FORM SB-2/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
Aarica Holdings, Inc.
(Exact name of registrant as specified in its charter)

Texas 6159 74-2977141.
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Classification Identification Number)
Code Number)

Aarica Holdings, Inc.
1000 Winderley Place, Suite 124
Maitland, Florida 32751

(Address, including zip code and telephone number,
including area code, of registrant's principal executive offices
and principal place of business)

Carol Kolozs, President
Aarica Holdings, Inc.
1000 Winderley Place, Suite 124
Maitland, Florida 32751
(407) 667-9411
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------
Copies To:
Maurice J. Bates, Esq. Norman R. Miller, Esq.
Maurice J. Bates, L.L.C. Kirkpatrick & Lockhart LLP
5000 Quorum Drive 3100 Bank One Center
Suite 629 1717 Main Street
Dallas, Texas 75240 Dallas, Texas 75201-4681
Phone (972) 385-2167 Phone (214) 939-4906
Fax (972) 490-1619 Fax (214) 939- 4949

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective. If this Form is
filed to register additional securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box.

CALCULATION OF REGISTRATION FEE

Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price Per Share Aggregate Offering Price Registration Fee

(1) (1) (1)
- ------------------------------------------------------------------------------------------------------------------------
Units 1,165,000 $10.00 $11,650,000 $3,076
- ------------------------------------------------------------------------------------------------------------------------
Common Stock, par
value $.01 (2) 1,165,000 (2) (2) (2)
_______________________________________________________________________________________________________________________

Redeemable Common Stock
Purchase Warrants (2) 1,165,000 (2) (2) (2)
- ------------------------------------------------------------------------------------------------------------------------
Common Stock, par
value $.01 (3) 1,165,000 $12.00 $13,980,000 $3,691
- ------------------------------------------------------------------------------------------------------------------------
Underwriter's Warrants (4) 110,000 $.01 $100 $1
- ------------------------------------------------------------------------------------------------------------------------
Units Underlying the
Underwriter's Warrants 110,000 $12.00 $1,320,000 $349
- ------------------------------------------------------------------------------------------------------------------------
Common Stock, par
value $.01 (5) 110,000 (5) (5) (5)
- ------------------------------------------------------------------------------------------------------------------------
Redeemable Common Stock
Purchase Warrants 165,000 (5) (5) (5)
- ------------------------------------------------------------------------------------------------------------------------
Common Stock, par
value $.01 (6) 165,000 $18.00 $2,970,000 $784
- ------------------------------------------------------------------------------------------------------------------------

Total $29,920,100 $7,900

(1) Estimated solely for the purpose of calculating the registration fee.
(2) Included in the units. No additional registration fee is required.
(3) Issuable upon the exercise of the redeemable common stock purchase
warrants. Pursuant to Rule 416 there are also registered an indeterminate
number of shares of common stock, which may be issued pursuant to the
anti-dilution provisions applicable to the redeemable common stock purchase
warrants, the underwriters' warrants and the redeemable common stock
purchase warrants issuable under the underwriters' warrants.
(4) Underwriters' warrants to purchase up to 165,000 units, consisting of an
aggregate of 165,000 shares of common stock and 165,000 redeemable common
stock purchase warrants.
(5) Included in the units underlying the underwriters' warrants. No additional
registration fees are required.
(6) Issuable upon exercise of redeemable common stock purchase warrants
underlying the underwriters' units. The registrant hereby amends this
Registration Statement on such date or dates as may be necessary to delay
its effective date until the registrant shall file a further amendment
which specifically states that this Registration Statement shall thereafter
become effective in accordance with Section 8(a) of the Securities Act of
1933 or until this Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may
determine.

SUBJECT TO COMPLETION, DATED April 12, 2001
Initial Public Offering Prospectus

1,100,000 Units
Consisting of 1,100,000 Shares of Common Stock and
1,100,000 Redeemable Common Stock Purchase Warrants

Aarica Holdings, Inc.

Aarica Holdings, Inc. The Offering:

o Aarica designs, manufactures o We are offering 1,100,000 units,
and distributes athletic footwear, each unit consists of one share of
sportswear and sports accessories common stock for five years
in Mexico for United States and through Rushmore Securities
European brands. on a firm commitment basis. We
anticipate that the initial public
o Aarica Holdings, Inc. offering price will be between
1000 Winderley Place, $9.00 and $11.00 per unit
Suite 124 Securities Corporation on a firm
Maitland, Florida 32751 commitment basis. We anticipate
Telephone: (407) 667-9411 that the initial public offering
price will be between $9.00 and
Per Unit Total $11.00 per unit.
-------- -----
Public offering price $ o The underwriter has an option to
Underwriting discounts $ purchase an additional 165,000
Proceeds to Aarica $ units to cover any over-allotments.
The 165,000 shares included in the
over-allotment units will be
provided by certain selling
shareholders.
o We intend to use the offering
proceeds for possible acquisition
of businesses, brands or products,
reduction of debt, and working
capital and other general corporate
purposes.

We have applied to list our units, common stock and warrants on the Boston Stock
Exchange and the NASDAQ SmallCap Market under the following symbols:

Boston Stock Exchange: NASDAQ SmallCap Market
Units AHM/U ARHI/U
Common stock AHM ARHI
Warrants AHM/W ARHI/W

Investing in our units, common stock and warrants involves certain risks. See
Risk Factors beginning on page 6.

Neither the SEC nor any state securities commission has approved or disapproved
these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.

RUSHMORE SECURITIES CORPORATION

Prospectus dated 2001

TABLE OF CONTENTS
Page
Prospectus Summary..........................................................3
Selected Consolidated Financial Information.................................5
Risk Factors................................................................6
We have a history of operating losses and may continue to incur operating
losses until an adequate operating revenue base is established..........6
The strength of our competitors makes it difficult to compete with their
distribution operations in Mexico.......................................6
We are highly dependent on our licensing agreements with Lotto and L.A.
Gear and the loss of
such agreements would have an adverse impact on our revenues............6
We are dependent upon the proceeds of this offering to finance our
operations..............................................................6
We do not have product liability insurance and could be subject to claims
for defective products which could have a material adverse effect on our
business................................................................6
We are subject to prevailing Mexican economic conditions and changes in
government policies.....................................................7
We are subject to fluctuations in the Mexican peso which have had an
adverse impact on our financial condition in the past ..................7
You may be limited in your ability to enforce civil liabilities against
Aarica since most of our assets and operations are located in Mexico....7
We are subject to duties on imports which could limit the variety of
footwear that we sell...................................................8
The imposition of monetary exchange controls would adversely affect our
business................................................................8
Loss of Carol Kolozs and other key management personnel would adversely
impact our business.....................................................8
Dilution to new shareholders will be approximately 84.3%..................8
We must keep our prospectus current under the Securities Act and state
securities acts for warrant holders to be able to exercise their
warrants................................................................8
Management will retain broad discretion in the use of the offering's
proceeds................................................................8
Significant sales of common stock in the market by existing shareholders
could adversely affect market prices of the common stock................8
The representative of the underwriters lacks experience in equity
offerings, which could adversely affect our offering....................8
There has been no prior market for the securities offered and we cannot
assure that an active trading market will develop.......................9
Use of Proceeds............................................................10
Dividend Policy ...........................................................10
Dilution...................................................................11
Capitalization ............................................................12
Management's Discussion and Analysis of Financial Condition and Results of
Operations ............................................................13
Business of Aarica ........................................................17
Additional Information ....................................................23
Management.................................................................24
Certain Relationships and Related Transactions.............................28
Principal Shareholders.....................................................30
Description of Securities..................................................31
Shares Eligible for Future Sale ...........................................32
Plan of Distribution ......................................................33
Listing Applications.......................................................36
Legal Matters..............................................................36
Experts.................................................................. 36
Index to Consolidated Financial Statements.................................37

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this
prospectus. Before making an investment decision, you should read the entire
prospectus carefully, including the consolidated financial statements and
related notes, in order to understand our business and this offering fully.

References in this prospectus to "Aarica"," We", "Our" and "Us", refer to
Aarica Holdings, Inc., a Texas corporation, which owns 99% of the outstanding
capital stock of Aarica Holdings, Mexico, S. A. de C. V., a Mexican holding
company organized to own substantially all of the stock of Mexican subsidiaries.

Unless otherwise indicated, the information in this prospectus assumes the
underwriters' over-allotment option and the underwriters' warrants are not
exercised.

Aarica and its Business

Our executive offices in the United States are located at 1000 Winderley
Place, Suite 124, Maitland, Florida 32751, telephone (407) 667-9411 and in
Mexico City at Lago Chalco No. 156, Col. Anahuac Mexico, D. F. 11320. The
telephone number in Mexico is (525) 260-05-82.

The Offering
Securities offered:

1,100,000 units. Each unit consists of one share of common stock and one warrant
to purchase an additional share of common stock. The shares and the warrants
included in the units will automatically separate 30 days from the date of this
prospectus, after which the common stock and warrants in the units will trade
separately.

Warrants:

The warrants included in the units will be exercisable commencing 30 days after
the offering. The exercise price of a warrant is (120% of the offering price of
the units). We may redeem some or all of the outstanding warrants for $.05 per
warrant at any time on 30 days prior written notice if the closing price of the
common stock on the NASDAQ SmallCap Market or the Boston Stock Exchange is at
least (150% of the offering price of the units) per share for 10 consecutive
trading days.

Common stock to be outstanding
after the offering.......................3,925,000 (1)
Warrants to be outstanding
after the offering.......................1,100,000 warrants (2)

Use of Proceeds..........Possible acquisition of businesses, brands or products,
reduction of debt, and working capital purposes.

Proposed Market Symbols:
Boston Stock Exchange: NASDAQ SmallCap Market
Units AHM/U ARHI/U
Common stock AHM ARHI
Warrants AHM/W ARHI/W
- -----------------
(1)The 3,925,000 shares of common stock to be outstanding after the offering do
not include:

(a) Up to 1,100,000 shares issuable upon exercise of the warrants;

(b) Up to 165,000 shares issuable upon exercise of the warrants included in
the underwriters' over-allotment option;

(c) 110,000 shares of common stock issuable upon exercise of the
underwriters' warrants and 110,000 shares issuable upon exercise of the
warrants included in the underwriters' warrants;

(d) 105,000 shares issuable upon exercise of warrants issued to a selling
agent in a private placement in June 1999;

(e) 350,000 shares of common stock which may be issued under the company's
stock compensation plan;

(f) 405,000 shares issuable to Madison & Wall Worldwide, Inc. (formerly
Continental Capital & Equity Corporation) upon exercise of outstanding
stock options at $2.00 per share; and

(g) 275,000 shares issuable to Robert E. Schmidt, Jr., a director of the
company upon the exercise of options at $2.00 per share.

(2) The 1,100,000 warrants to be outstanding after the offering do not include
up to 165,000 warrants issuable upon exercise of the over-allotment option,
110,000 warrants underlying the underwriters' warrants and 105,000 warrants
issued to the selling agent in a private placement in June 1999.

Selected Consolidated Financial Information

The following selected financial data has been derived from our audited
balance sheets and statements of operations for the fiscal years ended December
31, 2000 and 1999. This selected financial data should be read in conjunction
with the consolidated financial statements and related footnotes included in
this prospectus.

Years Ended
December 31,
2000 1999
Operating Data:

Net sales $6,989,122 $5,433,254
Loss before extraordinary item (1,685,120) (2,220,752)
Extraordinary item-extinguishment of debt 4,058,015 -
Net income (loss) 2,372,895 (2,220,752)
Loss per share before extraordinary item (1) (.60) (.82)
Extraordinary item earnings per share 1.45 -
Earnings (loss) per share .85 (.82)
Weighted average common shares
outstanding 2,805,208 2,703,836

As of
Dec. 31, 2000
Actual As Adjusted (2)
Balance Sheet Data:

Total assets $5,128,579 $9,928,579
Total liabilities 8,122,564 3,772,564
Shareholders' equity (deficit) (2,993,985) 6,156,015

- ---------------
(1) Basic and diluted.
(2) As adjusted to reflect the sale of the units offered by this prospectus at
an offering price of $9.00 to $11.00 per unit and the application of the
net proceeds therefrom. The calculations in this table and elsewhere in
this prospectus are based on $10 per share, the mid-point of the range of
this offering.

Risk factors

You should carefully consider each of the following risk factors and
all of the information in this prospectus before deciding to invest in the
securities offered through this prospectus. Some of the risks listed below
relate to our business specifically. Other risks relate to doing business in
Mexico and to the ownership of our stock. The risks described below are not the
only ones facing our company. There may be additional risks relating to, our
company specifically and to publicly traded companies generally, not
specifically identified that may adversely affect our business and the market
price for our stock.

Risk factors relating to our business

We have a history of operating losses and may continue to incur
operating losses until an adequate operating revenue base is established. We
have been in business for approximately 10 years and have experienced a variety
of conditions which have negatively impacted our ability to sustain consistent
profits, such as the Mexican financial crisis in 1995 and a shortage of
operating capital. For the fiscal years ended December 31, 2000 and 1999 we had
operating losses of $699,532 and $1,318,875, respectively. We expect to incur a
loss during the first quarter of 2001 due to the reduction of manufacturing to a
minimal level and a decrease in net sales compared to the first quarter of 2000.
We will likely continue to incur significant expenses associated with the
development and operation of our businesses, a substantial portion of which may
be incurred before the realization of the related revenues. These expenditures
may result in operating losses until an adequate revenue base is established. We
cannot assure that we will be able to operate profitably in the future.

The strength of our competitors makes it difficult to compete with
their distribution operations in Mexico. Aarica competes in Mexico with a number
of major brands such as Nike, Fila, Reebok and other local distributors for
market share in its distribution operations for athletic footwear and related
accessories. These major brands and some of the local brands could have greater
financial, marketing and sales resources than Aarica.

We are highly dependent on our licensing agreements with Lotto and L.A.
Gear and the loss of such agreements would have an adverse impact on our
revenues. Approximately 90% of our net sales in 2001 are expected to be derived
from licensing agreements with Lotto and L.A. Gear for the manufacture and
distribution of their products. The termination of either of these licensing
agreements would have a material adverse effect on our operations. Our current
license agreements extend through December 2007 and July 2018 for L.A. Gear and
Lotto, respectively, and the licensors can terminate the agreements in the event
Aarica breaches the license covenants. We intend to lessen our dependence on our
current licensors by obtaining new licensing agreements with other international
brand manufacturers and distributors. We also intend to develop our own in-house
brands of products for niche markets in the United States and Mexico, but there
is no guarantee that we will be able to accomplish this in the near future. We
are currently producing soccer gloves and shin guards under the Lotto brand and
intend to develop these and other products for marketing under our own brands.
We are obligated to make minimum royalty payments to L.A. Gear of $75,000 in
2000, $100,000 in 2001, $150,000 in 2002 and $200,000 thereafter and to Lotto in
the amount of $110,000 in 2000, thereafter increasing by approximately 11%
annually. We are not in compliance with the payments of our royalty obligations
to Lotto, but Lotto has not notified the company that it is in default of the
royalty agreement.

We are dependent upon the proceeds of this offering to finance our
operations. Our shortage of working capital in the past has severely impaired
our ability to efficiently purchase raw materials, manage our manufacturing
output and allow us to develop new products and customers. Our ability to
overcome this shortage in working capital is dependent upon the receipt of
proceeds from this offering. In the event this offering is not completed, we may
not be able to obtain the required financing to implement our business plan.

We do not have product liability insurance and could be subject to
claims for defective products which could have a material adverse effect on our
business. We do not currently carry product liability insurance. Management has
made this determination because the majority of our revenues are generated in
Mexico and it believes that product liability suits are less likely to be
successful in Mexico than in the United States. Although management believes
that successful product liability suits are rare in the athletic footwear
industry in the United States, there have been successful suits brought against
manufacturers. Management will continue to evaluate the feasibility and cost
effectiveness of carrying product liability insurance. A successful material
product liability suit against Aarica would have a material adverse impact on
Aarica and its operations. We will seek to obtain product liability insurance if
distribution is expanded into the United States.

Risk factors relating to doing business in Mexico

We are subject to prevailing Mexican economic conditions and changes in
government policies. Substantially all of our existing assets and revenues are
located and generated in Mexico. In addition, a substantial portion of the
proceeds from this offering is to be invested in the development of our business
in Mexico. Our business is, and will continue to be, affected by prevailing
conditions in the Mexican economy and is, to a significant extent, vulnerable to
economic trends and changes in government policies. The Mexican government has
exercised and continues to exercise significant influence over many aspects of
the Mexican economy. Accordingly, actions taken or policies established by
legislative, executive or judicial authorities in Mexico that affect the economy
of Mexico could have material adverse effects on Mexican entities in general and
on our business in particular. We cannot assure that future economic, political
or diplomatic developments in or affecting Mexico will not impair our business,
results of operations, financial condition, liquidity (including the ability to
obtain financing), or materially adversely affect the market price of our
securities. A new president of Mexico was elected in July 2000. While the new
president has publicly announced his intention to foster increased trade
relations between Mexico and the United States and Canada which could result in
increased business for the company, there is no assurance that he will be able
to implement this policy, or if implemented, it will be beneficial to the
company.

