pay such compensation and provide such benefits, if any, as the parties may mutually agree upon in writing.
(g)	By the Executive due to Company Failure to set Internal Financial Goals or Adopt Stock Option Plan.  In the event that the Company fails to set internal financial goals or adopt a stock option plan and the Executive elects to terminate his employment under this Agreement, the Company shall (1) pay the Executive's accrued salary and any other accrued benefits through the effective date of termination; (2) reimburse the Executive for expenses already actually incurred through the effective date of termination; (3) pay or otherwise provide for any benefits, payments or continuation or conversion rights in accordance with the provisions of any employee benefit plan of which the Executive or any of his dependents is or was a participant or as otherwise required by law; (4) pay the Executive and his beneficiaries any compensation and/or provide the Executive or his eligible dependents any benefits due through the effective date of termination.
(h)	The Executive shall not be required to mitigate the amount of any payment provided for in this Section by seeking employment or otherwise.
8.   EFFECT OF EXPIRATION OF AGREEMENT OR TERMINATION OF      EXECUTIVE'S EMPLOYMENT
Upon the expiration of this Agreement by its terms or the termination of the Executive's employment by the Company for Cause or the Executive Without Good reason, neither the Company nor the Executive shall have any remaining duties or obligations except that:
(a)	The Company shall:
	(1)	pay the Executive's accrued salary and any other accrued benefits through the effective date of such expiration or termination;
	(2)	reimburse the Executive for expenses already actually incurred through the effective date of such expiration or termination;
	(3)	pay or otherwise provide for any benefits, payments or continuation or conversion rights in accordance with the provisions of any employee benefit plan of which the Executive or any of his dependents is or was a participant or as otherwise required by law;
	(4)	pay the Executive and his beneficiaries any compensation and/or provide the Executive or his eligible dependents any benefits due through the effective date of such expiration; and
	(5)	continue to remain bound by the terms of Section 12 hereof.
(b)	The Executive shall remain bound by the terms of Section 9,11 and 13.
9.   COVENANTS AS TO CONFIDENTIAL INFORMATION AND COMPETITIVE      CONDUCT
The Executive acknowledges and agrees as follows: (i) this Section 9 is necessary for the protection of the legitimate business interests of the Company, (ii) the restrictions contained in this Section 9 with regard to geographical scope, length of term and types of restricted activities are Reasonable; (iii) the Executive has received adequate and valuable new consideration for entering into this Agreement, and (iv) the Executive's expertise and capabilities are such that this obligation and the enforcement of it by injunction or otherwise will not adversely affect the Executive's ability to earn a livelihood.
(a)	Confidentiality of Information and Nondisclosure.  The Executive acknowledges and agrees that his employment by the Company under this Agreement necessarily involves proprietary information pertaining to the business of the Company and its related entities.  Accordingly, the Executive agrees that at all times during the terms of this Agreement and at all times thereafter, he will not, directly or indirectly, without the express written approval of the Company, unless directed by applicable legal authority having jurisdiction over the Executive, disclose to or use, or knowingly permit to be so disclosed or used, for the benefit of himself, any person, corporation or other entity other than the Company.
	(1)	any information concerning any financial matters, customer relationships, competitive status, supplier matters, internal organizational matters, current or future plans, or other business affairs of or relating to the Company or its subsidiaries
	(2)	any management, operational, trade, technical or other secrets or any other proprietary information or other data of the Company or its subsidiaries,
	(3)	any other information related to the Company or its related entities that the Executive should reasonably believe will be damaging to the Company or its related entities and which has not been published and is not generally known outside of the Company.
	The Executive acknowledges that all of the foregoing constitutes confidential and/or proprietary information of the Company, which is the exclusive property of the Company.  Excluded from this confidential and/or proprietary information of the Company shall be (i) information known by or generally available to the public through no breach by the Executive of this Agreement and which the public may use without any direct or indirect obligation to the Company and (ii) information that documentary evidence demonstrates was independently developed by the Executive,
(b)	Restrictive Covenant.  During the term of, and for a period of one (1) year (the "Restrictive Period") after the termination of the Executive's employment other than by the Company Without Cause or by the Executive With Good Reason, the Executive shall not render, directly or indirectly, services to (as an employee, consultant, independent contractor or in any other capacity) any person, firm, corporation, association or other entity which conducts the same or similar business as the Company or its subsidiaries at the date of the Executive's termination of employment within the states in which the Company or any of its subsidiaries is then doing business at the date of the Executive's termination of employment hereunder without the prior written consent of the Board of Directors which may be withheld at its sole discretion.  In the event that this Agreement expires after termination and is not renewed by the parties, the Restrictive Period shall not extend be yond the termination of employment unless the Company pays the Executive an additional amount equal to one year's Annual Base Salary, in which case it shall extend for a period of one (1) year.  In the event the Executive violates any of the provisions contained in this Section, the Restrictive Period shall be increased by the period of time in which the Executive was in violation as determined by an Arbitrator or Court of competent jurisdiction.  The Executive further agrees that at no time during the Restrictive period will the Executive attempt to directly or indirectly solicit or hire employees of the Company or its subsidiaries or induce any of them to terminate their employment with the Company or any of the subsidiaries.
(c)	Company Remedies.  The Executive acknowledges and agrees that any breach of this Agreement by him will result in immediate and irreparable harm to the Company and that the Company cannot be reasonably or adequately compensated by damages in an action at law.  In the event of a breach by the Executive of the provisions of this Section 9 as determined by an Arbitrator or a Court of competent jurisdiction, the Company shall be entitled, to the extent permitted by law, immediately to cease paying or providing the Executive or his dependents any compensation or benefits provided pursuant to Section 4, Section 6 or Section 7 of this Agreement as liquidated damages, and also to obtain immediate injunctive relief restraining the Executive from conduct in breach of the covenants contained in this Section 9.  Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach, including the recovery of damages from the Executive.
10.   AGREEMENT SURVIVES MERGER OR DISSOLUTION
This Agreement shall not be terminated by the Company's voluntary or involuntary dissolution or by any merger in which the Company is not the surviving or resulting corporation, or on any transfer of all or substantially all of the Company's assets.  In the event of any such merger or transfer of assets, the provisions of this Agreement shall be binding on and inure to the benefit of the surviving business entity or the business entity to which such assets shall be transferred and to the executive and his heirs.
11.   OWNERSHIP OF INTANGIBLES
All processes, inventions, patents, copyrights, trademarks, and other intangible rights that may be conceived or developed by Executive, either alone or with others, during the term of Executive's employment, whether or not conceived or developed during Executive's working hours, and with respect to which the equipment, supplies, facilities, or trade secret information of the Company was used, or that relate at the time of conception or reduction to practice of the invention to the business of the Company or to the Company's actual or demonstrably anticipated research and development, or that result from any work performed by Executive for the Company, shall be the sole property of the Company.  Executive shall execute all documents, including patent applications and assignments, required by the Company to establish the Company's rights under this Section.
12.   INDEMNIFICATION BY THE COMPANY
The Company shall, to the maximum extent permitted by law, indemnify and hold the Executive harmless against expenses, including reasonable attorney's fees judgements, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the Executive's employment by the Company.  The Company shall advance to the Executive any expense incurred in defending any such proceeding to the maximum extent permitted by law.
13.   DISCLOSURE OF CUSTOMER INFORMATION AND SOLICITATION OF       OTHER EMPLOYEES PROHIBITED
In the course of his employment, the Executive will have access to confidential records and data pertaining to the Company's customers and to the relationship between these customers and the Company's account executives.  Such information is considered secret and is disclosed to the Executive in confidence.  During his employment by the Company and for one (1) year after termination of that employment, the Executive shall not directly or indirectly disclose or use any such information, except as required in the course of his employment by the Company.
14.   RESOLUTION OF DIFFERENCES OVER BREACHES OF AGREEMENT
Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to, this Agreement, or the breach thereof, or arising out of any other matter relating to the Executive's employment with the Company, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof and if any relief other than injunctive relief is sought, the Company and the Executive agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in accordance with this Section 14 and the Commercial Arbitration Rules of the American Arbitration Association ("AAA").  The matter shall be heard and decided, and awards rendered by a panel of three (3) arbitrators (the "Arbitration Panel").  The Company and the Executive shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators (the "Commercial Panel") and AAA shall select a third arbitrator from the Commercial Panel.  The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof.  Except as provided in Section 12 hereof, each party shall bear sole responsibility for all expenses and costs incurred by such party in connection with the resolution of any controversy, dispute or claim in accordance with this Section 14; provided, however, the Executive may recover his costs and attorneys' fees in recovering compensation, stock and/or benefits to which he is entitled under this Agreement.
15.   WAIVER
The waiver by a party hereto of any breach by the other party hereto of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach by a party hereto.
16.   NON RELIANCE
Each party to this Agreement represents, warrants and acknowledges that in entering to this Agreement that it has not relied upon any act, representation, or warranty by any other party thereto, or by any of their representatives or attorneys, except as may be expressly contained in this Agreement.  Each party further represents and warrants that it has thoroughly discussed all aspects of this Agreement with his or its attorneys, that he/it has had a reasonable time to review this Agreement, that he/it fully understands the provisions of this Agreement and the effect thereof and that he/it is entering into this Agreement voluntarily and of his/its own free will.
17.   CONSTRUCTION OF AGREEMENT
(a)	Governing Law.  This Agreement shall be governed by and construed under the laws of the state of Texas.
(b)	Severability.  In the event that anyone or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
(c)	Headings.  The descriptive headings of the several paragraphs of this Agreement are inserted for convenience or reference only and shall not constitute a part of this Agreement.
18.   ENTIRE AGREEMENT AND INTEGRATION
This Agreement contains the entire agreement between the parties and supersedes all prior oral and written agreements, understandings, commitments, and practices between the parties, including all prior employment agreements, whether or not fully performed by the Executive before the date of this Agreement.  No amendments to this Agreement may be made except by a writing signed by both parties.
19.   NOTICES
Any notice to the Company required or permitted under this Agreement shall be given in writing to the Company, either by personal service or by registered or certified mail, postage prepaid, addressed to the legal department of the Company at its then principal place of business.  Any such notice to the Executive shall be given in a like manner and, if mailed, shall be addressed to his home address then shown in the Company's files.
For the purpose of determining compliance with any time limit in this Agreement, a notice shall be deemed to have been duly given (a) on the date of service, if served personally on the party to whom notice is to be given, or (b) on the third business day after mailing, if mailed to the party to whom the notice is to be given in the manner provided in this section.
20.   SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable, the remainder of this Agreement shall nevertheless remain in full force and effect.  If any provision is held invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.
21.   EXECUTION
Executed by the parties on January 16, 2002.