We are subject to fluctuations in the Mexican peso which have had an adverse
impact on our financial condition in the past. Exchange rate fluctuations could
have a material adverse effect on our business and our ability to service our U.
S. dollar-denominated liabilities, including liabilities under our license
arrangements with L.A. Gear and Lotto and our importing arrangements with our
Asian manufacturers. For example, the peso lost value against the dollar, from
5.0750 pesos per dollar as of December 31, 1994 to 9.6350 pesos per dollar as of
December 31, 2000, as reflected in the following table:

Average Exchange Rate--Pesos per U.S. Dollar (Source: Banco de Mexico)
- ----------------------------------------------------------------------
Date Pesos per Dollar
---- ----------------
12/31/00 9.6350
09/30/00 9.4375
6/30/00 9.8350
3/31/00 9.2575
12/31/99 9.4950
12/31/98 9.9055
12/31/97 8.0638
12/31/96 7.8900
12/31/95 7.6850
12/31/94 5.0750

Although our U. S. dollar-denominated indebtedness has decreased
considerably in recent months, we may, in the future, incur both peso and
non-peso-denominated indebtedness. As a result of our plan of operations in
Mexico, we will generate both dollar and peso-denominated receivables in the
sale of our products originating in Mexico. As our peso-denominated revenues
increase, our foreign exchange risk will also increase. The peso has stabilized
in recent years and we do not currently hedge against the risk of exchange rate
fluctuations although we may implement such a strategy if management foresees a
peso devaluation that would have a material adverse impact on our business.

You may be limited in your ability to enforce civil liabilities against
Aarica since most of our assets and operations are located in Mexico.
Enforcement by investors of civil liabilities under the United States federal
securities laws may be adversely affected by the fact that although Aarica is a
Texas corporation with offices in the United States, its operating subsidiaries
and substantially all of the assets of the business are located in Mexico and
substantially all of the proceeds of this offering will be used in Mexico. In
addition, Carol Kolozs, a United States citizen and President of Aarica, resides
in both the United States and Mexico. Consequently, it may not be possible for
investors to effect service of process within the United States upon such
persons or the Mexican subsidiaries or to enforce against them judgments of a
United States court predicated upon the civil liability provisions of the United
States federal securities laws.

We are subject to duties on imports which could limit the variety of
footwear that we sell. Currently, the company imports footwear from Asian
suppliers and pays a duty of 35%. If these duties were to be increased or
compensatory duties or non-duty trade barriers were to be imposed by the Mexican
government, our ability to import could be adversely affected which could limit
the variety of footwear that we sell.

The imposition of monetary exchange controls would adversely affect our
business. In recent years, the Mexican economy has suffered balance of payment
deficits and shortages in foreign exchange reserves. While the Mexican
government does not currently restrict the ability of Mexican or foreign persons
or entities to convert pesos to dollars or to transfer dollars outside Mexico,
we cannot assure that the Mexican government will not institute a restrictive
exchange control policy in the future. Any such restrictive exchange control
policy would materially adversely affect the Company's ability to convert pesos
into dollars and could also have a material adverse effect on the Company's
business and financial condition, including a negative effect on operating
profits.

Risk factors relating to our company and its securities

Loss of Carol Kolozs and other key management personnel would adversely
impact our business. We believe that our success depends upon the continued
services of Carol Kolozs, our President and Chief Executive Officer. If one or
more of our executives were unable or unwilling to continue in their present
positions, our business could be materially adversely affected. We do not
currently have employment agreements with Mr. Kolozs or any executive officer or
employee. We cannot assure that we will be able to employ qualified personnel on
terms acceptable to the company in the event of the loss of any members of our
present management team. We do not presently carry key man insurance on the life
of any employee.

Dilution to new shareholders will be approximately 84.3%. Carol Kolozs
acquired his stock in Aarica at a cost less than that at which the investors
purchasing in this offering will pay for their shares. Therefore, new investors
will bear most of the risk of loss, while control of Aarica will remain in the
hands of Mr. Kolozs. Immediately after this offering, the book value of your
shares will be approximately $1.57. This represents dilution of $8.43 per share
or 84.3% from the purchase price you will pay in the offering.

We must keep our prospectus current under the Securities Act and state
securities acts for warrant holders to be able to exercise their warrants.
Holders of the warrants will be able to exercise their warrants only if a
current registration statement relating to the underlying shares is then in
effect and only if the shares are qualified for sale under the securities laws
of the jurisdiction in which the holders of the warrants reside. For the life of
the warrants, the company will use its best efforts to maintain such a
registration statement but no assurance can be given that it will be able to do
so.

Management will retain broad discretion in the use of the offering's
proceeds. The company intends to use the proceeds of this offering for the
purposes specified under "Use of Proceeds" but management will have broad
discretion in the application of such proceeds, such as for the acquisition of
other businesses, brand names or products and for working capital. We have
allocated $3,250,000 of our net proceeds for the acquisition of unspecified
businesses, brand names or products. Shareholders will not have a vote on any
such acquisitions and will be dependent upon management's skill in making any
such acquisitions. There can be no assurance that management will be successful
in the negotiations of any acquisitions and, if an acquisition is consummated,
that it would be on terms that will be beneficial to the company.

Significant sales of common stock in the market by existing
shareholders could adversely affect market prices of the common stock. Upon the
completion of this offering, existing shareholders will own 2,825,000 of the
3,925,000 shares outstanding. Of these 2,825,000 shares, 575,000 shares will be
eligible for sale under Rule 144 beginning approximately June 2001 and the
remaining 2,250,000 shares will be subject to the underwriters lock-up for one
year from the date of this prospectus. Significant sales by such existing
shareholders could adversely affect prevailing market prices of the company's
stock and impair its ability to raise capital through the sale of its equity
securities.

The representative of the underwriters lacks experience in equity
offerings, which could adversely affect our offering. The representative of the
underwriters has only co-managed a public offering of its own equity securities
and this lack of experience could adversely impact our offering. A new
investment banker for the representative, however, recently joined the firm and
has had substantial experience in managing equity offerings similar to our
offering.

There has been no prior market for the securities offered and we cannot
assure that an active trading market will develop. Prior to this offering, there
has been no public market for our securities. We have applied for listing of our
securities on the Boston Stock Exchange and the NASDAQ SmallCap Market. We
cannot assure that either of these listings will be approved or, if approved,
that a meaningful, active market will develop or, if such a market should
develop that it will be sustained with sufficient liquidity to permit someone to
sell their shares at any time. We cannot assure that the securities could ever
be sold at or near the offering price, or at all, in the event of an emergency.

Use of proceeds

We estimate that the net proceeds we will receive from the sale of the
1,100,000 units in this offering will be approximately $9,150,000. This is based
upon the $10 mid-point of an assumed initial public offering price of $9.00 to
$11.00 per unit, after deducting estimated underwriting fees and other expenses
of the offering. If exercised, the over-allotment option will be fulfilled with
shares held by selling shareholders and we will not receive additional net
proceeds if the over-allotment option is exercised.

The following table summarizes our intended use of these net proceeds:
Percent of
Application of net proceeds Amount Net Proceeds
- --------------------------- ------ ------------
Acquisitions (1) $ 3,250,000 35.5%
Repayment of certain indebtedness (2) 4,350,000 47.6
Working capital and general
corporate purposes 1,550,000 16.9
------------ -----
Total $ 9,150,000 100.0%
=========== ======
----------------------
(1) The company has no acquisitions pending but intends to identify a
going business, brand name or product that would offer
distribution possibilities throughout the world.
(2) Includes indebtedness of $3,150,000 owed to Schmidt International
LLC, a limited liability company substantially owned by Robert E.
Schmidt, Jr., a director of the company. The Schmidt International
indebtedness is due May 15, 2001 and bears interest at 5% above
the prime rate. Also includes an estimated payment of taxes due
the Mexican government of $800,000, payment of rent to the State
of Zacatecas of $200,000 and payment of royalties to Lotto of
$200,000. The company intends to negotiate payment periods and
amounts with these creditors and, to the extent that the company
is successful in doing so, the use of proceeds for repayment of
indebtedness will be reduced.

Our anticipated use of net proceeds is based upon our current status of
operations and business plan. It is possible that the application of funds may
vary depending upon a number of factors including, without limitation, changes
in the economic climate and governmental policies in Mexico, an increase in
orders for athletic shoes and the need for additional raw materials, the
availability of bank or other financing and other factors beyond our control. We
currently estimate that the net proceeds from this offering will be sufficient
to meet our liquidity and working capital requirements for the next 24 months.
Additional financing may be required to implement our long-term business plan.
We cannot assure that any such financing will be available when needed on terms
acceptable to us, if it is available at all.

Pending use of the net proceeds from this offering, we may invest the
net proceeds in short-term interest bearing accounts, government securities or
bank certificates of deposit in the United States and Mexico. We expect to pay
the indebtedness to Schmidt immediately after the offering. We expect to pay the
other indebtedness and utilize the proceeds for working capital and general
corporate purposes during the six months following the offering. We have no
acquisitions pending and no defined timetable to use the proceeds for
acquisitions.

dividend policy

Neither Aarica nor its subsidiaries have paid dividends on their common
stock and it is not anticipated that we will do so in the foreseeable future. We
plan to retain future earnings, if any, to finance operations and expansion of
our business.

Dilution

Our net tangible book value at December 31, 2000 was a deficit of
$2,993,985, or approximately $(1.06) per share. Our net tangible book value is
determined by subtracting the total amount of our liabilities from the total
amount of our tangible assets and dividing the remainder by the weighted average
number of shares of our common stock outstanding. The pro forma as adjusted net
tangible book value per share after this offering will be approximately
$6,156,015 or $1.57 per share after giving effect to the sale of the 1,100,000
shares we are offering based upon the $10 mid-point of an assumed initial public
offering price of $9.00 to $11.00 per unit, (no value assigned to the warrants)
and the receipt of the net proceeds therefrom. This would represent an immediate
increase in the net tangible book value per share of common stock of $2.63 to
existing shareholders and an immediate dilution of $8.43 per share to new
investors.

The following table illustrates this per share dilution:
Assumed initial public offering price per share $10.00
Net tangible book value per share as of December 31, 2000 $(1.06)
Increase per share attributable to new investors 2.63
------
Adjusted net tangible book value per share after this offering 1.57
Dilution per share to new investors in this offering $8.43
======
Percentage dilution 84.3%

The following table presents the following data as of December 31, 2000,
and assumes an initial public offering price of $10 per share (the mid-point of
an assumed initial public offering price of $9.00 to $11.00 per share), for our
new investors:

(a) The number of shares of common stock acquired from us;

(b) The total cash consideration paid;

(c) The average price per share paid before deducting estimated
underwriting fees and estimated expenses of the offering; and

(d) The average price per share paid by the existing shareholders and upon
the exercise of outstanding options by officers, directors and
affiliates at prices below the offering price of the units.

Shares of Common Stock Purchased Aggregate Consideration Average Price
--------------------------------- -------------------------------- -----------------
--------------------------------- -------------------------------- -----------------

Number Percent Amount Percent Per Share
---------------- ---------- ----------------- ----------- -----------

Existing shareholders 3,525,000 (1) 76.2% $1,976,000 15.2% $.56
New investors 1,100,000 23.8% 11,000,000 84.8% $10.00
--------- ----- ----------- -----
Total 4,625,000 (2) 100.0% $12,976,000 100.0%
============= ====== ============ ======

- --------------
(1) The 3,525,000 shares held by existing shareholders include:

(a) 405,000 shares issuable to Madison & Wall upon exercise of stock
options at $2.00 per share;

(b) 275,000 shares issuable to Robert E. Schmidt, Jr., a director of
the company upon the exercise of options at $2.00 per share; and

(2) The 4,625,000 shares of common stock to be outstanding after the offering
do not include: o Up to 1,100,000 shares issuable upon exercise of the
warrants;

(a) Up to 165,000 shares issuable upon exercise of the warrants included
in the underwriters' over-allotment option;

(b) 110,000 shares of common stock issuable upon exercise of the
underwriters' warrants and 110,000 shares issuable upon exercise of
the warrants included in the underwriters' warrants;

(c) 350,000 shares of common stock which may be issued under the company's
stock compensation plan, of which 275,000 outstanding options are
exercisable at the offering price of the units in this offering; and

(d) 105,000 shares issuable upon exercise of warrants at $2.50 per share
issued to the selling agent in a private placement in June 1999.

Capitalization

The following table sets forth our capitalization as of December 31, 2000:

on an actual basis; and on a pro forma as adjusted basis to give effect to
the sale of 1,100,000 shares at the $10 mid-point of an assumed initial
public offering price of $9.00 to $11.00 per share and the application of
the estimated net proceeds of $9,150,000 after deducting estimated
underwriting discounts and commissions and our estimated offering expenses.

Actual As Adjusted

Total assets $ 5,128,579 $9,928,579
Total current liabilities 8,122,564 3,772,564
Total long-term debt -- --
Shareholders equity (deficit):
Common stock, $0.01 par value,
20,000,000 shares authorized,
2,825,000 shares issued and
outstanding, 3,925,000 as adjusted (1) 28,250 39,250
Additional paid-in capital 767,760 9,906,760
Accumulated losses (3,789,995) (3,789,995)
----------- -----------
Total shareholders' equity (deficit): ($2,993,985) $ 6,156,015
------------ ------------
Total liabilities and shareholders' equity (deficit): $5,128,579 $ 9,928,579
============ ============

- --------------
(1) The 3,925,000 shares as adjusted for this offering do not include:

(a) Up to 1,100,000 shares issuable upon exercise of the warrants;

(b) Up to 165,000 shares issuable upon exercise of the warrants included
in the underwriters' over-allotment option;

(c) 110,000 shares of common stock issuable upon exercise of the
underwriters' warrants and 110,000 shares issuable upon exercise of
the warrants included in the underwriters' warrants;

(d) 105,000 shares issuable upon exercise of warrants issued to a selling
agent in a private placement in June 1999;

(e) 350,000 shares of common stock which may be issued under the company's
stock compensation plan; o 405,000 shares issuable to Madison & Wall
at $2.00 per share upon exercise of outstanding stock options; and

(f) 275,000 shares issuable to Robert E. Schmidt, Jr., a director of the
company upon the exercise of options at $2.00 per share.

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

Results of Operations

Comparison of Years Ended December 31, 2000 and 1999

Net sales from distribution of Lotto and L.A. Gear products increased
50.1% mainly as a result of higher sales volume due to the availability of
product to sell. The cash and letter of credit financing provided by Schmidt
International enabled the company to more nearly meet demand for its products by
importing more Lotto product and expanding the Lotto product line. In 1999 the
company was not able to meet the demand for its Lotto products because it did
not have the financial ability to manufacture and import all of the product that
it could have sold. The company began sales of its L.A. Gear product line in
June 1999. Due to capital deficiencies, in the fourth quarter of 2000 the
company terminated manufacturing sales to third parties in order to dedicate its
limited financial resources to the production of the Lotto and L.A. Gear
products distributed by the company at greater profit margins.

Gross profit from distribution increased to 32.8% from 27.8% of net
sales due to the increase in selling margins as a result of better selection of
products and a broader product line. The loss from manufacturing decreased 31.5%
due to the implementation of a modular production configuration in the first
quarter of 2000, and although significant one-time training and implementation
costs were incurred during the 2000 first quarter, these changes resulted in
more efficient operations that decreased the manufacturing loss in the 2000
period versus the 1999 period. However, inadequate financing prohibited the
company from accepting some purchase orders from customers due to its inability
to finance the purchase of raw materials. This also resulted in the company
paying premiums for the procurement of raw materials because it could not
purchase raw materials in economic order quantities and purchased raw materials
at higher prices from vendors willing to provide credit further impeding the
company from achieving sufficient production volume to operate profitably. With
the proceeds from this offering and the current operational structure at the
company's manufacturing facility, the company believes that it can produce a
sufficient volume to operate profitably. We believe that the L.A. Gear
production, which began in October 2000, along with the demand for our Lotto
product will be sufficient to generate a profitable volume; however, the company
is also seeking new brands to manufacture and sell. If this offering is not
successful, a restructuring plan would have to be implemented that contemplates
the closing of the manufacturing operations in order to stop the losses and
concentrate on the purchase and distribution of product manufactured by other
companies. There are sources for all of the products that the company
manufactures.

Selling general and administrative expenses were 27.3% and 26.6% of net
sales in 2000 and 1999, respectively. We believe that sales can be increased at
the same level of operating expenses other than selling expenses.

Tax inflation adjustments and surcharges of $686,862 and $265,509 in
2000 and 1999, respectively, were incurred due to the inability of the company
to pay value added and payroll taxes and import duties. Of the $686,862 recorded
in 2000, approximately $323,000 are expenses of 1999 and 1998. The company did
not record these expenses in 1999 and 1998 because the company filed protests
with the Mexican tax authority disputing the form of payment of certain taxes,
inflation adjustments and surcharges. The understanding of the company was that
it did not need to record inflation adjustments and surcharges on protested
taxes. The company in August 2000 received a favorable ruling on approximately
$566,000 of disputed taxes but received legal advice that the Mexican tax
authority has other permissible procedures that it can utilize to seek payment
of the taxes. Moreover, the company was advised that the liability for inflation
adjustments and surcharges must continue to be recorded until the Mexican tax
authority has utilized all of the procedures available to it, the company has
reached a settlement with the tax authority, or until the end of a five year
period commencing with the initial ruling. The company has not restated 1999 and
1998 for the tax inflation adjustments and surcharges because they do not meet
the criteria for recording prior period adjustments. The company expects that
this offering will provide the ability to eliminate these expenses by paying
taxes on time and possibly reach favorable agreements with the tax authority on
the unpaid taxes. See the discussion of taxes under the Liquidity and Capital
Resources section.

The $725,683 of interest expense in 2000, approximately 10% of net
sales, reflects the severe impact of the company's lack of working capital. The
company had average bank debt outstanding during the 1999 period of
approximately $4,500,000 bearing interest at LIBOR plus 5% whereas the average
debt owed to Schmidt International during the 2000 period was approximately
$2,500,000 bearing interest at the prime rate plus 5%. The company believes that
the interest expense incurred in the 2000 period is higher than it would pay on
similar levels of debt after the offering because it believes that it will be
able to borrow at a rate less than prime plus 5%. The interest expense in 2000
includes approximately $110,000 of Schmidt International loan costs in addition
to interest expense. Interest expense in 2000 also includes approximately
$150,000 of expense to a non-affiliated individual in Mexico incurred to finance
a letter of credit at an annual interest rate of approximately 70% in order to
finance one purchase of imported product which was profitable even after
incurring this interest. This arrangement was entered into prior to the
involvement of Schmidt International. The company does not anticipate these
types of costs to occur after this offering.

Reductions of accounts payable include a gain of $295,306 from the
settlement of accounts payable to a vendor and $192,531 from the cancellation of
a number of small amounts of old accounts payable to companies no longer in
business or that have not had any activity and have not sought payment for
several years. These reductions have been recorded as other income because they
reduce costs and expenses of prior years.

Extraordinary income of $4,058,015 in 2000 resulted from the
extinguishment of U.S. dollar debt owed to Banco Bilbao Vizcaya Mexico, S.A. The
majority of the debt to this bank was incurred prior to 1995 for inventory and
working capital financing and for the purchase of manufacturing equipment. Due
to the financial crisis that occurred in Mexico in 1995, banks, with the
assistance of the Mexican government, have been settling delinquent debts that
were incurred during and before the 1995 financial crisis. The company was able
to extinguish the bank debt with $750,000 of financing provided by Schmidt
International.

Recent Developments

The company reduced plant operations to minimal production during the
first quarter of 2001 because it cannot buy raw materials for production. The
company expects to report net sales of approximately $800,000 for the quarter
ended March 31, 2001 compared to $1,205,000 for the 2000 period. Although
distribution sales are comparable in both periods, manufacturing sales to third
parties accounted for the decrease. Therefore, the company expects to report a
loss greater than the $330,000 loss recorded for the first quarter of 2000,
excluding extraordinary and unusual income items.

We are introducing Lotto tennis footwear, apparel and accessories in
May 2001 and currently have sufficient sales orders to positively impact 2001
sales. We opened our first retail outlet store in Mexico City in April 2001 and
are currently negotiating retail locations in Guadalajara and Puebla. We expect
to open additional stores in 2002.

In December 2000 we hired a Director of Sales who worked 12 years for
Adidas de Mexico, S.A. de C.V., of which 8 years were as Director of Sales. With
his help we have restructured the sales department and are implementing a sales
effort focused more on booking orders two seasons in advance and procuring
inventories according to the bookings rather than the current practice of
selling from stock with some orders in advance.

Liquidity and Capital Resources

The company's cash position at December 31, 2000 was $135,014 of
available cash compared to $214,654 at December 31,1999. Restricted cash
decreased during 2000 due to the liquidation of the related letter of credit.

The company has financed its working capital requirements since October
1999 principally through borrowings from Schmidt International. Schmidt
International has loaned the company a total of approximately $3,168,000 through
December 31, 2000. This loan matures on May 15, 2001. Management expects to
close this offering prior to May 15, 2001.

Although the financing provided by Schmidt International has enabled
the company to increase sales and inventories, the company has not been able to
pay many of its obligations on time and has reduced plant operations to minimal
production during the first quarter of 2001 because it cannot buy raw materials.
The company is contemplating closing the manufacturing plant if this offering is
not successful to eliminate the manufacturing losses and concentrate on the
profitable distribution operations. If the offering is successful, the company
believes that it will have the capital resources necessary to operate the plant
profitably. Net proceeds of approximately $9,150,000 from this offering will be
used to pay the debt owed to Schmidt International, pay taxes and related
inflation adjustments and surcharges to the Mexican government and certain
accounts payable, provide for general working capital and corporate purposes,
and make acquisitions of companies or brands if one or more appropriate
opportunities become available. We currently estimate that the net proceeds from
this offering will be sufficient to meet our liquidity and working capital
requirements for the next 24 months. Additional financing may be required to
implement our long-term business plan. We cannot assure that any such financing
will be available when needed on terms acceptable to us, if it is available at
all. If this offering is not successful, the company must negotiate an extension
with Schmidt International and may ultimately need to find alternative sources
to finance its working capital requirements.

The company owed $202,151 to Lotto at December 31, 2000 of which
$93,985 was due in July 2000 and $108,166 was due in January 2001. Lotto has not
notified the company that it is in default of the royalty agreement. The company
owed the State of Zacatecas, Mexico approximately $150,000 at December 31, 2000
for rental of the production facility for the period July 1, 1999 to December
31, 2000. The State of Zacatecas has not notified the company that it is in
default of the rent agreement. We believe that we can negotiate payment
schedules with Lotto and the State of Zacatecas.

Current liabilities exceeded current assets by $3,604,678 and
$6,438,368 at December 31, 2000 and 1999, respectively. See the consolidated
statements of cash flows for the changes in the components of working capital.

Accounts receivable - trade increased by $390,104 due to higher sales
in the fourth quarter of 2000 compared to the fourth quarter of 1999.

Inventories increased $586,636 mainly due to the financing provided by
Schmidt International that enabled the company to carry more inventories to
support the increase in net sales.

Prepaid expenses increased by $194, 884 due mainly to payments related
to this offering that will be reclassified to shareholders' equity at the time
of the offering.

Notes payable to Schmidt International increased $2,439,183. In June
2000 $300,000 of borrowings and accrued interest to Madison & Wall was satisfied
by shares of company stock from the personal holdings of Carol Kolozs. The
company recorded a capital contribution of $300,000 in connection with this
transaction.

Accrued taxes payable increased $982,429 to $2,290,073 due to the
company's inability to pay the taxes. These taxes are principally unpaid payroll
and value added taxes and import duties of approximately $1,479,000 and related
inflation adjustments and surcharges of approximately $811,000. The company has
protested the amount of these inflation adjustments and surcharges. Although the
company believes that a payment of approximately $800,000 would enable it to put
the remainder of the amount owed under a four-year installment agreement, the
company intends to negotiate a settlement with the tax authority which would
result in payment of an amount significantly less than the liabilities recorded.
The company believes that it is possible, with the change in the Presidential
ruling party in December 2000, that tax relief will be granted to businesses
that owe taxes due to statements made by the new government although no specific
plan has been established. Any reductions in taxes will result in income to the
company.

Other accrued expenses and liabilities decreased mainly due to a
reduction of customer advances as the company shifted production from sales to
third parties to its distribution companies.

Madison & Wall exercised 25,000 stock options in 2000 resulting in a
$50,000 decrease in shareholders' deficit. The company raised $420,010, net of
expenses, in a private offering of its common stock in June 1999.

Seasonality

Sales typically are higher in the second half of the year than the first half
with the fourth quarter normally being the largest sales quarter due to holiday
sales.

Inflation

According to Banco de Mexico ("Bank of Mexico"), inflation in Mexico
was 8.9%, 12.3% and 18.6% in 2000, 1999 and 1998, respectively. Bank of Mexico
has set an inflation goal of 6.5% for 2001. These inflation levels are
substantially above the levels experienced in the United States. Generally, the
company has been able to include the effects of raw material price increases in
the selling price of its products, and the cost of labor has not kept up with
the general rate of inflation. Therefore, the company does not believe that
inflation has had a material effect on the results of operations for the periods
presented.

Accounting Standards

In June 1998, the Financial Accounting Standards Board (FASB) issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities".
This statement establishes the accounting and reporting standards for all
derivative financial instruments, including those embedded in other contracts,
and for hedging activities. The statement, to be applied prospectively, will be
effective for the company's quarter ending March 31, 2001. The company does not
presently have any derivative financial instruments; however, the company may
utilize derivative financial instruments in the future.

Forward Looking Statements

This prospectus contains forward looking statements relating to the company's
future economic performance, possible acquisitions of businesses and brand
names, our operating and growth strategies, plans and objectives of management
for future operations, and other financial items that are based on the beliefs
of, as well as assumptions made by and information currently known to our
management. The words "expects," "intends," "believes," anticipates," "may,"
"will," "could" and "should" and similar expressions and variations thereof are
intended to identify forward-looking statements. All forward looking statements
attributable to us, or persons acting on our behalf, are expressly qualified by
the cautionary statements included in this prospectus. The cautionary statements
set forth in this prospectus are intended to emphasize that actual results may
differ materially from those contained in any forward looking statement.

BUSINESS OF AARICA
General

Aarica is a Texas corporation which, through Mexican subsidiaries,
designs, manufactures and distributes athletic footwear, sportswear and sports
accessories for United States and European brands. We currently design and
manufacture athletic footwear for the L.A. Gear and Lotto brands for which we
are the exclusive distributors in Mexico. We design and import from Asian
manufacturers models of Lotto and L.A. Gear athletic footwear that we can
purchase more economically than manufacture due to the large number of sizes and
color variations. We also design and distribute sportswear and sports
accessories, fabricated by other Mexican companies, for these brands. We have
manufactured athletic footwear for Puma, Wilson and K-Swiss brands during 2000
and New Balance and Vans during 1998 and 1999.

History

The company commenced business in 1990 with the establishment in Mexico of
Aarica Sport, S. A. de C. V. as the exclusive licensor and distributor of the
Italian brand Lotto by Carol Kolozs. The organization of Aarica Sport was an
outgrowth of Mr. Kolozs' prior business experience in owning and operating Lotto
Southeast in the United States, which distributed Lotto products from 1981 to
1985.

The company was reorganized in 1998 through the organization under Mexican
law of Aarica Holdings, Mexico, S.A. de C.V., which acquired substantially all
of the stock of four Mexican subsidiaries from Mr. Kolozs. Simultaneously, Mr.
Kolozs organized Aarica Holdings, Inc. under Texas law and exchanged the stock
of Aarica Mexico for 2,600,000 shares of the Texas company. Substantially all of
the company's business to date has been conducted in Mexico through the
subsidiaries but the company plans to expand its operations to the United
States, Canada and more of Latin America.

The evolution of the Mexican market was advanced with the establishment of
the North American Free Trade Agreement in the early 1990s. Mr. Kolozs' strategy
was to establish the Lotto brand in Mexico through the importation of
Asian-manufactured products and, once established, to transition from imported
products to domestically (Mexican) made products. The culmination of this
strategy came in early 1992 with the structuring of a joint venture agreement
with a Taiwanese group which resulted in the establishment of Taimex Industries,
S. A. de C.V., to manufacture athletic footwear in a modern manufacturing
facility in the Mexican State of Zacatecas. Mr. Kolozs subsequently bought out
the Taiwanese group. The company's shoe manufacturing is currently conducted
through Taimex and North America Shoe Corporation, S. A. de C. V., which utilize
the Zacatecas facility.

The Zacatecas plant, a 100,000 square foot manufacturing facility
constructed to the company's specifications, commenced operations in 1994 with a
contract from Wal-Mart Stores, Inc. for the production of athletic footwear.
This contract resulted in the export of 1.2 million pairs of shoes to Wal-Mart
stores in the United States over a two and one-half year period. The Wal-Mart
contract provided experience in high volume production and, although marginally
profitable, provided training and established the platform for the current
production of more sophisticated international brands.

The Mexican economy in 1994 was not prepared to effectively compete in a
global environment. This resulted in a disproportionate balance of trade, and it
became evident that imports from non-treaty countries would have to be halted or
greatly diminished. For all footwear that originated in China, a compensatory
duty was implemented. Other duty and non-duty barriers were put into effect,
which halted imports of footwear, virtually eliminating international brands
from the Mexican market. At the same time, the Mexican government stopped
artificially supporting its currency, which resulted in a re-structuring of the
country's economy. This set the stage for domestic production of various
products.

In March 1998, the company entered into a license agreement with L.A.
Gear, Inc. of Los Angeles, California which granted the company the right to use
the L.A. Gear name and trademark in Mexico. We offer a broad spectrum of fashion
athletic products to ladies and children due to L.A. Gear's strong brand
identification among these market segments.

Market Segments

The athletic footwear market can be divided into four segments: the
brand, the manufacturer, the distributor, and the retailer. Brands are companies
such as New Balance, Wilson, K-Swiss and Lotto. Their primary concerns are
product design and marketing. The manufacturers are responsible for making the
products. Virtually all of the major brands outsource their manufacturing to
independent contractors. Distributors are responsible for establishing
relationships with retailers and for transporting the product to the retailer.
Retailers sell the end product to the consumer.

Most of the international brands (Nike, Reebok, Fila, New Balance, Puma,
Lotto, L.A. Gear, K-Swiss and Vans) are available in the market in Mexico and
are sold in first-tier retail outlets including sports specialty stores,
department stores, and shoe or apparel stores. In Mexico, management believes
there are approximately 2,500 such retail outlets, which reach approximately 45%
of the population. The distribution strategy of the company in Mexico is to
license complementary brands which offer niche market competitive advantages,
for example Lotto for soccer, Mexico's number one sport, L.A. Gear for women's
athletics and men's athletic casual, and L.A. Lights, a sub-brand of L.A. Gear,
for children's lighted footwear. Athletic shoes, although produced for sports,
are also worn as a casual statement or as an expression of fashion. This social
statement and status, represented by the wearing of branded products, as in the
United States, is significant, and forms a part of the everyday expression of
the younger Latin population. The company competes principally on sales price
and the performance and name recognition of the brands that it offers in these
niche markets.

Business Strategy

The company's business strategy is:

(1) to utilize its modern manufacturing facility in Mexico for the
production of high quality, internationally branded athletic footwear
and accessories;

(2) to develop new licensing agreements with internationally recognized
brand name companies for the manufacture and distribution of their
products;

(3) to develop in-house brands for distribution to niche markets;

(4) to expand the distribution, throughout the United States, Latin
America and Canada, of its licensed and manufactured products; and

(5) to identify a brand name or product for acquisition that would offer
distribution possibilities throughout the world.

Though our manufacturing operation was originally structured to be a
resource for manufacturing athletic footwear for a variety of customer/brands,
it has always been the company's strategy to utilize this resource to enhance
its own distribution. This process was delayed due to financial and capital
deficiencies experienced after the Mexican financial crisis of 1995. In October
2000, the company further implemented this strategy with the commencement of
production of L.A. Gear athletic footwear at its Zacatecas facility for our L.A.
Gear distribution company. It is the intention of management to utilize this
important manufacturing resource to increase profitability by producing more
products for its own distribution. We expect the majority of our 2001 production
to be dedicated to our own distributed products.

Mexico has aggressively exploited the free trade agreements recently
adopted. Since the onset of the North American Free Trade Agreement in 1990, the
first free trade agreement entered into by Mexico, which included the United
States and Canada, Mexico has aggressively concluded agreements with Bolivia,
Chile, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua,
Venezuela, Israel and the European Economic Community, which went into effect on
July 1, 2000.