The Company



/s/ B.H. Adams             
By:  Byron H. Adams
Chairman of the Board of Directors of Adams Golf, Inc.



The Executive



/s/ O.G. Brewer             
By:  Oliver Brewer
President and Chief Executive Officer of Adams Golf, Inc.

EX-10.22

AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT

      THIS AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (this "Amendment"), dated as of March 28, 2002, made by and among

      GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (the "Lender"),

      ADAMS GOLF, LTD., a Texas limited partnership (the "Borrower"), and

      ADAMS GOLF, INC., ADAMS GOLF HOLDING CORP., ADAMS GOLF GP CORP., ADAMS GOLF R A C CORP., ADAMS GOLF MANAGEMENT CORP., ADAMS GOLF DIRECT RESPONSE, LTD. and ADAMS GOLF IP, L.P. (the "Guarantors") and, together with the Borrower, the "Credit Parties" and each a "Credit Party"),

      to the Loan and Security Agreement, dated as of March 27, 2001 (as amended, modified, restated or supplemented from time to time, the "Loan Agreement"), among Credit Parties and the Lender.  All capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Loan Agreement.

RECITALS

      A.      Pursuant to the Loan Agreement, the Lender has agreed to make Revolving Credit Advances to the Borrower secured by the Collateral.

      B.      To induce the Lender to enter into the Loan Agreement and make Revolving Credit Advances to the Borrower thereunder, each of the Guarantors jointly and severally guaranteed the payment and performance of all of the Obligations owing by the Borrower to the Lender pursuant to the Guaranty executed by each Guarantor.

      C.      The Borrower cannot satisfy all of the conditions precedent for the Lender's making of Revolving Credit Advances during the Fiscal Year ending December 31, 2002.  Among other things, the Borrower does not have $15.0 million of cash and cash equivalents on hand as required by Section 1.2(e) of the Loan Agreement before the Lender's making of the initial Revolving Credit Advance during such Fiscal Year.

      D.      Nevertheless, the Credit Parties have requested that the Lender make Revolving Credit Advances to the Borrower during the Fiscal Year ending December 31, 2002 and the Lender has agreed to such request, upon the terms and subject to the conditions set forth herein.

      E.      To accomplish the foregoing, the Credit Parties and the Lender have agreed to enter into this Amendment.

STATEMENT OF AGREEMENT

      NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the Credit Parties and the Lender hereby agree as follows:

ARTICLE I

AMENDMENTS TO LOAN AGREEMENT

      The Loan Agreement is hereby amended as follows:

	1.1	Defined Terms.  Schedule A, Definitions, is amended as follows:
	(a)	The following new definitions are added in appropriate alphabetical sequence:
		"Dilution" shall mean, for any period of determination, the difference between
	Accounts arising during such period and the actual cash collected on such Accounts during such period, expressed as a percentage of the total face amount of all Accounts arising during such period.
		"Net Special Revolving Credit Advance Availability" shall mean, at any time, the
	Special Revolving Credit Advance Availability less the amount of the Special Revolving Credit Advances then outstanding.
		"Special Revolving Credit Advance Closing Date" shall mean the date on which
	Each of the conditions precedent to Lender's making of any Special Revolving Credit Advance has been satisfied and Lender makes the initial Special Revolving Credit Advance to Borrower.
		"Special Revolving Credit Advance Availability" shall mean at any time, the
	Lesser of (i) the Special Revolving Credit Advance Maximum Amount or (ii) the Special Revolving Credit Advance Borrowing Base, in each case less reserves established by Lender from time to time.
		"Special Revolving Credit Advance Borrowing Base" shall mean at any time an
	Amount equal to the sum at such time of:
			(a)  the lesser of: (i) 50% percent of the value (as
		Determined by Lender in the exercise of its good faith credit judgement) of Borrower's Eligible Accounts; provided that Lender shall reduce the foregoing percentage by two percentage points for each percentage point that the dilution of Borrower's Accounts (calculated by Lender as the average dilution over the most recent twelve months) exceeds 35% percent, or (ii) 85% of the Net Forced Liquidation Value of Borrower's Eligible Inventory, as determined by Lender in the exercise of its good faith credit judgment, the sale of which has given rise to an Eligible Account (also determined by Lender in the exercise of its good faith credit judgement) that remains outstanding at such time, plus
			(b)  85% of the Net Forced Liquidation Value of Borrower's
		Eligible Inventory at such time consisting of finished goods, as determined by Lender in the exercise of its good faith credit judgement.
		"Special Revolving Credit Advance Inventory Appraisal" shall mean the
	Inventory Appraisal to be obtained by Lender before its making of any Special Revolving Credit Advance requested by Borrower as set forth in Section 1A.2(e) of this Agreement.
		"Special Revolving Credit Advances" shall mean those Revolving Credit
	Advances made by Lender pursuant to this Agreement from the Special Revolving Credit Advance Closing Date through the Special Revolving Credit Advance Termination Date.
		"Special Revolving Credit Advance Maximum Amount" shall mean $3.0 million
	dollars.
		"Special Revolving Credit Advance Termination Date" shall mean the earliest of
	(i) August 31, 2002, (ii) the date Lender's obligation to advance funds is terminated pursuant to Section 7.2, and (iii) the date of indefeasible prepayment in full by borrower of the Obligations in accordance with the provisions of Section 1.2(c).
	(b)	The definition of "Borrowing Base" is amended by deleting clause (a) of the
definition thereof in its entirety and by substituting in lieu thereof the following:
		"(a)	50% of the value (as determined by Lender in the exercise of its good
	faith credit judgement) of Borrower's Eligible Accounts; provided that Lender shall reduce the foregoing percentage by two percentage points for each percentage point that the Dilution of Borrower's Accounts (calculated by Lender as the average Dilution over the most recent twelve months) exceeds 35%, plus"
	(c)	The definition of "Stated Expiry Date" is amended to read "March 26, 2004."
	(d)	During the period from the Special Revolving Credit Advance Closing Date
through the Special Revolving Credit Advance Termination Date, the definitions of the following terms set forth in Schedule A to the Loan Agreement, whenever used in the Loan Agreement, shall have the following meanings:
		(i)	"Borrowing Availability" shall mean and refer to "Special Revolving
	Revolving Credit Advance Availability";
		(ii)	"Borrowing Base" shall mean and refer to "Special Revolving Credit
	Advance Borrowing Base";
		(iii)	"Net Borrowing Availability" shall mean and refer to "Net
	Special Revolving Credit Advance Availability"; and
		(iii)	"Revolving Credit Advances" shall mean and refer to
	"Special Revolving Credit Advances."
	1.2	Special Revolving Credit Advances.  A new Section 1A, Special Revolving
Credit Advances, is added as follows:
	1A	SPECIAL REVOLVING CREDIT ADVANCES.
		1A.1	Special Revolving Credit Advances.
		(a)	Subject to the terms and conditions of this Agreement, from the
	Special Revolving Credit Advance Closing Date through the Special Revolving Credit Advance Termination Date, (i) Lender agrees to make available advances (each, a "Special Revolving Credit Advance") in an aggregate outstanding amount not to exceed the Special Revolving Credit Advance Availability, and (ii) Borrower may at its request from time to time borrow, repay and reborrow, under this Section 1A.1.
		(b)	Borrower may request a Special Revolving Credit Advance in
	Accordance with Section 1.1(b) of this Agreement.
		1A.2	Provisions Applicable to Special Revolving Credit Advances.
	Except as otherwise specifically set forth in this Section 1A.2, all of the provisions of this Agreement pertaining to the Revolving Credit Advances shall apply to the Special Revolving Credit Advances:
		(a)	Upon the Special Revolving Credit Advance Termination Date
	the obligation of Lender to make Special Revolving Credit Advances hereunder shall immediately terminate and Borrower shall pay to Lender in full, in cash, all outstanding Special Revolving Credit Advances.
		(b)	If the outstanding amount of the Special Revolving Credit
	Advances shall at any time exceed the Special Revolving Credit Advances Availability, then Borrower shall immediately repay the Special Revolving Credit Advances in the amount of such excess.
		(c)	Borrower shall pay interest to Lender on the aggregate
	Outstanding Special Revolving Credit Advances at a floating rate equal to the Index Rate plus five and three-quarter percent (5.75%) per annum (the "Special Revolving Credit Advance Rate").  During the occurrence of any Event of Default, the Special Revolving Credit Advance Rate shall not be increased pursuant to Section 1.5(c) of this Agreement.
		(d)	All of the conditions precedent to the making of the Loans
	Generally, as set forth in Sections 1.2, 2.1 and 2.2 of the Loan Agreement, shall apply to the making of any of the Special Revolving Credit Advances except for the requirements of Sections 1.2(d) and (e) which shall not apply.
		1A.3	Special Provisions for Revolving Credit Advances
		(a)	Borrower shall not request, and Lender shall have no obligation
	to make, any Revolving Credit Advances during the period from the Special Revolving Credit Advance Closing Date through the Special Revolving Credit Advance Termination Date except for Special Revolving Credit Advances.