The company believes that the above mentioned free trade agreements,
together with the democratization process occurring within Mexico, evidenced by
the winning of the July 2000 presidential elections by the opposition party for
the first time in 71 years, will result in increased growth and investment in
Mexico, which will be beneficial to the company.

Proposed Acquisitions

The company plans to expand its operations throughout the United
States, Latin America and Canada through one or more acquisitions of profitable
businesses or brand names that will offer established distribution outlets. Mr.
Kolozs has been involved in the distribution of athletic footwear and wearing
apparel in the United States and Mexico for nearly 20 years and during that time
has established numerous contacts in the industry who make known to him other
businesses and brands which may be available for acquisition, joint venture or
other strategic alliance relationships. In the past, the company has had
discussions with several potential acquisition partners but has not had the
financing available to consummate an acquisition. The company has allocated
approximately $3,250,000 of the proceeds of this Offering for such purposes and
believes that it will be able to finance a substantial acquisition with such
proceeds, debt and the use of company stock.

The company believes that if it is able to acquire a profitable
business with distribution outlets in the United States, it will be able to
utilize these outlets to distribute in the United States the products it
currently designs, manufactures and distributes in Mexico.

Manufacturing

The company manufactures high-quality athletic footwear through its
wholly owned subsidiaries, Taimex and Nasco. Taimex provides the manufacturing
equipment and materials and Nasco provides the labor to produce the footwear.
The manufacturing facility consists of a 100,000 square foot building on nine
acres of land housing manufacturing operations, offices and dormitories for the
company's foreign technicians. The complex was built in 1994 to the company's
specifications pursuant to an agreement with the State of Zacatecas and leased
back to the company. The facility includes state-of-the-art manufacturing
equipment purchased from Taiwan which enables the company to manufacture most
types of footwear composed of a synthetic sole, glued and stitched to a variety
of uppers (including athletic footwear, work shoes, casual shoes and outdoor and
hiking footwear). Other than dress shoes and cowboy boots, this type of
construction is considered to be at the high end of the value scale for these
categories. The facility is located in a rural, agricultural area that provides
a low-cost work force. The manufacturing of functional athletic footwear under
international standards is a complex and difficult process, and very labor
intensive. Most products require the sourcing of as many as twenty-five
different materials and components which must meet all specifications and
quality standards. Transformation to a finished product may take as many as
eighty operations. Regional companies capable of providing this service within
acceptable quality standards in an efficient and cost-effective basis are in
great demand. Training and experience have been significant in obtaining sales
to international sports brands, and the company intends to continue its
technical development in search of new and profitable sales opportunities.

The company has space and equipment to produce 90,000 pairs of shoes
per month in a normal 45-hour workweek with a single production shift. The
company could either hire additional employees or purchase equipment in lieu of
hiring employees to achieve a monthly production level of 90,000 pairs of shoes
per month. Although the company has achieved a production level of 60,000 pairs
of shoes per month, it produced fewer than 20,000 pairs of shoes per month
during 2000 due to financial constraints and a shift in corporate strategy. In
1997, the company ceased producing large orders of simpler less expensive shoes
and sandals to customers such as Wal-Mart and began producing more complex value
added athletic footwear which requires more operations and a greater variety of
models. In December 1999, the company reconfigured its plant from mass
production lines to production modules that permit greater production
flexibility. The plant reconfiguration has resulted in greater output per
employee, cross training, and the ability to efficiently produce a greater
variety of models at the same time.

The company believes that it has sufficient production capacity to meet
current and projected demand for its current product lines.

The company also manufactures soccer shin guards and goalie gloves in
this facility.

Distribution

The company is the exclusive manufacturer and distributor of the
Italian brand Lotto for athletic footwear, sports wear and accessories in Mexico
pursuant to a license agreement with Lotto originally entered into in 1990. The
company's Lotto footwear products are manufactured primarily at the Zacatecas
facility and distributed in Mexico through the company's 99%-owned subsidiary,
Aarica Sport. The company distributes these products primarily to sport boutique
outlets and department stores. Beginning in January 2000, the company began
importing from Asia certain models of Lotto athletic footwear to complement
existing models manufactured at its plant.

We have an exclusive license agreement with L.A. Gear, Inc. for the design,
manufacture and distribution of L.A. Gear shoes, accessories and clothing in
Mexico. L.A. Gear products are sold through the same channels of distribution as
our Lotto products. We began distribution of imported L.A. Gear athletic
footwear in December 2000 to complement other models manufactured in our plant.

Until recently, we sold all of our products through an in-house sales
force consisting of a national sales manager and eleven representatives that are
paid primarily on a commission basis. The company has established sales regions
in Mexico. Sales regions and accounts are assigned to salesmen based upon their
experience and past success. The internal sales force is directly responsible
for calling on the retail trade locations in Mexico, which consist primarily of
department stores, sport boutique shops, specialty stores and shoe stores.
Orders are received by the responsible salesman and forwarded to administrative
support personnel for processing. Orders in the vicinity of Mexico City are
delivered by the company and orders outside of the Mexico City area are
generally shipped by freight, collect.

In December 2000, we hired a Director of Sales who formerly worked for
Adidas de Mexico, S.A. de C.V. We restructured our sales department and are
implementing a sales effort focused on booking orders two seasons in advance and
procuring inventories according to the bookings rather than the current practice
of selling from stock with some orders in advance.

We plan to complement our retail sales from company operated stores and
in April 2001 opened our first retail outlet store in Mexico City. We are
currently negotiating retail locations in Guadalajara and Puebla, Mexico. We
expect to open additional stores in 2002.

The approximate percentage of net sales contributed by our principal
classes of products in the years 2000 and 1999 were as follows:

Product 2000 1999
------- -------------------

Footwear 70% 63%
Sportswear 18% 24%
Accessories 12% 13%

No customer accounted for more than 10% of net sales in 2000 and 1999.

Design and Development

The company employs ten persons who design and develop athletic
footwear and apparel such as work-out clothing, jackets, training and running
apparel, athletic carrying bags and athletic accessories such as soccer balls,
shin guards and goalie gloves for L.A. Gear and Lotto.

Other Products

The company currently manufactures sports accessories, such as goalie
gloves and shin guards for soccer, at the Zacatecas facility for distribution
under the Lotto brand name and intends to expand its manufactured products.
Current plans include the development of a product line of shin guards and
goalie gloves under the house brand "Aspro", to be marketed directly to
retailers in the United States, Canada and Latin America. Aarica Sport Products
Manufacturing, S. A. de C. V. was organized in 1997 to produce the accessories
sold by Aarica Sport and to develop additional accessories for sale in Mexico
and the United States. Management intends to concentrate on products that are
compatible with products currently produced. The company's license agreements do
not restrict the company from manufacturing or distributing products that
compete with like category products covered by the license agreements.

License Agreements

The company currently has a license agreement with Lotto for the
manufacture and distribution in Mexico of sportswear, athletic footwear and
related accessories. The Lotto license agreement began in 1990 and was renewed
effective July 29, 1998, for an initial term of ten years with an automatic
renewal for an additional ten years. Royalties are payable at 5% of net sales
with minimum royalties of $110,000 for 2000, increasing by approximately 11%
annually. In addition, the company is obligated to spend 4% of net sales on
advertising, sales and promotion of Lotto products in the licensed territory.

The company entered into an exclusive license agreement with L.A. Gear
in March 1998, amended in November 1999, for the design, manufacture and
distribution in Mexico of L.A. Gear footwear, apparel and related accessories.
The L.A. Gear license agreement was entered into for an initial term of five
years with an automatic renewal for five years. Royalties are payable at 4% of
net sales, with minimum royalties of $75,000 in 2000, $100,000 in 2001, $150,000
in 2002 and $200,000 annually thereafter.

Raw Materials

The Mexican footwear manufacturing industry is in an expansion mode and
the infrastructure supporting raw material suppliers has been expanded and
upgraded for the development of more complete and sophisticated product lines.
The company has three suppliers that individually account for 13% or more of
total raw material purchases. The materials provided by these suppliers are
available from other sources within Mexico. The principal

raw materials used by the company in the manufacture of athletic shoes are
leather, woven and non-woven fabrics for shoe covering, PVC coated materials and
foam padding. Most raw materials necessary to manufacture athletic footwear are
available today in Mexico. All raw materials utilized by the company have
multiple sources of supply, and management believes that the loss of any
particular supplier would not create an undue hardship on the company. There are
few limitations in the importing of raw materials from non-treaty countries, and
no limitations in purchasing from treaty countries such as the United States and
Canada. The only major component the company currently purchases outside of
Mexico is the outsole, which is imported from Asia with a 13% import duty.
Outsoles are shipped by boat on a minimum 60-day delivery schedule. If the
company is able to develop production on its assembly lines to meet management's
objective for economy of scale, the company would add an out-sole production
facility to its manufacturing plant. The in-house production of outsoles would
provide greater flexibility, greater control over delivery schedules, and a
reduction in costs. In-house production would enable the company to sell excess
production in the local market providing an additional source of revenue.

Trademarks

The company uses the tradenames and trademarks "Aarica" in the
categories of footwear, clothing and accessories. The tradenames and trademarks
were registered in Mexico by Mr. Kolozs, who assigned the registrations to the
company.

Competition

The company competes in Mexico with a number of major brands such as
Nike, Fila, Reebok and other local distributors for market share in its
distribution operations. These major brands and some of the local brands have
greater financial, marketing and sales resources than the company. The company's
major brand competitors in distribution do not have facilities in Mexico for the
manufacture of athletic footwear, the company's principal product. Management
believes its modern manufacturing facility in Zacatecas gives it the ability to
produce a greater variety of products than its competitors and offer more
competitive pricing. In addition, the company competes favorably on the basis of
pricing due to its Mexican based manufacturing and its high level of vertical
integration. The company's principal competition, from a manufacturing
perspective, is from Southeast Asian based footwear manufacturers. Management
believes that the company's cost of production compares favorably to these
competitors due to tariffs on goods imported from Southeast Asia.

Properties

The company's commercial and distribution offices are located in Mexico
City in a 40,000 square foot facility which also houses its marketing, sales,
administrative, financial support, warehousing, product development and
distribution operations. The current lease expires on September 30, 2005, with
an annual rental of approximately $96,000 plus an added value tax, plus annual
inflation increases. The company has an option to purchase the property from the
lessor, an unaffiliated party, for $1,000,000. The company considers this
facility adequate for the foreseeable future. The company's United States office
is based in Maitland, Florida consisting of approximately 1,500 square feet of
executive office space at an annual rental of $8,000, one-half of which is paid
by Mr. Kolozs, who also uses the space for personal purposes.

The company manufactures its products in a 90,000 square foot facility
in the State of Zacatecas, Mexico. The Government of Zacatecas arranged for the
facility to be built on behalf of the company and the company executed a lease
agreement which provided for an annual rental of approximately $100,000. From
the inception of the lease, the company has been able to successfully negotiate
a waiver of the rental payments through June 1999. The company is required to
begin paying an annual rental of approximately $100,000, plus an added value
tax, plus annual Mexican inflation increases under a lease agreement which
expires in April 2001, with a one year extension.

Company Policy on Prison and Child Labor

It is the company's policy to ask its vendors to sign an agreement that
they do not use child or prison labor in the manufacture of goods sold to the
company.

Mexican Regulatory Matters

Environmental Regulation

The company is subject to the provisions of the Ley General de
Equilibrio Ecologico y Proteccion al Ambiente (the General Law on Ecology and
Protection of the Environment), the regulations issued under the General Law and
several technical environmental norms issued by the Secretaria de Ambiente,
Recursos Naturales y Pesca (Ministry of the Environmental, Natural Resources and
Fisheries or "SEMARNAP"), which is the federal ministry in Mexico in charge of
supervising and regulating environmental matters. The SEMARNAP is assisted by
other governmental authorities such as the Secretaria de Salud (Ministry of
Health), the Secretaria de Comunicacion y Transportes (Ministry of
Transportation and Communications), the Secretaria de Marina (Secretary of Navy)
and the Secretaria de Energia (Ministry of Energy). In addition, the company is
subject to environmental laws and regulations issued by the governments of each
of the states of Mexico in which its facilities are located.

The Environmental Law and regulations require that authorizations be
obtained from SEMARNAP prior to carrying out any activity that may have an
adverse impact on the environment. In particular, these environmental
regulations address chemical, petrochemical and oil refining activities as well
as the construction of gas pipelines. In order to obtain authorization, SEMARNAP
requires the submission of an environmental impact analysis based upon such
analysis and other information it may request. SEMARNAP is entitled to grant or
deny its authorization for any activity.

Since the enactment of the Environmental Law, several technical
environmental regulations have been issued. These regulations are applicable to
Mexican industry in general, and specifically set forth, among other things,
permissible levels of emissions, water discharges and hazardous substance
discharges as well as atmospheric pollution levels. Other technical regulations
are issued for specific industries. The Mexican environmental regulatory
framework is generally updated and revised annually.

There are currently no material legal or administrative proceedings
pending against the company with respect to any environmental matters, and
management does not believe that continued compliance with environmental laws
will have a material adverse effect on the company's financial condition or
results of operations.

The company does not expect that the cost of maintaining compliance
with environmental laws or environmental requirements related to NAFTA or the
recent admission of Mexico to the Organization for Economic Cooperation and
Development will cause a significant increase in the company's environmental
expenditures.

Foreign Investment Legislation

Foreign investment in the capital stock of Mexican companies is
regulated by the 1993 Ley de Inversion Extranjera (the "Foreign Investment Law")
and the 1998 Foreign Investment Regulations. Under the Foreign Investment Law,
foreign investment is defined, in general, as (i) the participation of foreign
investors in the capital stock of Mexican corporations, or investments made by a
Mexican corporation in which the foreign capital has a majority participation,
and (ii) the participation of foreign investors in certain activities regulated
by the Foreign Investment Law. Foreign investors are defined as individuals or
entities that are not Mexican nationals. The Comision Nacional de Inversiones
Extranjeras (the Foreign Investment Commission) and the Registro Nacional de
Inversiones Extranjeras (the National Registry of Foreign Investments) of the
Secretaria de Comercio y Fomento Industrial (the Ministry of Commerce and
Industrial Development) are responsible for the administration of the Foreign
Investment Law and the Foreign Investment Regulations.

As a general rule, the Foreign Investment Law allows foreign investment
in the capital stock of Mexican companies except those engaged in certain
specified restricted industries. The company is not restricted as to ownership
of subsidiaries in Mexico.

Mexican federal law requires that each Mexican corporation shall have
at least two shareholders.

Employees

At December 31, 2000, the Company had approximately 320 employees,
including 31 administrative, 13 sales, 10 design and development and 266
production and distribution employees.

Union Contract and Labor Relations

With approximately 250 unionized workers, Nasco is the largest employer
among the company and its subsidiaries. Nasco employees are affiliated with
Confederacion de Trabajadores Mexicanos, the largest union in Mexico. The
collective bargaining agreement between Nasco and the union provides for yearly
negotiations in the month of March, alternating between negotiations on wages in
one year and benefits under the contract in the next year. Daily wages are
categorized as (i) $3.30 for (A) category workers, (ii) $3.60 for (B) category
- -workers, and (iii) $4.15 for (C) category workers. Under the union contract,
these wages are paid for seven days, although a normal workweek consists of 45
hours. In addition, an on time and daily attendance bonus of $8.00 and food
coupons worth $12.00 are provided monthly. Vacations range from one week for the
first year to two weeks during the fourth year, and after four years a bonus of
25% of base wages is added to vacation pay. Mexican labor laws mandate a bonus
of 15 days to be paid on or before December 18 of each year. Under the union
contract with Nasco, this bonus was extended to 17 days. Additionally, mandated
social benefits, such as social security, housing subsidies and retirement funds
are calculated at approximately 30% of base salary.

The company has a good working relationship with the union and its
employees and has never experienced a work stoppage.

Mexican Labor Laws

Employee Severance Benefits

In accordance with Mexican labor law, the company is liable for
separation payments, which consist of the payment of three months plus 20 days
of salary for each year of service to employees terminating under certain
circumstances.

The Company is also liable for seniority premium payments of 12 days of
salary (up to a maximum of twice the minimum wage) for each year of service to
employees who (i) retire or are terminated, once they have reached 15 years of
service with the company; and (ii) are terminated under certain circumstances,
with no seniority requirement. The majority of the company's employees have been
recently hired and the potential seniority premium liability is not considered
significant.

Employee Profit Sharing

The Mexican companies are subject to statutory employee profit sharing
at a rate of 10% based on taxable income, after certain adjustments, primarily
to exclude the effects of restated depreciation and the tax gain or loss from
monetary position. The amount for 1999 was approximately $4,500. There were no
distributions in 2000.