		(b)	The Clean-Up Period for the calendar year ending December 31,
	2002 shall commence no earlier than September 1, 2002 even if all of the Special Revolving Credit Advances are paid in full before such date.
		(c)	The next Reappraisal Period shall commence no earlier than
	December 1, 2002.
		(d)	Except as otherwise set forth in Section 1A.2(b) and (c), nothing
	contained in Section 1A.1 of this Agreement shall in any way change the terms of Lender's making of any Revolving Credit Advances during the calendar year ending December 31, 2003 or any subsequent calendar year."
	1.3	Financial Covenants.  Paragraph 4 of Schedule G to the Loan Agreement is
Amended in its entirety to read as follows:
		"4	Net Borrowing Availability.  Borrower shall maintain at all
	Times Net Borrowing Availability of not less than $3,000,000."
	1.4	Fees.  Schedule E to the Loan Agreement is amended by adding a new paragraph
7 as follows:
		"7.	SPECIAL REVOLVING CREDIT ADVANCE FEES:  In
	connection with Lender's agreement to make Special Revolving Credit Advances to Borrower under this Agreement, Borrower agrees to pay to Lender the following fees:
		(a)	A non-refundable additional fee of $100,000 (the "Special
	Revolving Credit Advance Fee") payable and fully earned on the date of the execution and delivery of Amendment No. 1 to this Agreement; and
		(b)	A monitoring fee of $10,000 for any month in which there is a
	Special Revolving Credit Advance outstanding, payable as of the first day in such month on which such Special Revolving Credit Advance is made."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
	The Credit Parties hereby represent and warrant to the Lender that:
	2.1	Compliance with the Loan Agreement and Other Loan Documents.  As of the
execution of this Amendment, the Credit Parties are in compliance with all of the terms and provisions set forth in the Loan Agreement and in the other Loan Documents to be observed or performed by the Credit Parties, except where the failure of the Credit Parties to comply has been waived in writing by the Lender.
	2.2	Representations in Loan Agreement and other Loan Documents.  The
representations and warranties of the Credit Parties set forth in the Loan Agreement and the other Loan Documents are true and correct in all material respects as of the date of this Amendment, except to the extent that any representation and warranty is expressly stated to relate to a specific earlier date, in which case, such representation and warranty is true and correct as of such earlier date.
	2.3	Power and Authorization.  The execution, delivery and performance by each
Credit Party of this Amendment and each of the other Loan Documents to which it is a party: (a) are within such Credit Party's power and authority; (b) have been duly authorized by all necessary or proper action; (c) are not in violation of any Requirement of Law or Contractual Obligation of such Credit Party (d) do not result in the creation or imposition of any Lien (other than Permitted Encumbrances) upon any of the Collateral; and (e) do not require the consent or approval of any Governmental Authority or any other Person.
	2.4	Enforceable Obligations.  This Amendment and each other Loan Document have
been duly executed and delivered on behalf of each Credit Party that is a party thereto, and is the legal, valid and binding obligation of such Credit Party, enforceable against it in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency and other similar laws affecting creditors' rights generally.
ARTICLE III
MODIFICATION OF LOAN DOCUMENTS
	3.1	Loan Documents.  The Loan Agreement and each of the other Loan Documents
are amended to provide that any reference to the Loan Agreement in the Loan Agreement or any of the other Loan Documents shall mean the Loan Agreement as amended by this Amendment, and as it is further amended, restated, supplemented or modified from time to time.
ARTICLE IV
CONDITIONS PRECEDENT
	It shall be a condition precedent to the effectiveness of the amendments to the Loan
Agreement as set forth in Article I hereof (including, without limitation, the Lender's making of any Special Revolving Credit Advances to the Borrower), that each of the following conditions shall have been satisfied:
	4.1	Documentation.  The Lender shall have received an original of this Amendment
duly executed by the Credit Parties.
	4.2	Payment of Special Revolving Credit Advance Fee.  The Borrower shall have
paid to the Lender the Special Revolving Credit Advance Fee.  Upon the execution and delivery of this Amendment, the Borrower hereby authorizes the Lender to make a Special Revolving Credit Advance to the Borrower in the amount of $100,000 for the payment of the Special Revolving Credit Advance Closing Fee.
	4.4	Representations and Warranties.  All of the representations and warranties made
by the Credit Parties in this Amendment and each of the Loan Documents shall be true and correct as of the Special Revolving Credit Advance Closing Date except to the extent that any such representation or warranty is expressly stated to relate to a specific earlier date, in which case, such representation and warranty shall be true and correct as of such earlier date.
	4.5	Due Diligence.  The Lender shall have successfully completed all due diligence
of the Credit Parties and the Collateral as the Lender, in its sole discretion, shall deem necessary or appropriate and, following the completion of such due diligence, shall have elected in its discretion to approve the making of the Special Revolving Credit Advances pursuant to the Loan Agreement as amended hereby.
ARTICLE V
GENERAL
	5.1	Full Force and Effect.  As expressly amended hereby, the Loan Agreement and
each of the other Loan Documents amended hereby shall continue in full force and effect in accordance with the provisions thereof.  As used in the Loan Agreement and each of the other Loan Documents amended hereby, "hereinafter", "hereto", "hereof" or words of similar import, shall, unless the context otherwise requires, mean the Loan Agreement or such other Loan Documents, as the case may be, in each as amended by this Amendment.
	5.2	Applicable Law.  This Amendment shall be governed by and construed in
accordance with the internal laws and judicial decisions of the State of North Carolina.
	5.3	Counterparts.  This Amendment may be executed in one or more counterparts,
each of which shall constitute an original, but all of which when taken together shall constitute but one and the same instrument.
	5.4	Expenses.  The Borrower shall reimburse the Lender for all fees and expenses
(legal or otherwise) incurred by the Lender in connection with the preparation, negotiation, execution and delivery of this Amendment and all other agreements and documents or contemplated hereby, and the closing of each of the transactions contemplated hereby, including without limitation, the Lender's legal fees and expenses, and the Lender's costs and expenses of obtaining the Special Revolving Credit Advance Inventory Appraisal.
	5.5	Headings.  The headings in this Amendment are for the purpose of reference
only and shall not affect the construction of this Amendment.
	5.6	Waiver of Jury Trial.  THE CREDIT PARTIES AND THE LENDER EACH
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AMENDMENT, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.