Litigation

The company is not currently a party to any material pending litigation
or proceedings that would materially affect its business or assets.

ADDITIONAL INFORMATION

Aarica has not previously been subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended. We have filed with the
Securities and Exchange Commission a registration statement on Form SB-2
(including any amendments thereto) under the Securities Act with respect to the
units offered. This prospectus does not contain all of the information,
exhibits, and schedules contained in the registration statement. For further
information about Aarica and the units, read the registration statement, the
exhibits and any schedules attached. Statements made in this prospectus
regarding the contents of any contract or document filed as an exhibit to the
registration statement are not necessarily complete and, in each instance, you
are referred to a copy of each contract, document or exhibit filed with the
registration statement. Each such statement is qualified in its entirety by such
reference. The registration statement, the exhibits, and the schedules filed
with the Commission may be inspected, without charge, at the Commission's public
reference facilities. These facilities are located at

(1) Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C.
20549; o Northwestern Atrium Center, 500 West Madison Street, Room
1400, Chicago, Illinois 60661; and o Suite 1300, Seven World Trade
Center, New York, New York 10048.

Copies of the materials may also be obtained at prescribed rates by
writing to the Commission, Public Reference Section, 450 Fifth Street, NW,
Washington, D.C. 20549. The Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission at http://www.sec.gov.

As a result of this offering, Aarica will become subject to the
reporting requirements of the Exchange Act. Therefore, we will file periodic
reports, proxy statements, and other information with the Commission. Following
the end of each calendar year, we will furnish our shareholders with annual
reports containing audited consolidated financial statements certified by
independent public accountants and proxy statements. For the first three
quarters of each calendar year, we will provide quarterly reports containing
unaudited consolidated financial information.

MANAGEMENT

Directors and Executive Officers

The following table sets forth certain information regarding the Company's
directors and executive officers at December 31, 2000:

Name Title Age
---- ----- ---

Carol Kolozs President, Director 54
John J. Stitz Secretary, Treasurer, Chief Financial Officer 44
James Schnorf (1) Director, Assistant Secretary 47
Patrick L. M. Williams (2) Director 60
Robert E. Schmidt, Jr. (3) Director 60

- --------------
(1) Chairman of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of Audit Committee and Compensation Committee.

Our directors are elected at each annual meeting of shareholders. The
officers are appointed annually by the board of directors. Officers and
directors hold office until their respective successors are elected and
qualified or until their earlier resignation or removal.

Carol Kolozs is the founder and has been President and a director of
the company since its organization in November 1998 and has held such positions
with the Mexican subsidiaries since their inception. Mr. Kolozs has over 30
years experience in the United States and Mexico in domestic and international
business ventures. From 1981 to 1985 Mr. Kolozs was owner of Lotto Southeast, a
company that represented Lotto products in the Southeastern United States, where
he was responsible for sales, marketing, and promotion of Lotto products. Lotto
Southeast and Lotto U.S.A. were sold to HH Brown Shoe Company, a major United
States footwear company, in 1985. Because of this association with Lotto, in
1989 Lotto offered Mr. Kolozs a license to distribute Lotto athletic footwear,
clothing and accessories in Mexico. This license led to Mr. Kolozs founding
Aarica Sport in 1990 as the first phase of an integrated business in Mexico for
the manufacture and distribution of branded athletic products in Mexico, the
United States and Latin America. He was awarded the "Palmas de Oro" (Golden
Palms) Industrialist of the Year Award for all of Mexico in 1995 for his
pioneering and development of Aarica's business concepts. Mr. Kolozs is a United
States citizen and is bi-lingual in English and Spanish.

John J. Stitz was appointed Secretary, Treasurer and Chief Financial
Officer of the company in June 2000. Mr. Stitz was Vice President and Chief
Financial Officer of RVM Industries, Inc., a publicly traded holding company in
Akron, Ohio engaged through its subsidiaries in the manufacture of aluminum
truck trailers, aluminum billets and extrusions and street signs. Mr. Stitz has
over 15 years experience in financial management positions and six years as
audit manager with a national accounting firm. His experience includes SEC
reporting, acquisitions, risk management, management information systems,
employee benefits, consolidations and foreign currency translation. He is a
Certified Public Accountant with a B. S. degree in Accountancy from Wake Forest
University and an MBA from The Wharton School of the University of Pennsylvania.
Mr. Stitz is bi-lingual in English and Spanish and relocated to Mexico City in
June 2000.

James Schnorf was elected a Director and Secretary of the company in
February 1999. He resigned as Secretary with the appointment of Mr. Stitz. He
has been the Chief Financial Officer of Madison & Wall since February 1998 and
also serves as the General Manager. Madison & Wall is a financial public
relations firm based in Longwood, Florida. His responsibilities include
activities involving financing, taxes operations, risk management, management
information systems, strategic agreements, mergers/acquisitions, and human
resource matters. He possesses approximately ten years of experience from 1976
to 1985 in various managerial capacities at Caterpillar, Inc. a Fortune 100
manufacturer of earth moving equipment and diesel engines. Mr. Schnorf's
experience also includes controller responsibilities from 1986 to 1987 for a
division of Sequa Corp., a New York Stock Exchange entity specializing in the
aerospace industry. From 1988 through 1995, Mr. Schnorf served as Chief
Financial Officer and Secretary-Treasurer of Stevens Industries, Inc., a large
manufacturer/distributor of laminated wood products. Before joining Madison &
Wall, Mr. Schnorf was the Chief Executive Officer of Cardinal Capital, L.L.C., a
limited liability company responsible for managing a fund that provides
mezzanine financing and which takes controlling interest positions in emerging
growth companies. Mr. Schnorf earned a BS degree in accounting from Eastern
Illinois University and an MBA from the University of Illinois. Certified as a
CPA and CMA, Mr. Schnorf is an active member of the Mensa Society, the Institute
of Certified Management Accountants, the American Institute of Certified Public
Accountants, and the Financial Executives Institute. Mr. Schnorf is a past
President of the Eastern Illinois University School of Business Advisory Board
and a past member of the University of Illinois Executive MBA Alumni Association
Board of Directors and was elected as the Year 2000 Distinguished Alumnus of the
Eastern Illinois University School of Business.

Patrick L. M. Williams was elected a director of the company in February
1999. Since June 1986, he has been Senior Executive Vice President of RDV
Sports, Inc., Orlando, Florida. RDV Sports is the parent company of the Orlando
Magic basketball team of the National Basketball Association, the Solar Bears of
the International Hockey League and the Orlando Miracle of the Women's National
Basketball League. Mr. Williams is responsible for administration, promotional
and public relations activities for all teams owned by the parent company. In
1996, he was named one of the 50 most influential people in NBA history by a
national publication. Mr. Williams also spent seven years in the Philadelphia
Phillies organization of the National Baseball League, two as a player and five
in the front office and was employed in the Minnesota Twins baseball
organization for three years. Mr. Williams holds a bachelors degree in Physical
Education from Wake Forest University and a masters degree in Physical Education
from Indiana University.

Robert E. Schmidt, Jr. was elected a director of the company in April 2000.
Mr. Schmidt is Chief Executive Officer of Boulder Venture, Inc., headquartered
in Milwaukee, Wisconsin with offices in Tampa and Ft. Lauderdale, Florida,
Phoenix, Arizona and Denver, Colorado. Mr. Schmidt has operated under various
company names since 1963 and continues to do so. In 1980, Mr. Schmidt formed a
real estate development and construction company known as Corporate Development.
The name Boulder Venture, Inc. ("Boulder Venture") was adopted in 1996. Boulder
Venture is currently engaged in commercial real estate development on a national
scale. Boulder Venture, directly or through various entities owned and
controlled by Mr. Schmidt, has assets in excess of $140 million. Boulder Venture
manages all properties in-house. The portfolio includes: Walgreens, 7-Eleven,
Staples, Winn Dixie, Publix, Smiths, and ABCO (all food stores), Starbucks,
Sam's Clubs, Sears, Best Buy, Barnes and Noble, as well as apartment buildings,
office buildings and other commercial properties. Mr. Schmidt is a past board
member of the Metropolitan Builders Association of Greater Milwaukee, and a past
member of NAHB Multi Family and Commercial Building Council.

Advisory Board; Audit and Compensation Committees

The board of directors established an Advisory Board on April 12, 2000 and
named Robert E. Schmidt, III, Chairman. It is anticipated that the company will
add additional members to the Advisory Board and to activate the board upon
completion of this offering. The duties of the Advisory Board and the Audit and
Compensation Committees will be established at a later date. Robert E. Schmidt,
III is the son of Robert E. Schmidt, Jr. He has been with Boulder Venture, Inc.
for over ten years. and currently is President of the firm. Mr. Schmidt, III
graduated from the University of Colorado in 1989, with a major in Economics.
Significant Employees

Emanuel Bartoni, 30, has been employed by the company in its Mexico City
offices since 1993 in various capacities. He was appointed Commercial Director
of Aarica Sport S.A. de C.V. in 1995 and is responsible for the development of
all products distributed by the company as well as procurement and marketing
strategies. Mr. Bartoni is a citizen of Italy and was a consultant to Lotto S.
p. A., Italy, from August 1992 until October 1993 for new product development
and distribution of soccer footwear, clothing and accessories in Europe. From
September 1991 to October 1992 he helped develop and coordinate logistics and
publicity for Adidas, Italy, for the Olympic Games in Barcelona, Spain.

Francisco Cos Sustaita, 45, was employed in December 2000 as Director of
Sales. He worked 12 years for Adidas de Mexico, S.A. de C.V. as Director of
Sales from 1993 to December 2000 and in various sales positions from 1986 to
1989. He was responsible for managing a sales force of 20 persons in 3 sales
offices. He developed and implemented the company's sales plan and selected
domestic and imported products and styles to be sold by Adidas in Mexico. He was
Commercial Director of Lazer Deportes, S.A. de C.V. (Slazenger) from 1990 to
1993 and was responsible for sales, promotion and distribution.

Executive Compensation

The following table sets forth the compensation awarded to, earned by,
or paid to the chief executive officer (the "Named Executive Officer") for
services rendered to the Company's subsidiaries in all capacities for the fiscal
years ended December 31, 2000, 1999 and 1998. No other executive officer was
paid more than $100,000 in salary and bonus for such fiscal years.
Summary Compensation Table

Name and Annual Compensation All Other
Principal Position Fiscal Year Salary Bonus Compensation
- ------------------ ----------- ------ ----- -------------

Carol Kolozs, President December 31, 2000 $200,000 - -
December 31, 1999 $148,000 - -
December 31, 1998 $148,000 - -

The company hired John Stitz as Secretary, Treasurer and Chief
Financial Officer in June 2000 at a base salary of $100,000 per year and intends
to hire one or more vice-presidents and other executives. It is not anticipated
that any one executive to be hired will be compensated at an annual rate in
excess of $100,000. Compensation of Directors
Directors who are employees of the company will not receive any
remuneration in their capacity as directors. Outside directors will receive an
annual retainer of $5,000 plus $1,000 per meeting attended, $1,000 for chairing
a committee of the board of directors, and $500 for each committee meeting
attended. No compensation will be paid for telephonic meetings of the board or a
committee. Messrs. Schnorf, Williams and Schmidt have each elected to accept
5,000 options at the offering price of the Units in this offering in lieu of
their $5,000 annual retainer for the year 2000. Outside directors will also be
eligible to participate in the company's stock compensation plan.

Stock Compensation Plan

In April 2000, the company adopted a stock compensation plan for key
employees and directors pursuant to which such individuals may be granted
options involving an aggregate of up to 350,000 shares of common stock. Under
the plan, shares of common stock may be granted as incentive compensation to
employees, officers, directors, and advisors to the company or any parent,
subsidiary or affiliate of the company.

The number of shares reserved and the shares granted are subject to
adjustment in the event of any subdivision, combination, or reclassification of
shares. The plan will terminate in 2010. Either incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified options, or both may be granted at the discretion of the board of
directors or a committee of the board of directors. The exercise price of any
incentive option will not be less than the fair market value of the shares at
the time the option is granted. The options granted are exercisable within the
times or upon the events determined by the board or committee set forth in the
grant, but no option is exercisable beyond ten years from the date of the grant.
The board of directors or committee administering the plan will determine
whether each option is to be an ISO or non-qualified stock option; the number of
shares; the exercise price; the period during which the option may be exercised;
and any other terms and conditions of the option. The holder of an option may
pay the option price in cash, shares of the company with a fair market value
equal to the purchase price, or partly in shares and partly in cash.

The options can only be transferred by will or by the laws of descent
and distribution. Except in the case of death, disability or change in control,
no option shall be exercisable for more than 90 days after an employee ceases to
be an employee unless the employment of the employee was terminated, as
conclusively determined by the committee, due to disloyalty, dishonesty, illegal
conduct, or gross negligence, in which case the option terminates upon
termination of employment. An optionee who was a director or advisor to the
company at the time of this offering may exercise his options at any time within
three years after his status as a director or advisor is terminated to the
extent that he was entitled to exercise his option at such date, unless his
termination was due to death or disability. If an optionee's employment as an
employee, director, or advisor, is terminated because of permanent disability or
death, the committee shall have the right to extend the exercise period for not
longer than five years from the date of termination. An optionee who becomes a
director or advisor after this offering may exercise his options at any time
within one year after his status as a director or advisor is terminated to the
extent that he was entitled to exercise his option at such date, unless his
termination was due to death or disability.

The plan also permits the award of Stock Appreciation Rights to
optionees. The committee may award to an optionee, with respect to each share of
common stock covered by an option, a related SAR permitting the optionee to be
paid the appreciation on the related option. An SAR granted with respect to an
ISO must be granted together with the related option. An SAR granted with
respect to a non-qualified option may be granted together with or subsequent to
the grant of the related option. The exercise of the SAR shall cancel and
terminate the right to purchase an equal number of shares covered by the related
option.

The plan can be amended or terminated at any time. The plan will be
administered by the compensation committee of the board of directors which will
be composed entirely of directors who are "disinterested persons" as defined in
Rule 16b-3 of the Securities Exchange Act of 1934, as amended. The compensation
committee currently consists of Patrick L. M. Williams and Robert E. Schmidt,
Jr. At the date of this prospectus, options to purchase 25,000 shares at the
public offering price of the common stock in this offering have been granted to
each of the directors other than Mr. Kolozs. Such options are exercisable
immediately. In addition, options to purchase 100,000 shares each have been
granted at the offering price of the common stock in this offering to John J.
Stitz, Chief Financial Officer, and Emanuel Bartoni, Commercial Director of
Aarica Sport, S.A. de C.V. Such options are exercisable 20% each year beginning
in June 2001.

Indemnification

The company's Articles of Incorporation provide for indemnification of
any director, officer or former director or officer of the corporation to the
fullest extent permitted by the Texas Business Corporation Act which provides
that a corporation may indemnify an individual made a party to a proceeding
because the individual is or was a director or officer against liability in his
official capacity with the corporation, including expenses and legal fees. The
company's By-laws also provide indemnification and, as provided by the Texas
Business Corporation Act, empower the company to purchase and maintain insurance
on behalf of any person who may be indemnified under the Texas Business
Corporation Act. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to its Articles of Incorporation and By-laws, or
otherwise, the company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In connection with the organization of the company, Carol Kolozs,
President and a director of the company, acquired 2,600,000 shares of the
company's common stock in exchange for 99.9% of the outstanding stock of the
Mexican holding company and the four Mexican subsidiaries. Mexican law requires
that each Mexican corporation shall have at least two shareholders. The company
owns 99.9% of the outstanding common stock of the Mexican holding company, which
owns approximately 99% of the outstanding common stock of the three existing
Mexican subsidiaries, 80% of the outstanding common stock of Aspro, and 99% of
two Mexican companies incorporated in 2000. As the other shareholder, in
compliance with Mexican law, Mr. Kolozs' owns one share of the Mexican holding
company and one share of each of the Mexican subsidiaries with 99% ownership.
The company owed Mr. Kolozs $52,935 and $93,279 without interest at December 31,
2000 and 1999, respectively.

Prior to the reorganization, Carol Kolozs owned 99.99% of Aarica Holdings,
Mexico, S.A. de C.V., a Mexican corporation, and substantially the same
ownership percentages of the other four Mexican corporate subsidiaries as listed
in the Basis of Presentation section of Note 1, all of which had been
incorporated and in business prior to the transaction and not for purposes of
the transaction. After a simultaneous exchange of shares in December 1998
between Aarica Holdings, Mexico S.A. de C.V. , Aarica Holdings, Inc., a Texas
corporation, and Carol Kolozs, Carol Kolozs owned 100% of Aarica Holdings, Inc.
which in turn owned 99.99% of Aarica Holdings, Mexico, S.A. de C.V. which owned
the percentages listed in Note 1. No cash or other consideration was exchanged
other than the shares in the companies. This reorganization was a combination of
entities under common control and was accounted for at historical cost in a
manner similar to a pooling of interests.