[Signatures Begin on the Next Page]

      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered on the date first above written.

	Borrower:
ADAMS GOLF, LTD.
By:	Adams Golf GP Corp., its sole general partner
	By:_/s/ Russell Fleischer_____________
	Name: Russell Fleischer
	Title: Vice President and Chief Financial Officer
	Credit Parties:
ADAMS GOLF, INC.
ADAMS GOLF HOLDING CORP.
ADAMS GOLF GP CORP.
ADAMS GOLF R A C CORP.
ADAMS GOLF MANAGEMENT CORP.
By:_/s/ Russell Fleischer___________
Name: Russell Fleischer
Title: Vice President and Chief Financial Officer
ADAMS GOLF DIRECT RESPONSE, LTD.
ADAMS GOLF IP, L.P.
By:  Adams Golf GP Corp., its sole general partner
	By:_/s/ Russell Fleischer
	Name: Russell Fleischer
	Title: Vice President and Chief Financial Officer

Lender:

GENERAL ELECTRIC CAPITAL CORPORATION

By:__/s/ Malcolm Ferguson                                        

Name:_Malcolm Ferguson                                          

Title:  Duly Authorized Signature

EX-10.23

REDACTED COPY

CONFIDENTIAL TREATMENT REQUESTED


CONFIDENTIAL PORTIONS OF THIS

DOCUMENT HAVE BEEN REDACTED

AND HAVE BEEN SEPARATELY

FILED WITH THE COMMISSION

[AMC LOGO]Assured Management Company

GOLF CONSULTANT AGREEMENT

	This Agreement is made on the 30th day of August, 1999, between THOMAS S.
WATSON ("CONSULTANT") and ADAMS GOLF, INC. ("ADAMS").
	In consideration of the mutual covenants and agreement hereinafter expressed, the
parties hereto do covenant and agree with each other as follows:
1.	GRANT TO ADAMS.
	CONSULTANT hereby gives and grants to ADAMS the exclusive worldwide right and license to use CONSULTANT'S name, facsimile signature, nickname, voice or likeness upon and in connection with the manufacture, sale, distribution, advertising and promotion of drivers and fairway woods ("EQUIPMENT"), manufactured or sold by ADAMS, its subsidiaries, affiliates or licensees as ADAMS in its sole discretion may determine.  See also Sections 4.1 and 4.2 herein.
2.	COVENANTS BY CONSULTANT.
	During the term of this Agreement, except as otherwise provided herein, CONSULTANT (a) will not give the right to use or permit the use of CONSULTANT's name, facsimile signature, nickname, voice or likeness to any other manufacturer or seller of golf clubs; (b) will not sponsor or endorse golf clubs made or sold by any other manufacturer or seller; and (c) will not serve as a consultant or advisor of any other manufacturer or seller of golf clubs.  See also Sections 4.1 and 4.2 herein.
3.	DUTIES OF CONSULTANT.
	During the term of this Agreement, CONSULTANT shall:
	3.1	To the extent provided to CONSULTANT by ADAMS, play exclusively with ADAMS EQUIPMENT, carry an ADAMS umbrella, wear an ADAMS visor or cap and carry the ADAMS golf bag.  However, CONSULTANT will not be required to wear ADAMS visor or cap in advertising for Polo Ralph Lauren.
	3.2	Have the option to add golf ball and/or clothing product identification, logo or endorsement of third-party companies that do not manufacture clubs under the same brand to visor or cap and/or golf bag.  No other product identification, logos or endorsements will be added to ADAMS visor or caps or golf bags without the express written consent of both parties, which consent shall not be unreasonably withheld.

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3.3	Retain full option to (a) negotiate and enter into contract with any golf ball manufacturer that does not manufacture clubs under the same brand, as well as (b) decide which golf shoes and gloves to endorse.
3.4	Exert best efforts to achieve a satisfactory record of play in a minimum of [*****] ([*****]) events annually, including made-for-television events.  In the event CONSULTANT should play less than [*****] ([*****]) events, then his annual retainer shall be reduced by a fraction of which the numerator is the number of events under [*****] ([*****]) he has played and the denominator of which is [*****] ([*****]).  For example, if CONSULTANT plays [*****] ([*****]) events, his annual compensation shall be reduced by [*****].  Both parties agree that in the event illness or other reasons outside the control of CONSULTANT prevent CONSULTANT from playing [*****] ([*****]) events, the parties agree to negotiate to resolve the issue, and if accord cannot be reached, then to refer to Section 15 herein.
3.5	Use best efforts to make [*****] ([*****])appearances in Japan during the term of this Agreement, under his normal fees and conditions.  If, in fact, there are no events that meet normal CONSULTANT conditions, ADAMS will assist in obtaining and/or producing same.  CONSULTANT will not be required to play regular tour events to meet these conditions.  If acceptable events are not available, the obligation is waived.
3.6	Advise and consult with ADAMS, at ADAMS' reasonable request, from time to time, relative to the design, testing and characteristics of EQUIPMENT.
3.7	Demonstrate, discuss and emphasize the newest features of ADAMS EQUIPMENT at every opportunity.
3.8	Be available for such press interviews, radio or TV appearances arranged for CONSULTANT by ADAMS which are compatible with CONSULTANT's own practice, play and personal time requirements.  CONSULTANT will be required to be available after a tournament win for selected interviews, either the Sunday afternoon or Monday morning following the win.  In all such interviews and appearances, CONSULTANT will use his best efforts to make reference to the ADAMS brand.