In April 1998, Madison & Wall extended the company an unsecured
revolving line of credit in the amount of $300,000 with interest at an annual
rate of 10% on the unpaid principal balance thereof. The line of credit expired
December 31, 1998, but was extended by Madison & Wall until June 30, 2000. In
June 2000, Madison & Wall elected to capitalize the outstanding balance of
approximately $300,000, including unpaid interest, in exchange for 150,000
shares of the company's stock from the personal holdings of Carol Kolozs. James
R. Schnorf, an officer and director of Madison & Wall, was elected a director of
the company in February 1999.

For its services related to this offering, Madison & Wall will be paid
a consulting fee equal to two percent of the gross proceeds of this offering,
payable at the closing of the offering. Madison & Wall was paid a fee equal to
200,000 shares of the company's common stock from the personal holdings of Mr.
Kolozs for Madison & Wall's services related to the private offering of common
stock. Mr. Kolozs contributed 150,000 of his personal shares to Madison & Wall
in cancellation of the debt and 200,000 of his personal shares to Madison & Wall
for its services in the 1999 private offering without any consideration from the
company in order to prevent dilution of the company's outstanding shares. In
June 2000, Madison & Wall was granted an option to purchase 250,000 shares at
$2.00 per share and in September 2000, Madison & Wall was granted on option to
purchase 200,000 shares at $2.00 per share. In October 2000, Madison & Wall
exercised options for 25,000 shares. In February 2001, Madison & Wall sold, to
an independent third party, 10,000 shares which it purchased in the company's
June 1999 private placement for $85,000 and loaned the $85,000 proceeds to the
company for working capital on an unsecured non-interest note due June 30, 2001.
The company intends to retain Madison & Wall for investor relations services
after completion of this offering at an anticipated cost of $180,000 for a
period of at least 12 months. In addition, Madison & Wall may be granted an as
yet undetermined number of options to purchase common stock at prices beginning
at 110% to 120% of the offering price of the common stock in this offering.

The company owed Schmidt International $3,168,003 at December 31, 2000.
Robert E. Schmidt, Jr., a member of Schmidt International, is a director of the
company. Schmidt International has provided the company a borrowing line in an
amount of $2,600,000 plus advances for costs of importations. The entire amount
expires May 15, 2001. Schmidt has provided guarantees for and has discounted
certain letters of credit. Schmidt guaranteed letters of credit totaling
$765,000 at December 31, 2000. The note evidencing the loan bears interest at
the prime rate plus 5% and is collateralized by 2,250,000 shares of common stock
of the company owned by Carol Kolozs and a lien on inventories and accounts
receivable of the company. Schmidt International is not obligated to loan
additional amounts to the company. The company intends to repay the Schmidt
International loan from the proceeds of this offering. In October 2000, the
company granted Mr. Schmidt options to purchase 275,000 shares of the company's
common stock for five years at $2.00 per share beginning January 1, 2001 as
partial consideration for the Schmidt International loans and extensions. The
option must be exercised in 25,000 share increments and may be called by the
company beginning in April 2001 if the closing price of the company's stock is
$15 per share for ten consecutive trading days.

The option price was consistent with other options outstanding on the date
of grant and the company estimated that the options had no value on such date.

All future transactions between the company and its officers, directors
or 5% shareholders, and their respective affiliates, will be on terms no less
favorable than could be obtained from unaffiliated third parties and will be
approved by a majority of the independent disinterested directors of the
company. Any forgiveness of loans must be approved by a majority of the
company's disinterested directors who do not have an interest in the transaction
and who have access, at the company's expense, to the company's or independent
counsel. Past transactions with affiliates were approved by a majority of
disinterested directors at the time of the transaction, except the issuance of
1,000 shares to Mr. Kolozs at the time of the company's organization when he was
the only director.

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information as of March 31,
2001, regarding the beneficial ownership of the company's common stock
immediately prior to, and after, the sale of the units offered hereby, for

(1) each person owning beneficially 5% or more of the common stock,

(2) each director and executive officer of the company, and

(3) all directors and executive officers of the company as a group.

Percent Owned

Name and Address of Number of Before After
Beneficial Owner Shares Owned the Offering the Offering

Carol Kolozs (1) 2,250,000 79.6% 57.3%
1000 Winderley Place
Maitland, Florida 32751

James Schnorf (2) 825,000 25.2 18.9
195 Wekiva Springs Road
Longwood, Florida 32779

Robert E. Schmidt, Jr. (3) 300,000 9.6 7.1
4340 Hillsborough Avenue
Tampa, Florida 33614

Patrick L. M. Williams (4) 25,000 - -
Two Magic Place
8701 Maitland Summit Blvd.
Orlando, Florida 32810

John J. Stitz -0- - -
Lago Chalco No. 156
Col. Anahuac
Mexico, D. F. 11320

All directors and executive officers
as a group (five persons) (5) 3,400,000 94.4% 72.3%

- --------
(1) Shares are pledged as collateral to Schmidt International for loans to the
company from Schmidt International. If the over-allotment option is
exercised in full, Mr. Kolozs' holdings would be 2,185,000 shares or 55.7%.
(2) Held by Madison & Wall, of which Mr. Schnorf is an officer and director.
Includes options to purchase 425,000 shares at $2.00 per share within 60
days from the date of this prospectus. Mr. Schnorf disclaims beneficial
interest in the shares held by Madison & Wall. If the over-allotment option
is exercised in full, Madison & Wall's holdings would be 725,000 shares or
16.6%. Mr. Schnorf holds options to purchase 25,000 shares at the offering
price of the shares offered hereby within 60 days from the date of this
prospectus in his capacity as a director.
(3) Includes options to purchase 25,000 shares at the offering price of the
shares offered hereby and 275,000 shares at $2.00 per share all within 60
days from the date of this prospectus.
(4) Includes options to purchase 25,000 shares at the offering price of the
shares offered hereby within 60 days from the date of this prospectus.
(5) If the over-allotment option is exercised in full, holdings would be
3,235,000 shares or 68.8% after the offering.

DESCRIPTION OF SECURITIES

The authorized capital stock of the company consists of 20,000,000
shares of common stock, $.01 par value per share, and 3,000,000 shares of
preferred stock, $.01 par value per share. As of December 31, 2000 there were
2,825,000 shares of common stock issued and outstanding and no shares of
preferred stock outstanding. There were 19 holders of the common stock.

Units

Each unit consists of one share of common stock and one warrant which
entitles the holder to purchase one share of common stock at (120% of the
offering price) until 2006. The shares and the warrants included in the units
will automatically separate 30 days from the date of this prospectus, after
which the common stock and warrants in the units will trade separately. If the
over-allotment option is exercised, the selling shareholders will provide the
shares included in the over-allotment units and the company will provide the
warrants and the shares of common stock underlying such warrants.

Common Stock

Shareholders are entitled to share ratably in any dividends paid on the
common stock when, as and if declared by the board of directors. Each share of
common stock is entitled to one vote on matters submitted to shareholders.
Cumulative voting is denied. There are no preemptive or redemption rights
available to shareholders of common stock. Upon liquidation, dissolution or
winding up of Aarica, the holders of common stock are entitled to share ratably
in the net assets legally available for distribution. All outstanding shares of
common stock are, and the shares, the units and the shares underlying the units,
to be issued in this offering will be fully paid and non-assessable.

Redeemable Common Stock Purchase Warrants

The warrants will be issued in registered form under, governed by, and
subject to the terms of a warrant agreement between Aarica and American Stock
Transfer & Trust Company as warrant agent. The following statements are
summaries of the material provisions of the warrant agreement. Copies of the
warrant agreement may be obtained from Aarica or the warrant agent and have been
filed with the Commission as an exhibit to the registration statement of which
this prospectus is a part.

Each warrant entitles the holder to purchase one share of common stock
at an exercise price of $________ per share (120% of the offering price per
share) at any time after the common stock and warrants become separately
tradable until (5 years from the date of this prospectus). We may reduce the
exercise price of the warrants for a period of at least 20 days. The right to
exercise the warrants will terminate at the close of business on (5 years from
the date of this prospectus). The warrants contain provisions that protect the
warrant holders against dilution by adjustment of the exercise price in certain
events, including but not limited to stock dividends, stock splits,
reclassification or mergers. A warrant holder will not possess any rights as a
shareholder of Aarica. Shares of common stock, when issued upon the exercise of
the warrants in accordance with the terms thereof, will be fully paid and
non-assessable.

At any time after the warrants become separately tradable we may redeem
some or all of the warrants at a call price of $0.05 per warrant, upon thirty
(30) day's prior written notice if the closing sale price of the common stock on
the __________ Exchange has equaled or exceeded (150% of the offering price per
share) for ten (10) consecutive days immediately preceding the notice of
redemption.

The warrants may be exercised only if a current prospectus relating to
the underlying common stock is then in effect and only if the shares are
qualified for sale or exempt from registration under the securities laws of the
state or states in which the purchaser resides. So long as the warrants are
outstanding, we have undertaken to file all post-effective amendments to the
registration statement required to be filed under the Securities Act, and to
take appropriate action under federal law and the securities laws of those
states where the warrants were initially offered to permit the issuance and
resale of the common stock issuable upon exercise of the warrants. However,
there can be no assurance that we will be in a position to effect such action,
and the failure to do so may cause the exercise of the warrants and the resale
or other disposition of the common stock issued upon such exercise to become
unlawful.

Selling Agent's Warrants

The selling agent in the June 1999 private placement received warrants
to purchase 105,000 shares of the common stock at $2.50 per share until June 30,
2004. The exercise price may be paid in cash, stock of the company or by tender
of a portion of the warrants based on the exercise price and the closing price
of the common stock on the trading date preceding the tender. The number of
shares issuable upon exercise of the warrants is subject to adjustment in the
event of a stock dividend, spin-off, split up or reduction in number of shares
outstanding. The holder of the warrants has demand and "piggy-back" registration
rights with respect to the common stock issuable upon exercise of the warrants
at the company's expense.

Preferred Stock

The board of directors, without further action by the shareholders, is
authorized to issue up to 3,000,000 shares of preferred stock, $.01 par value.
The preferred shares may be issued in one or more series. The terms as to any
series, as relates to any and all of the relative rights and preferences of
shares, including without limitation, preferences, limitations or relative
rights with respect to redemption rights, conversion rights, voting rights,
dividend rights and preferences on liquidation will be determined by the board
of directors. The issuance of preferred stock with voting and conversion rights
could have an adverse affect on the voting power of the holders of the common
stock. The issuance of preferred stock could also decrease the amount of
earnings and assets available for distribution to holders of the common stock.
In addition, the issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control. We have no plans or commitments to
issue any shares of preferred stock.

Transfer Agent, Registrar and Warrant Agent
The Transfer Agent, Registrar and Warrant Agent for the units, common
stock and warrants will be American Stock Transfer & Trust Company, 40 Wall
Street, New York, New York 10005.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have 3,925,000 shares of
common stock issued and outstanding. Of these shares, the 1,100,000 shares sold
in this offering will be freely tradable in the public market without
restriction under the Securities Act, except shares purchased by an "affiliate"
(as defined in the Securities Act) of Aarica. The remaining 2,825,000 shares,
will be "restricted shares" within the meaning of the Securities Act. Restricted
shares cannot be publicly sold unless registered under the Securities Act or
sold in accordance with an applicable exemption from registration, such as that
provided by Rule 144 under the Securities Act.

In general, under Rule 144, as currently in effect, a person (or
persons whose shares are aggregated) is entitled to sell restricted shares if at
least one year has passed since the later of the date such shares were acquired
from Aarica or any affiliate of Aarica. Rule 144 provides, however that within
any three-month period such person may only sell up to the greater of 1% of the
then outstanding shares of common stock (approximately 39,250 shares following
the completion of this offering) or the average weekly trading volume in our
shares during the four calendar weeks immediately preceding the date on which
the notice of the sale is filed with the Commission. Sales pursuant to Rule 144
also are subject to certain other requirements relating to manner of sale,
notice of sale and availability of current public information. Anyone who is not
an affiliate for a period of at least 90 days is entitled to sell restricted
shares under Rule 144 without regard to the limitations if at least two years
have passed since the date such shares were acquired from us or any affiliate.
Any affiliate is subject to such volume limitations regardless of how long the
shares have been owned or how they were acquired.

After this offering, Mr. Kolozs will own 2,250,000 shares of the common
stock (2,185,000 if his allotted shares are sold in the over-allotment option).
Mr. Kolozs and the other officers and directors will enter into an agreement
with the underwriters agreeing not to sell or otherwise dispose of any shares
for one year after the date of this prospectus without the prior written consent
of the underwriters. The 200,000 shares acquired by private investors in a
private offering in June 1999 became eligible for sale under Rule 144 in June
2000 and the 200,000 shares acquired by Madison & Wall in July 1999 became
eligible for sale under Rule 144 in July 2000. The 150,000 shares acquired by
Madison & Wall in June 2000 will be eligible for sale under Rule 144 in June
2001. All of such shares will be subject to a six-month lock-up from the date of
this prospectus and any shares acquired by Madison & Wall upon the exercise of
options will be subject to a lock-up of six months from the date of this
prospectus or the date of exercise, whichever is later.

We cannot predict the effect, if any, that an offer or sale of these
shares would have on the market price. Nevertheless, sales of significant
amounts of restricted shares in the public markets could adversely affect the
fair market price of the shares, as well as impair our ability to raise capital
through the issuance of additional equity shares.

Plan of distribution

Subject to the terms and conditions of the underwriting agreement, the
underwriters named below, through their representatives, Rushmore Securities
Corporation, have severally agreed to purchase from us and we have agreed to
sell to the underwriters, the respective number of units set forth opposite
their respective names at the initial public offering price, less the
underwriting discounts set forth on the cover page of this prospectus:

Underwriters Number of Units

Rushmore Securities Corporation

Total 1,100,000

In January 2001, Rushmore Securities Corporation ("Rushmore") was
substituted as representative of the underwriters because the manager of
investment banking of the former representative was employed by Rushmore to be
its manager of investment banking. Rushmore is a registered broker dealer which
has been in business for more than three years and, as a firm, has only served
as co-manager of an equity offering of its own securities three years ago and
thus lacks experience in managing an equity offering such as this offering.
However, the new investment banker with Rushmore has substantial experience in
such offerings and has managed nine equity offerings since October 1997 which
successfully raised approximately $65,000,000. There is no other relationship
between the company and Rushmore. The lack of investment banking experience of
Rushmore could adversely impact our offering.

The underwriting agreement provides that the obligations of the
underwriters to pay for and accept delivery of the shares of common stock and
our warrants are subject to approval of certain legal matters by counsel to the
underwriter and to certain other events. The underwriters are obligated to
purchase all shares of common stock and warrants we are offering (other than
those covered by the over-allotment option described below), if any such shares
are purchased.

We have been advised by the representatives of the underwriters that
the underwriters propose initially to offer the units to the public at the
offering price set forth on the cover page of this prospectus and through
members of the NASD. The representatives have also advised us that the
underwriters may allow a concession, not in excess of $___ per unit, and in
their discretion, to certain domestic dealers who are members of the NASD and
which domestic dealers agree to sell our securities in conformity with the NASD
Conduct Rules. The initial public offering price and concessions will not be
changed by the representatives until after the offering has been completed. The
underwriters have advised us that they do not intend to confirm sales to any
accounts over which they exercise discretionary authority.

At the closing of the sale of our securities that we are offering, we
will sell to the underwriters, the underwriter's warrants, for nominal
consideration, entitling the underwriters to purchase an aggregate of 110,000
units containing 110,000 shares of common stock and 110,000 warrants. The
underwriters' warrants shall be non-exercisable and non-transferable, other than
a transfer to affiliates of the underwriters or members of the selling group for
a period of twelve months following the effective date. The underwriters'
warrants and the underlying securities shall contain anti-dilution provisions
and are redeemable. The underwriters' warrants will be exercisable for a period
of four years commencing one year following the effective date and, if the
underwriters' warrants are not exercised during such period, they shall, by
their own terms, automatically expire.

The exercise price of each underwriter's warrants shall be:

(1) $____ per unit and

(2) $____ per share of common stock underlying the warrant,

which are 120% of the public offering price of our units and 150% of public
offering price of the shares of common stock underlying our warrants.

In addition, we have granted to the underwriters a single demand
registration right and unlimited piggy back registration rights with respect to
our common stock and our warrants underlying the underwriter's warrants for a
period commencing at the beginning of the second year and concluding at the end
of the fifth year following the effective date.

The warrants will not be redeemable for a period of twelve months
following the effective date, at which time the warrants may be redeemed by us
for $0.05 per warrant on not less than thirty days prior written notice, subject
to exercise by the underwriters, if the closing bid price for our common stock
has been at least $___ per share for thirty consecutive trading days. If we
exercise our right to redeem warrants, the underwriters may still exercise the
warrants until the close of business on the day immediately before the date
fixed for redemption. If any warrant called for redemption is not exercised by
such time, it will not be exercisable, and the underwriters will be entitled
only to the redemption price.

We may redeem the warrants at any time that a current registration
statement under the Securities Act covering the shares of common stock issuable
upon exercise of our warrants is in effect. The issuance of such shares to the
underwriters must be registered, qualified or exempt under the laws of the state
in which the underwriters reside. If required, we will file a new registration
statement with the Securities and Exchange Commission with respect to the
securities underlying the warrants prior to the exercise of such warrants and
will deliver a prospectus with respect to such securities to the underwriter as
required by Section 10(a)(3) of the Securities Act.

Under Rule 2710(a)(7)(A) of the NASD Conduct Rules, the warrants
acquired by the underwriters will be restricted from sale, transfer, assignment
or hypothecation for a period of one year from the effective date of this
offering, except to officers or partners (not directors) of the underwriters and
members of the selling group and their officers or partners.

In addition to the above, the company and the selling shareholders have
granted to the underwriters an option exercisable for 45 days from the effective
date, to purchase up to an additional 165,000 units containing 165,000 shares of
common stock and 165,000 warrants at the initial public offering price, less the
underwriting discount set forth on the cover page of this prospectus. All of the
shares of common stock included in the over-allotment units will be sold to the
underwriters by the selling shareholders and the company will not receive any
proceeds from the sale of such shares. The underwriters, or the underwriters
individually at their option, may exercise this option solely to cover
over-allotments in the sale of our securities being offered by this prospectus.

Prior to this offering, there has been no public market for our
securities and there can be no assurances that an active public market for our
securities will be developed or, if developed, sustained after this offering.
The initial public offering price of our units and the exercise price and terms
of our warrants have been arbitrarily determined by negotiations between us and
the underwriters and may bear no relationship to our current earnings, book
value, net worth or other established valuation criteria. The factors considered
in determining the initial public offering prices included:

(1) an evaluation by our management and the underwriters of the history of
and prospects for the industry in which we compete,

(2) an assessment of management,

(3) our prospects,

(4) our capital structure, and

(5) certain other factors deemed relevant.

The initial public offering prices do not necessarily bear any
relationship to our assets, book value, earnings or other established criterion
of value. Such prices are subject to change as a result of market conditions and
other factors, and no assurance can be given that a public market for the shares
of common stock and/or warrants will develop after the close of the public
offering, or if a public market in fact develops, that such public market will
be sustained, or that our units, shares of common stock and/or warrants can be
resold at any time at the initial public offering prices or any other prices.

We have agreed to pay our underwriters an underwriting discount as a
commission equal to ten percent of the gross proceeds of this offering,
including the gross proceeds from the sale of the over-allotment option, if
exercised. We have also agreed to reimburse the underwriters on a
non-accountable basis for their expenses in the amount of two percent of the
gross proceeds of this offering, including proceeds from any securities
purchased under the over-allotment option. The underwriters will pay the
underwriters' expenses in excess of the non-accountable expense allowance. To
the extent that the expenses of the underwriters are less than the amount of the
non-accountable expense allowance received, such excess shall be deemed to be
additional compensation to the underwriters.

If the underwriters, at their election at any time one year after the
date of this prospectus, solicit the exercise of the warrants, Aarica will be
obligated, subject to certain conditions, to pay the underwriters a warrant
solicitation fee equal to 5% of the aggregate proceeds received by Aarica as a
result of the solicitation. No warrant solicitation fees will be paid within one
year after the date of this prospectus. No solicitation fee will be paid if the
market price of the common stock is lower than the then exercise price of the
warrants. No solicitation fee will be paid if the warrants being exercised are
held in a discretionary account at the time of their exercise, except where
prior specific approval for exercise is received from the customer exercising
the warrants and no solicitation fee will be paid unless the customer exercising
the warrants states in writing that the exercise was solicited and designates in
writing the underwriters or other broker-dealer to receive compensation in
connection with the exercise.

We have agreed to indemnify the underwriters against any costs or
liabilities incurred by the underwriters by reasons of misstatements or
omissions to state material facts in connection with statements made in the
registration statement or the prospectus. The underwriters have, in turn agreed
to indemnify us against any liabilities by reason of misstatements or omissions
to state material facts in connection with the statements made in the
prospectus, based on information relating to the underwriters and furnished in
writing by the underwriters. To the extent that this indemnification may purport
to provide exculpation from possible liabilities arising from the federal
securities laws, in the opinion of the Securities and Exchange Commission, such
indemnification is contrary to public policy and therefore unenforceable.

Shares of common stock held by our existing shareholders prior to the
effective date (other than those subject to the over-allotment option), are
subject to a one year lock-up period, with the exception of 200,000 shares of
common stock issued in the June 1999 private placement, and shares acquired by
Madison & Wall and Robert E. Schmidt, Jr. upon the exercise of stock options,
which are subject to a six month lock-up period from the date of exercise.
Madison & Wall's 150,000 shares acquired in June 2000, as consideration for
cancellation of approximately $300,000 of debt, become eligible for sale under
Rule 144 in June 2001 unless registered under the Securities Act prior to that
date but will be subject to a six month lock-up from the effective date of this
prospectus. The lock-up periods are subject to early termination at the sole
discretion of the underwriters. If the over-allotment option is exercised, Mr.
Kolozs will sell up to 65,000 shares and Madison & Wall will sell up to 100,000
of the shares it acquired in July 1999. An appropriate legend referring to these
restrictions is or will be marked on the face of the certificates representing
all such securities. Moreover, for a period of twelve months from the effective
date, we will not sell or otherwise dispose of any securities without the prior
written consent of the underwriters.

The underwriters shall have the right to designate a member of the
board of directors, or at the underwriters' option, to designate one individual
to attend the meetings of our board of directors for a period of five years
after the effective date. If Robert A. Shuey, III, a representative of Rushmore,
is designated as a member of the board of directors, he will receive an annual
retainer of $5,000 and $1,000 per meeting attended, $1,000 for chairing a
committee of the board of directors, and $500 for each committee meeting
attended.

The foregoing is a summary of the principal terms of the agreement
described above and does not purport to be complete. Reference is made to the
underwriting agreement, which is filed, as an exhibit to the registration
statement.

In connection with the offering, Rushmore, on behalf of the
underwriters, may over-allot, or engage in syndicate covering transactions,
stabilizing transactions and penalty bids. Over-allotment involves syndicate
sales of units in excess of the number of units to be purchased by the
underwriters in the offering, which creates a syndicate short position.
Syndicate covering transactions involve purchases of the units in the open
market after the distribution has been completed in order to cover syndicate
short positions. Stabilizing transactions consist of bids or purchases of units
made for the purpose of preventing or retarding a decline in the market price of
the units while the offering is in progress. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Rushmore Securities Corporation, in covering syndicate short positions or making
stabilizing purchases, repurchases units originally sold by that syndicate
member.

In addition to the foregoing activities, the underwriters may make
short sales of the company's units and may purchase the company's units on the
open market to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of units than they are required to
purchase in the offering. "Covered" short sales are sales made in an amount not
greater than the underwriters' "overallotment" option to purchase additional
units in the offering. The underwriters may close out any covered short position
by either exercising their overallotment option or purchasing units in the open
market. In determining the source of shares to close out the covered short
position, the underwriters will consider, among other things, the price of units
available for purchase in the open market as compared to the price at which they
may purchase units through the overallotment option.

"Naked" short sales are sales in excess of the overallotment option.
The underwriters must close out any naked short position by purchasing units in
the open market. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on the price of
the units in the open market after pricing that could aversely affect investors
who purchase in the offering.

Similar to other purchase transactions, the underwriters' purchases to
cover the syndicate short sales may have the effect of raising or maintaining
the market price of the company's units or preventing or retarding a decline in
the market price of the company's units.

These activities may cause the price of the units to be higher than the
price that otherwise would exist in the open market in the absence of such
transactions. These transactions may be effected on the Boston Stock Exchange
and/or the NASDAQ SmallCap Market. None of the transactions described in this
paragraph is required, and, if they are undertaken, they may be discontinued at
any time.

Listing applicationS

We have applied for listing of the units, common stock and warrants on
the Boston Stock Exchange and the NASDAQ SmallCap Market under the trading
symbols: AHM/U, AHM and AHM/W on the Boston Stock Exchange and ARHI/U, ARHI, and
ARHI/W on the NASDAQ SmallCap Market, respectively. We cannot assure that either
application will be approved.

LEGAL MATTERS

The legality of our units, common stock and warrants being offered in
this prospectus will be passed upon for us by Maurice J. Bates, L.L.C., Dallas,
Texas. Certain legal matters will be passed upon for the underwriters by the law
firm of Kirkpatrick & Lockhart LLP, Dallas, Texas.

EXPERTS

The audited financial statements included in this prospectus and elsewhere
in the registration statement have been audited by Arthur Andersen, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.

AARICA HOLDINGS, INC.

Index to Consolidated Financial Statements

Report of Arthur Andersen, Independent Public Accountants..............................................F-1

Consolidated Balance Sheets as of December 31, 2000 and 1999...........................................F-2

Consolidated Statements of Operations
for the years ended December 31, 2000 and 1999.......................................................F-3

Consolidated Statements of Shareholders' Deficit
for the years ended December 31, 2000 and 1999.......................................................F-4

Consolidated Statements of Cash Flows
for the years ended December 31, 2000 and 1999.......................................................F-5

Notes to Consolidated Financial Statements as of December 31, 2000 and 1999............................F-6

Aarica Holdings, Inc. and Subsidiaries
Notes to consolidated financial statements as of December 31, 2000 and 1999
(Stated in U.S. dollars)

Report of Independent Public Accountants

To the Shareholders of
Aarica Holdings, Inc.

We have audited the accompanying consolidated balance sheets of AARICA HoldingS,
inc. (a United States corporation) AND SUBSIDIARIES as of December 31, 2000 and
1999, and the related consolidated statements of operations, shareholders'
deficit and cash flows, as restated - see Note 2, for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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.

As discussed in Note 1, during recent years the Company has suffered recurring
losses from operations. Management has developed various strategies to resolve
this situation. The accompanying financial statements do not include any
adjustments relating to the value and classification of asset carrying amounts
and the amount and classification of liabilities that might be required in case
these strategies are not successful.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Aarica Holdings, Inc. and
Subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States.

/s/ Arthur Andersen

Mexico City, D.F.
March 27, 2001

F-1

Aarica Holdings, Inc. and Subsidiaries
Consolidated balance sheets as of December 31, 2000 and 1999
(Stated in U.S. dollars)

Assets
- ------ Restated

2000 1999
------------ --------------
Current assets:
Cash and cash equivalents $135,014 $214,654
Restricted cash - 262,544
Accounts receivable-
Trade, net of allowance for doubtful accounts of $135,000 and
$120,000 in 2000 and 1999, respectively 1,988,424 1,598,320
Other 11,875 69,775

------------ -------------
2,000,299 1,668,095

Inventories 2,131,332 1,544,696
Prepaid expenses 251,241 56,357

------------ -------------
Total current assets 4,517,886 3,746,346

Machinery and equipment 602,286 712,606

Other assets 8,407 8,882

------------ -------------
Total assets $5,128,579 $4,467,834
============ =============
Liabilities and shareholders' deficit

Current liabilities:
Bank debt $ - $4,808,015
Accounts payable-trade 2,300,618 2,561,201
Accrued taxes 2,290,073 1,307,644
Notes payable to related parties 3,220,938 1,102,111
Other accrued expenses and liabilities 310,935 405,743

------------ -----------
Total current liabilities 8,122,564 10,184,714

Shareholders' deficit:
Common stock, $.01 par value; 20,000,000 authorized shares; 2,825,000 and
2,800,000 shares outstanding at December 31, 2000 and 1999,
respectively 28,250 28,000
Preferred stock, $.01 par value; 3,000,000 authorized
shares - -
Additional paid-in capital 767,760 418,010

------------ -----------
796,010 446,010
Accumulated losses (3,789,995) (6,162,890)

------------ ------------
Total shareholders' deficit (2,993,985) (5,716,880)

------------ ------------
Total liabilities and shareholders' deficit $5,128,579 $4,467,834
============ ============

The accompanying notes are an integral part of these
consolidated balance sheets.

F-2

Aarica Holdings, Inc. and Subsidiaries
Consolidated statements of operations
For the years ended December 31, 2000 and 1999
(Stated in U.S. dollars)

Restated
2000 1999
---------------- -------------

Sales-
Distribution $5,578,019 $3,715,764
Manufacturing 1,411,103 1,717,490

--------------- --------------
Total net sales 6,989,122 5,433,254

Cost of sales-
Distribution 3,748,410 2,681,843
Manufacturing 2,032,855 2,625,051

--------------- ------------
Total cost of sales 5,781,265 5,306,894

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

Gross profit (loss)-
Distribution 1,829,609 1,033,921
Manufacturing (621,752) (907,561)

--------------- -------------
Total gross profit 1,207,857 126,360

Operating expenses:
Selling general and administrative 1,907,389 1,445,235

--------------- ----------------
Operating loss (699,532) (1,318,875)

Other income (expenses):
Interest income 41,363 11,663
Interest expense (725,683) (439,100)
Translation loss (48,243) (157,102)
Reductions of accounts payable 487,837 -
Tax inflation adjustments and surcharges (686,862) (265,509)

--------------- ----------------
(931,588) (850,048)

--------------- ----------------
Loss before provisions for asset taxes and extraordinary item (1,631,120) (2,168,923)

Provisions for asset taxes 54,000 51,829

--------------- ----------------
Loss before extraordinary item (1,685,120) (2,220,752)

Extraordinary item - extinguishment of bank debt 4,058,015 -

--------------- ----------------
Net income (loss) $2,372,895 $(2,220,752)
=============== ================
Weighted average shares outstanding 2,805,208 2,703,836
=============== ================
Earnings per share:
Loss before extraordinary item $ (0.60) $ (0.82)
Extraordinary item 1.45 -

--------------- ---------------
Net income (loss) $ 0.85 $ (0.82)
=============== ===============

The accompanying notes are an integral part of these
consolidated statements.

F-3

Aarica Holdings, Inc. and Subsidiaries
Consolidated statements of shareholders' deficit
For the years ended December 31, 2000 and 1999
(Stated in U.S. dollars)

Capital Stock Additional Total
Paid-in Accumulated Shareholders'
------------------------------------------------
Shares Amount Capital Losses Deficit
-------------- -------------- -------------- -------------- ---------------

Balance as of December 31, 1998, as
previously reported 2,600,000 $ 26,000 $ - $ (3,824,665) $ (3,798,665)

Prior year adjustment, see Note 2 - - (117,473) (117,473)

------------------------------------------------------------------------------------------
Balance as of December 31, 1998, as
restated 2,600,000 26,000 - (3,942,138) (3,916,138)

Issuance of common shares 200,000 2,000 418,010 - 420,010
Net loss - - - (2,220,752) (2,220,752)

------------------------------------------------------------------------------------------
Balance as of December 31, 1999, as
restated 2,800,000 28,000 418,010 (6,162,890) (5,716,880)

Contribution of capital - - 300,000 - 300,000
Stock options exercised 25,000 250 49,750 - 50,000
Net income - - - 2,372,895 2,372,895

------------------------------------------------------------------------------------------
Balance as of December 31, 2000 2,825,000 $28,250 $767,760 $(3,789,995) $ (2,993,985)
============ ============ ============ ============ ============

The accompanying notes are an integral part of these
consolidated statements.