3.9	Cooperate with ADAMS in giving advice, suggestions and recommendations concerning the acceptability and playability of current ADAMS golf lines, the development of new ADAMS golf lines, and information about significant golf product and golf market trends, and meet as reasonably requested with ADAMS' Design/Testing Teams.
3.10	Make himself available on not more than two (2) days per Contract Year (as defined in Section 10 herein) for television and radio commercials and photo shoots, compatible with CONSULTANT's own practice, play and personal time

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_________________________
             [*****] - Confidential Material redacted and filed separately with the Commission.

		requirements, at no cost to ADAMS, except for expenses for himself and one associate as provided in Section 7.5 hereunder.  Said activities shall be directly related to the promotion of ADAMS golf products.
	3.11	Cooperate to the maximum extent possible, compatible with CONSULTANT's practice and play requirements on Tour and personal time requirements, in assisting ADAMS' promotional and public relations activities by making himself available for up to [*****] ([*****]) days per Contract Year (as defined in Section 10 herein), on no more than [*****] ([*****]) separate occasions, for personal appearances at no cost to ADAMS, except for expenses for himself and one associate as provided in Section 7.5 hereunder.  Said activities shall be directly related to the promotion of ADAMS golf products and shall not conflict with scheduled tournament play.  Each day shall be not more than [*****] ([*****]) hours in length, excluding travel time.  Days must be used during each Contract Year; days do not carryover to subsequent Contract Years.
	3.12	In the event ADAMS desires additional personal appearance or production days from CONSULTANT, other than days provided in Sections 3.10 and 3.11 herein, CONSULTANT will make himself available as may be mutually agreed by the parties at his then-current daily rate (which, as of January 1, 1999, is [*****] dollars ($[*****])), plus expenses.  This shall be in addition to any other fees payable as provided in Section 7 hereunder.
4.	DEVELOPMENT OF IRONS AND OTHER CLUBS.
	4.1	ADAMS will use best efforts, along with CONSULTANT, to develop irons and other clubs for CONSULTANT's use.  Until such clubs are developed to CONSULTANT's satisfaction, CONSULTANT retains right to use irons, putter and wedge of his choice, made by any manufacturer.

4.2

ADAMS, along with CONSULTANT, is making best efforts to develop a graphite tip shaft technology to interact with the new iron heads being developed.  CONSULTANT's input and endorsement through his usage on the Tour are a critical element in developing new clubs.

If CONSULTANT plays the iron developed by ADAMS, then he shall be entitled to a royalty of [*****] percent ([*****]%) of sales at ADAMS' wholesale price on sales in excess of [*****] dollars ($[*****]).  Wholesale price shall be defined as used in ADAMS' public accounting practices which are in accordance with GAAP.  By way of example, wholesale price shall be the ADAMS' sales price (less rejects, returns, cancellations, declines, credit card charge-backs, shipping and handling, bad debt, sales discounts, demo clubs, sales specials, sales promotions, net downs and sales taxes) on all sales.  This royalty shall be in addition to compensation provided in Section 7 herein.  If CONSULTANT is playing only the new iron head without the graphite tip, he shall receive a [*****] percent ([*****]%) royalty as set out herein but only on the sales of the steel shafted clubs sold worldwide.

3

_________________________
             [*****] - Confidential Material redacted and filed separately with the Commission.

4.3

Should ADAMS develop irons subsequently to the new irons contemplated in Section 4.2 above, CONSULTANT's royalty rights in Section 4.2 shall apply even if CONSULTANT chooses to keep playing the new irons contemplated in Section 4.2 above.  For example, if ADAMS develops a second generation of irons to the new irons contemplated in Section 4.2 above and sells the second generation of irons both with and without the graphite tip, and CONSULTANT chooses to continue playing the new irons contemplated in Section 4.2 above without the graphite tip rather than the second generation, CONSULTANT shall nevertheless be entitled to a royalty of [*****] percent ([*****]%) of the wholesale price on all second generation irons sold without the graphite tip on sales in excess of [*****] dollars ($[*****]).  In other words, CONSULTANT is not required to play the latest version of ADAMS' irons in order to receive royalties on all irons, but he must play a version of ADAMS' irons.

4.4

Within sixty (60) days next following the end of each Contract Year (as defined in Section 10 herein), ADAMS shall deliver to CONSULTANT, at CONSULTANT's address set forth herein, an appropriate itemized statement to CONSULTANT setting forth the total amount of Wholesale Sales for such preceding Contract Year, specifically identifying the products, and at the same time shall pay to CONSULTANT the royalty due for such period.

5.	REPRESENTATION.
	CONSULTANT will not have the right or authority to bind ADAMS by any representation or in any other respect whatsoever or to incur any obligation or liability in the name of or on behalf of ADAMS.
6.	ACTIVE STATUS, TERMINATION OR DEMISE.
	6.1	Total Termination:  In the event CONSULTANT dies, or is unable to play golf at all, then ADAMS can terminate this Agreement on thirty (30) days' written notice.
	6.2	Termination for Cause:  If either party commits any other material breach of this Agreement, the other party may terminate for cause upon giving fifteen (15) days written notice of such cause and provided the breach is not rectified within such fifteen (15) day period.  It shall be considered a material breach if ADAMS is adjudicated insolvent or declares bankruptcy or fails to make payment to CONSULTANT of any amount due hereunder or if CONSULTANT disparages ADAMS or discourages use of ADAMS' EQUIPMENT.
	6.3	Behavior:  During the term of this Agreement, CONSULTANT will conduct himself at all times with due regard to public morals and conventions.  If the value of the CONSULTANT endorsement is materially reduced or impaired because CONSULTANT shall have committed or shall commit any public act that

4

_________________________
             [*****] - Confidential Material redacted and filed separately with the Commission.

		involves moral turpitude under, or commits or violates any material, foreign, U.S., federal, or other applicable state or local laws, or which brings him into public disrepute, contempt, scandal or ridicule, or which insults or offends the community, or if CONSULTANT shall make any statements in derogation in any material respect of ADAMS or any of its affiliates or any of their respective products or services and such statement is made to the general public or becomes a matter of public knowledge; then at any time after the occurrence of such act, thing or statement, ADAMS shall have the right, in addition to its other legal and equitable remedies, to immediately terminate this Agreement, by giving written notice to CONSULTANT.  ADAMS must exercise its right of termination within ninety (90) days of its senior management becoming aware of the conduct giving rise to the right of termination.
7.	COMPENSATION TO CONSULTANT.
	7.1	Personal Use Equipment:  During the term of this Agreement, ADAMS shall supply CONSULTANT with a reasonable quantity of EQUIPMENT for CONSULTANT's personal use and an allowance of ten (10) iron sets and thirty (30) woods per Contract Year for friends and family.
	7.2	Annual Retainer:  In addition to any other compensation payable under this Agreement, and except as provided in Section 7.3 below, ADAMS shall pay CONSULTANT an annual minimum retainer, as follows:

Year 1 (9/1/99-8/31/00)	[*****] dollars	$[*****]
Year 2 (9/1/00-8/31/01)	[*****] dollars	$[*****]
Year 3 (9/1/01-8/31/02)	[*****] dollars	$[*****]
Year 4 (9/1/02-8/31/03)	[*****] dollars	$[*****]
Year 5 (9/1/03-8/31/04)	[*****] dollars	$[*****]

	Payments shall be made in two (2) equal installments on September 1 and March 1 of each respective year, except for Year 1, when the 1st payment shall be due October 1, 1999.
7.3	Tournament Bonus Money:  A minimum of [*****] dollars ($[*****]) per televised win to be paid within thirty (30) days after event concludes.
7.4	Stock.  ADAMS shall grant CONSULTANT the option to purchase

5

_________________________
             [*****] - Confidential Material redacted and filed separately with the Commission.

[*****] ([*****]) shares of ADAMS' stock at market price at the close of market on the date of execution of this Agreement.  This right will vest [*****] percent ([*****]%) per year of this Agreement.  If (i) the outstanding shares of Common Stock of ADAMS are increased, decreased or exchanged for a different number or kind of shares or other securities are distributed in respect of such shares of Common Stock (or any stock or securities received with respect to such Common Stock), through merger, consolidation, sale or exchange of all or substantially all of the assets of ADAMS, reorganization, recapitalization, relcassification, stock dividend, stock split, reverse stock split, spin-off or other distribution with respect to such shares of Common Stock (or any stock or securities received with respect to such Common Stock), or (ii) the value of the outstanding shares of Common Stock of ADAMS is reduced by reason of an extraordinary cash dividend, an appropriate and proportionate adjustment shall be made in (1) the maximum number and kind of shares or securities subject to this Plan as provided in Section 3.1, (2) the number and kind of shares or other securities subject to then outstanding Stock Options and/or (3) the price for each share or other unit of any other securities subject to then outstanding Stock Options.

	7.5	Expenses:  For the personal appearances contemplated in Sections 3.5, 3.10 and 3.11, ADAMS shall reimburse CONSULTANT for travel expenses for CONSULTANT and a companion of choice.  Travel expenses shall include jet fuel or first-class round-trip airfare, lodging, meals and local transportation.
8.	ADVERTISING.
	Prior to publishing or placing any advertising or promotional material which uses CONSULTANT's name, facsimile signature, nickname, voice or likeness, ADAMS shall submit the same to CONSULTANT, or CONSULTANT's designee, for approval, which approval shall not be unreasonably withheld or delayed.  In the absence of any specific disapproval communicated in writing to ADAMS within fourteen (14) days after mailing a copy to CONSULTANT, or CONSULTANT's designee, such advertising or promotional material shall be deemed to have been approved.  CONSULTANT, or CONSULTANT's designee, shall notify ADAMS of specific grounds for disapproval.
9.	MEMBERSHIPS.
	9.1	CONSULTANT warrants and represents that during the term of this Agreement he is a member in good standing of SAG, AFTRA or any other organization having jurisdiction over CONSULTANT's services hereunder.  This agreement is subject to all of the terms and conditions of the collective bargaining agreements with SAG, AFTRA, or any other union agreements or codes having jurisdiction over CONSULTANT's services hereunder.  In the event of a conflict between any provision of this Agreement and any such collective bargaining agreement, the latter shall prevail.

6

_________________________
             [*****] - Confidential Material redacted and filed separately with the Commission.

	9.2	All fund payments to the Pension and Health Fund of SAG and/or the Health and Retirement Funds of AFTRA shall be paid directly by an agent designated by ADAMS who is bound by the applicable collective bargaining agreement.  Pension and Health payments shall be made on the dates on which the CONSULTANT's annual retainer payments are made.
10.	TERM OF AGREEMENT.
	This Agreement shall commence as of the 1st day of September, 1999, and shall remain in effect for a period of five (5) years up to and including the 31st day of August 2004. A Contract Year shall be the one-year period beginning September 1, 1999 and each anniversary thereafter.  Unless renewed in writing by the authorized representatives of both parties, this Agreement shall then terminate.

11.	BOOKS AND RECORDS.
	ADAMS agrees that it will maintain accurate and complete records and books of account showing all shipments of irons shipped by it and the price thereof. CONSULTANT, or CONSULTANT's representatives, shall have the right at reasonable times (prior to the expiration of two (2) years after each Contract Year) to inspect the books and records of ADAMS insofar as they shall relate to the computation of royalties to be paid to CONSULTANT pursuant to this Agreement.
	CONSULTANT shall be entitled to any time within two (2) years after the receipt of any statement to question such statement by providing notice in writing of such question.  If ADAMS does not satisfy CONSULTANT within thirty (30) days after said question, CONSULTANT may have an audit made of all books and records of ADAMS which may in any way pertain to Gross Sales and ADAMS does by this Agreement authorize CONSULTANT, or CONSULTANT's representatives, to appear to examine and to make extracts from any bank records, any tax returns, or any accounting records or books which may in any way pertain to the Gross Sales of ADAMS.  If such audit shall be made by a certified public accountant and shall show an error prejudicial to CONSULTANT in an amount greater than five percent (5%) of the applicable Gross Sales reported by ADAMS for the statements being contested, ADAMS shall pay all reasonable expenses of the audit.  Any amount due CONSULTANT as commission or expenses for audit sh all be paid upon presentment of a statement by CONSULTANT to ADAMS of amounts due.
12.	NOTICE.
	Every written notice or written report which may be served upon CONSULTANT, according to the terms of this agreement, may be served by enclosing it in a postpaid envelope addressed to:

7

		Charles E. Rubin, Esquire Assured Management Company 1901 West 47th Place, Suite 200 Westwood, Kansas  66205
	or at such other address as is given in writing to ADAMS by CONSULTANT.
	Every written notice which may be served upon ADAMS, according to the terms of this Agreement, shall be served by enclosing it in a postpaid envelope addressed to:
		Barney H. Adams Golf Adams Golf, Inc. 2801 East Plano Parkway Plano, Texas  75074
	or at such other address as is given in writing by ADAMS to CONSULTANT.
13.	WARRANTIES AND INDEMNITIES.
	13.1	CONSULTANT represents and warrants that CONSULTANT is free of all prior undertakings and obligations which would prevent or tend to impair either the full performance of CONSULTANT's obligations hereunder or ADAMS' full enjoyment of the rights and privileges granted to it by CONSULTANT.
		CONSULTANT agrees to protect, indemnify and hold harmless ADAMS from any and all liability, claims, causes of action, suits, damages and expenses (including reasonable attorneys' fees and expenses) for which it becomes liable or is compelled to pay by reason of a breach of any covenant or representation in this agreement.
	13.2	ADAMS agrees to defend, indemnify and hold harmless CONSULTANT from any and all liability, claims, causes of action, suits, damages and expenses (including reasonable attorneys' fees and expenses) for which he becomes liable or is compelled to pay by reason of or arising out of any claim or action for personal injury, death or otherwise involving alleged defects in ADAMS' products, provided that ADAMS is promptly given notice in writing and is given complete authority and information required for the defense, and ADAMS shall pay all damages or costs awarded therein against CONSULTANT and any other cost incurred by CONSULTANT in defense of any suit, but shall not be responsible for any cost, expense or compromise incurred or made by CONSULTANT without ADAMS' prior written consent.
14.	SIGNIFICANCE OF HEADINGS.
	Section headings contained herein are solely for the purpose of aiding in speedy location of subject matter and are not in any sense to be given weight in the construction of this

8

	Agreement.  Accordingly, in case of any question with respect to the construction of this Agreement, it is to be construed as though such section headings had been omitted.
15.	APPLICABLE LAW.
	This Agreement shall be governed and construed according to the laws of the State of Kansas.
	The parties agree that any dispute arising under or in connection with this Agreement shall be resolved by arbitration in accordance with the Commercial Rules and Regulations then applicable of the American Arbitration Association, and any decision resulting from such arbitration shall be binding upon the parties hereto, and judgment on any decision of the arbitrator(s) may be entered in any court having jurisdiction over the parties.
16.	ENTIRE AGREEMENT.
	The provisions of this Agreement are intended by the parties as a complete, conclusive and final expression of their agreement concerning the subject matter hereof, which Agreement supersedes all prior agreements concerning the subject matter, and no other statement, representation, agreement or understanding, oral or written, made prior to or at the execution hereof, shall vary or modify the written terms hereof.  No amendments, modifications or releases from any provision hereof shall be effective unless in writing and signed by both parties.
17.	WAIVER.
	Unless otherwise mutually agreed in writing, no departure from, waiver of, or omission to require compliance with any of the terms hereof by either party shall be deemed to authorize any prior or subsequent departure or waiver, or obligate either party to continue any departure or waiver.
18.	EXECUTION AND DELIVERY REQUIRED.
	This instrument shall not be considered to be an agreement or contract nor shall not create any obligation whatsoever on the part of CONSULTANT or ADAMS unless and until it has been signed by CONSULTANT, or a duly authorized representative, and by duly authorized representatives of ADAMS and delivery has been made of a fully signed original to both parties.
19.	SEVERABILITY.

9

	Any provision or part of this Agreement prohibited by applicable law shall be ineffective to the extent of such prohibition without invalidating the remaining provisions or parts hereof.
20.	RELATIONSHIP.
	Both parties agree that this Agreement does not constitute and shall not be construed as a constituting of a partnership or joint venture between ADAMS and CONSULTANT. Neither party shall have any right to obligate or bind the other party in any manner whatsoever, and nothing herein contained shall give or is intended to give any rights of any kind to any third person.
21.	ASSIGNMENT AND CHANGE OF CONTROL.
	21.1	Neither ADAMS nor CONSULTANT shall have the right to grant sublicenses hereunder or to assign, alienate or otherwise transfer any of its rights or obligations hereunder, except CONSULTANT shall have the right to assign his financial benefits and ADAMS hereby consents to such assignment.
	21.2	In the event that ADAMS or its shareholders shall, through any transaction(s), sell or otherwise transfer control (more than fifty percent (50%) of the outstanding stock) of ADAMS to a third party, then CONSULTANT shall have the right to terminate this Agreement in its entirety.  ADAMS shall notify CONSULTANT of the pending transaction(s) in writing, and CONSULTANT shall notify ADAMS within thirty (30) days if he elects to grant his approval of the transfer.
	21.3	In the event that Barney Adams leaves ADAMS for any reason, CONSULTANT shall have the right to terminate this Agreement.
22.	CONFIDENTIALITY.
	Both parties understand that the contents of this Agreement, including, but not limited to, all amounts paid or to be paid and any additional consideration, are extremely confidential, and that disclosure of same to any third party could be detrimental to the interests of one or both parties.  Therefore, both parties agree not to disclose the terms of this Agreement, without the permission of the other party, to any third party other than to CONSULTANT's business, legal and financial advisors, and with respect to all such advisors, CONSULTANT shall take all reasonable steps to ensure such confidentiality to ADAMS.
	CONSULTANT recognizes that during the course of performing his duties hereunder he may become aware of proprietary, confidential information concerning ADAMS, its products, methods, processes, billing practices, financial condition, etc., or information ADAMS designates as confidential (collectively "Confidential Information"). CONSULTANT agrees that he will maintain in confidence and not disclose to any third party at any time any such Confidential Information and shall not use any such information to the detriment of ADAMS or for any purpose not contemplated by the Agreement.

10

	IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.

                /s/Tom Watson      
Tom Watson     (illegible entry)

APPROVED FOR ADAMS GOLF, INC.


By:              /s/B.H. (Barney) Adams   
         Barney H. Adams

11

EX-21.1

EXHIBIT 21.1

ADAMS GOLF, INC., A DELAWARE CORPORATION

SUBSIDIARIES

The Company conducts its operations through several direct and indirect wholly-owned subsidiaries, including (i) Adams Golf Holding Corp., which holds limited partnership interest of certain indirect subsidiaries of the Company; (ii) Adams Golf GP Corp., which holds capital stock or general partnership interests, as applicable, of certain indirect subsidiaries to the Company; (iii) Adams Golf Direct Response, Ltd., which operates advertising activities; (iv) Adams Golf, Ltd., which operates the golf club design, assembly and retail sales business; (v) Adams Golf IP, L.P., which holds the intellectual property rights of the Company, and (vi) Adams Golf Management Corp., which provides management and consulting services to certain of the Company's indirect subsidiaries.  A complete list of the Company's subsidiaries at March 29, 2002 is as follows:

Adams Golf, Ltd., a Texas limited partnership
Adams Golf Direct Response, Ltd., a Texas limited partnership
Adams Golf Holding Corp., a Delaware corporation
Adams Golf Management Corp., a Delaware corporation
Adams Golf RAC Corp., a Delaware corporation
Adams Golf IP, L.P., a Delaware limited partnership
Adams Golf Foreign Sales Corporation, a Barbados, W.I. corporation
Adams Golf U.K. Ltd., a United Kingdom private limited company
Adams Golf Japan, Inc. a Japan kabushiki kaisha