F-4

Aarica Holdings, Inc. and Subsidiaries
Consolidated statements of cash flows
For the years ended December 31, 2000 and 1999
(Stated in U.S. dollars)

Restated
2000 1999
-------------- -------------

Cash flows from operating activities:
Net income (loss) $2,372,895 $(2,220,752)
Adjustments to reconcile net income (loss) to net cash used in
operating activities-
Extraordinary item- extinguishment of bank debt (4,058,015) -
Depreciation and amortization 164,100 157,213
Decrease (increase) in-
Restricted cash 262,544 (262,544)
Accounts receivable-trade (372,144) (660,047)
Other accounts receivable 57,661 37,567
Prepaid expenses (194,079) (35,973)
Inventories (586,636) 161,954
Increase (decrease) in-
Accounts payable-trade (259,509) 1,104,095
Accrued taxes 979,709 469,027
Other accrued expenses and liabilities (94,414) 143,481

------------ -----------
Net cash used in operating activities (1,727,888) (1,105,979)

------------ ------------
Cash flows from investing activities:
Additions to machinery and equipment (53,780) (31,284)
Other assets 472 (1,363)

------------ ------------
Net cash used in investing activities (53,308) (32,647)

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

Cash flows from financing activities:
Proceeds from notes payable to related parties 2,450,419 516,875
Proceeds from bank debt - 499,802
Payments on notes payable to related parties (40,344) (307,088)
Loan payments (750,000) -
Increase in capital stock 50,000 420,010

------------ ------------
Net cash provided by financing activities 1,710,075 1,129,599

------------ ------------
Effect of exchange rate changes on cash (8,519) (30,728)

------------ -------------
Net decrease in cash and cash equivalents (79,640) (39,755)

Cash and cash equivalents at beginning of year 214,654 254,409

------------ ------------
Cash and cash equivalents at end of year $ 135,014 $ 214,654
============ ============
Supplemental disclosures:

Income taxes paid $ 115,870 $ 40,904
============ ============
Interest paid $ 768,858 $ 324,935
============ ============
Noncash conversion of debt to additional paid-in capital $ 300,000 $ -
============ ============

The accompanying notes are an integral part of these
consolidated statements.

F-5

Description of business and summary of significant accounting policies:

Description of business-

The Company through its subsidiaries designs, manufactures and sells athletic
footwear and sportswear principally in Mexico. The primary customers are large,
international footwear distributors as well as distributors and retailers in
Mexico. The Company has a manufacturing facility in Fresnillo, Zacatecas, Mexico
and a distribution facility and administrative office in Mexico City.

The Company has received a letter of intent from Rushmore Securities Corporation
of Dallas, Texas to raise approximately $10 million from the issuance of units
consisting of common stock and warrants in an initial public offering (IPO). The
Company has filed a registration statement and subsequent amendments with the
Securities and Exchange Commission on Form SB-2 in anticipation of a mid-2001
offering.

Business strategies-

In recent years the Company has suffered recurring losses, and its liabilities
exceed its assets. Consequently, funds are required for working capital and to
return operations to normal. Management considers that the funds from the IPO
will allow the correction of this situation.

If the IPO is not successful, management contemplates closing the manufacturing
operations and focusing its efforts on the distribution operations that have
proven to be more profitable as well as the extension of the maturity date of
the Schmidt debt.

The accompanying financial statements do not include any adjustments relating to
the value and classification of asset carrying amounts and the amount and
classification of liabilities that might be required in case these strategies
are not successful.

Use of estimates-

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make certain
estimates and use certain assumptions that affect the reported amounts of assets
and liabilities and the required disclosure of contingent assets and liabilities
in the financial statements. Actual results could differ from those estimates.

Basis of presentation-

The accompanying consolidated financial statements include the financial
statements of Aarica Holdings, Inc. and its wholly-owned Mexican subsidiary,
Aarica Holdings Mexico, S.A. de C.V., which in turn has the following
subsidiaries, all incorporated in Mexico:

% Ownership

- Aarica Sport, S.A. de C.V. 99.9
- Taimex Industries, S.A. de C.V. 100.0
- Aarica Sport Products Manufacturing, S.A. de C.V. 80.0
- West Coast Sports, S.A. de C.V. 99.9
- Aarica Services, S.A. de C.V. 99.9
- North America Shoe Corporation, S.A. de C.V. 99.9

F-6

All significant intercompany transactions and balances have been eliminated in
the accompanying consolidated financial statements.

Consolidation of foreign subsidiaries-

Aarica Holdings, Inc., a holding company without any substantive operations, is
incorporated in the United States and records its transactions in U.S. dollars.
However, all of its subsidiaries are Mexican corporations that record all of
their transactions and operations in Mexican pesos.

The functional currency of the Mexican operations is considered to be the U.S.
dollar. Accordingly, all Mexican peso amounts are translated into U.S. dollars
using the "remeasurement " approach prescribed by Statement of Financial
Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation", as
follows:

(a) Quoted year-end rates of exchange are used to remeasure monetary assets and
liabilities.

(b) All nonmonetary assets and shareholders' deficit accounts are remeasured at
the rates of exchange in effect at the time the items were originally
recorded.

(c) Revenues and expenses are remeasured at the average rates of exchange in
effect during the year, except for cost of sales, depreciation and
amortization, which are translated at the rates of exchange in effect when
the respective assets were manufactured or acquired.

(d) The foreign exchange gains and losses recorded in Mexican pesos as a result
of fluctuations in the exchange rate between the Mexican peso and U.S.
dollar are eliminated.

(e) The translation gain or loss arising from the remeasurement is included in
the determination of net income (loss) of the period.

Cash equivalents-

Cash equivalents are primarily bank deposits valued at market (cost plus accrued
interest).

Restricted cash-

Restricted cash at December 31, 1999 represents a restricted trust fund to
guarantee a letter of credit issued by the Company in the amount of $262,544.
The letter of credit and restricted trust fund were liquidated in 2000.

Inventories-

All inventories are stated at average cost, which does not exceed market value.

Accounts receivable-

The Company has calculated the allowance for doubtful accounts by reviewing
specific past due accounts and has included an estimate for accounts not past
due.

F-7

Machinery and equipment-

Machinery and equipment are stated at cost. When machinery and equipment are
retired or otherwise disposed of, the cost is removed from the books,
accumulated depreciation is charged with an amount equivalent to the
depreciation previously provided on the retired asset, and the difference is
recorded in the results of the period.

Depreciation of machinery and equipment is calculated using the straight-line
method over the following estimated useful lives:

Years

Machinery and equipment 10
Furniture and fixtures 10
Transportation equipment 4
Computer equipment 3

Impairment of long-lived assets-

The Company periodically evaluates the carrying value of long-lived assets in
accordance with SFAS No. 121, "Accounting for the Impairment of Long-lived
Assets and Long-lived Assets to be Disposed of ". Under SFAS No. 121, long-lived
assets are reviewed for impairment whenever events or circumstances indicate
that the carrying amount of an asset may not be fully recoverable. An impairment
loss is recognized if the sum of the expected long-term undiscounted cash flow
is less than the carrying amount of the long-lived assets being evaluated.

Employee severance benefits-

In accordance with Mexican Labor Law, the Mexican subsidiaries are liable for
separation payments, which consist of the payment of three months plus 20 days
of salary for each year of service to employees terminating under certain
circumstances. These payments are charged to the results of the period in which
the employee is terminated because the incurrence is rare.

Also under Mexican Labor Law, the Mexican subsidiaries are liable for seniority
premium payments of 12 days of salary (up to a maximum of twice the minimum
wage) for each year of service to employees who:

- - Retire or are terminated, once they have reached 15 or more years of
service with the Company.

- - Are terminated under certain circumstances, regardless of the years of
service to the Company.

The seniority premium liability as of December 31, 2000 is $48,283.

Income taxes-

Deferred income taxes are provided by the liability method for all temporary
differences between the amounts of assets and liabilities for financial and tax
reporting purposes, computed in accordance with SFAS No. 109, "Accounting for
Income Taxes".

Under SFAS No. 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amount of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary diffeences are expected to be recovered or settled. A valuation
allowance is established for any deferred tax asset for which it is more likely
than not that the related benefits will not be realized.

F-8

Stock options-

The Company has elected to follow the disclosure-only option of SFAS N(degree)
123, "Accounting for Stock Based Compensation", and to account for the Plan in
accordance with Accounting Principles Board Opinion N(degree) 25, "Accounting
for Stock Issued to Employees", and related interpretations. Options issued to
persons other than employees will be accounted for based on the value of the
consideration received or the fair value of the options issued, whichever is
more reliably measurable at the date of the grant.

Financial instruments-

The Company's financial instruments include cash equivalents, accounts
receivable, accounts payable and notes payable. Due to the short-term nature of
these items, the fair value of these instruments approximates their recorded
value. The Company does not have financial instruments with off-balance sheet
risk.

Revenue recognition-

Sales and related cost of sales are recorded when title passes to the customer,
generally when the goods are delivered to the customer or independent carrier.
Estimated provisions for returns and allowances are provided for in the same
period the related sales are recorded.

Shipping and handling costs-

Amounts billed to customers are included in net sales. Shipping and handling
costs, including warehousing and distribution expenses, are included in cost of
sales.

Advertising costs-

Advertising costs (approximately $46,000 and $47,000 in 2000 and 1999,
respectively) are expensed as incurred.

Recently issued accounting pronouncements-

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No.
133 went into effect on January 1, 2001. This new standard requires recognition
of all derivative financial instruments on the balance sheet as either assets or
liabilities and the measurement of such instruments and the hedged items at
their fair value. Changes in the fair value of the derivatives will be
recognized currently in earnings, unless specific hedge accounting criteria are
met. Gains and losses on derivative hedging instruments must be recorded in
either other comprehensive income or current earnings, depending on the nature
of the instruments. SFAS No. 133 is not expected to have any significant impact
on the Company since it presently does not engage in these kinds of activities.

Reclassifications of prior year financial statements-

Certain amounts in the 1999 financial statements have been reclassified to
conform to the presentation of the financial statements for 2000.

F-9

2. Restatement of 1999 financial statements and prior period adjustments:
- ------------------------------------------------------------------------------

The 1999 financial statements have been restated as follows:

Bank settlement-

In 1999 the Company entered into an agreement with Banco Bilbao Vizcaya Mexico,
S.A. ("BBV"), to extinguish the related bank debt. Although both BBV and the
Company agreed to and accounted for the debt extinguishment in 1999, the debt
settlement document was not signed until January 14, 2000 and the required
payment was made in January 2000. Since under SFAS No. 76 the Company was not
legally released from its debt obligation until January 2000, the extinguishment
has been transferred from 1999 to 2000. Interest expense on the debt has been
recorded for all of 1999.

Vendor settlement-

The Company had previously recorded a gain of $295,306 in 1999 based upon a
preliminary agreement signed in 1999. However, since the final settlement
agreement was signed and the final payment was made in January 2000, the Company
was not legally released from the related obligation until 2000, and
accordingly, the gain has been transferred to 2000.

Translation loss-

During 2000 the Company improved its fixed asset translation model in order to
obtain a more detailed analysis. As a result of such improvement, the Company
identified that the accumulated depreciation and translation loss were
overstated in the amount of $117,473 that corresponded to years prior to 1999.
Therefore, the Company recorded this amount against accumulated losses at
December 31, 1998.

3. Inventories:

2000 1999
-------------- -------------

Raw materials $392,423 $613,179
Work-in-progress 85,716 128,442
Finished goods 1,642,833 756,451
-------------- --------------
2,120,972 1,498,072
Merchandise-in-transit 10,360 46,624

-------------- --------------
$2,131,332 $1,544,696
============== ==============

Approximately $185,000 of finished goods at December 31,2000 have been pledged
as collateral for tax obligations to the Mexican Government and are not
available for sale until the related taxes have been paid.

As of December 31, 2000, irrevocable letters of credit in the amount of $765,000
were issued related, to purchase commitments of inventories with foreign
suppliers and were guaranteed by Schmidt International, LLC.

F-10

4. Machinery and equipment:

2000 1999
---------------- -------------

Machinery and equipment $1,250,104 $1,212,144
Furniture and fixtures 232,517 249,866
Transportation equipment 102,520 81,619
Computer equipment 112,122 99,790

---------------- --------------
1,697,263 1,643,419
Less- Accumulated depreciation (1,094,977) (930,813)

---------------- ---------------
$602,286 $712,606
================ ===============

The Company manufactures its products at its facility in the State of Zacatecas,
Mexico. The government of Zacatecas arranged for the facility to be built on
behalf of the Company, and the Company executed a lease agreement that provided
for an annual rental cost of approximately $100,000. From the inception of the
lease through June 1999, the Company successfully negotiated a waiver of all
rental payments. The Company (effective July 1, 1999) is required to begin
paying an annual rental of approximately $100,000, plus value-added tax, with
annual Mexican inflation increases under a lease agreement which expires in
April 2001 but includes a one-year extension option. The Company has accrued but
not paid $150,000 of rent at December 31, 2000. The State of Zacatecas has not
notified the Company that it is in default of the rent agreement as of the date
of issuance these financial statements.

The Company's commercial and distribution offices are located in Mexico City.
The current lease expires on September 30, 2005, with an annual rental of
approximately $96,000 plus value-added tax, with annual Mexican inflation
increases. The Company paid approximately $88,600 and $75,947 in 2000 and 1999,
respectively, for the rent of the facility in Mexico City. The Company's United
States office is based in Maitland, Florida, and its annual rental is $8,000.

5. Bank debt:

On January 14, 2000, Aarica Sport, S.A. de C.V. and Taimex Industries, S.A. de
C.V. completed the restructuring of their debt of $4,808,015 with BBV. As a
result of this restructuring, $4,058,015 of principal and interest was forgiven
and is presented in the statement of operations as an extraordinary gain. The
residual amount of $750,000 was paid in January 2000 with borrowings obtained
from Schmidt.

6. Notes payable to related parties:

2000 1999
-------------- -------------

Schmidt International, LLC $3,168,003 $728,820
Madison and Wall Worldwide, Inc - 280,012
Carol Kolozs 52,935 93,279

-------------- -------------
$3,220,938 $1,102,111
============== =============

The Company incurred interest expense on liabilities to related parties of
approximately $490,000 and $68,000 in 2000 and 1999, respectively.

F-11

The amount payable to Schmidt is collateralized by accounts receivable and
inventories of the Company and by 2,250,000 shares of the Company owned by Carol
Kolozs, majority shareholder, President and Director of the Company. The
borrowings are due May 15, 2001 and Schmidt is not obligated to loan additional
amounts to the Company. The loans bear interest at the prime rate of Sun Trust
Bank, Central Florida, N.A. plus 5% (14.5% at December 31, 2000). In addition,
the loan includes costs in the amount of $120,000 of which $110,000 is included
in interest expense in 2000.

In October 2000 the Company granted Schmidt options to purchase 275,000 shares
of the Company's common stock at $2.00 per share. The options have a measurement
date of October 2000, vested when granted, expire on December 31, 2005 and were
granted as partial consideration for loan extensions and letter of credit
financing. No expense has been recorded for the options because the options are
estimated to have no value at the measurement date.

On June 29, 2000 Madison and Wall Worldwide, Inc (formerly Continental Capital &
Equity Corporation) exchanged its outstanding principal and interest from its
revolving credit line to the Company in the approximate balance of $300,000 for
150,000 shares of common stock from the personal holdings of Kolozs. The
conversion of the note agreement established certain restrictions and
obligations for the Company, of which the most important are:

- - The Company is limited in the quantity of shares (and the respective share
prices) that can be issued (other than through the IPO) without the
consent of Madison and Wall.

- - A purchase option for up to 250,000 new shares of the Company's common
stock at a price of $2.00 per share was issued to Madison and Wall. Also,
in the event the IPO has not been consummated on or before June 30, 2001,
the option exercise price of the 250,000 shares will be $0.05 per share.
See Note 10.

The amount due Kolozs does not bear interest and does not have a due date.

7. Income taxes:

Income and asset tax regulations-

The Mexican subsidiaries are subject to income and asset taxes. According to
Mexican Law, income tax is computed taking into consideration the taxable and
deductible effects of inflation, such as depreciation calculated on asset values
restated for the effects of inflation, the deduction of inventory purchases in
place of cost of sales, and the effects of inflation on certain monetary assets
and liabilities. Beginning in 1999, the income tax rate increased from 34% to
35%, with the obligation to pay this tax each year at a rate of 30%
(transitorily 32% in 1999) and the remainder payable upon distribution of
earnings.

The asset tax is computed at an annual rate of 1.8% of the average of the
majority of inflation restated assets less certain liabilities, and the tax is
paid only to the extent that it exceeds the income tax of the period. Any
required payment of asset tax is refundable against the excess of income tax
over asset tax for the preceding three and following ten years.

The provisions for income tax and employee profit sharing have been determined
on the basis of the taxable income of each individual company and not on a
consolidated basis.

F-12

Mexican employee profit sharing-

The Mexican subsidiaries are subject to statutory employee profit sharing, which
is calculated at a rate of 10% on taxable income, after certain adjustments,
primarily to exclude the effects of inflation restated depreciation and the tax
gain or loss from monetary position. The amount for 1999 was approximately
$4,500 (included in operating expenses) and for 2000 there was no employee
profit sharing.

Analysis of provisions and balances-

The tax effect of temporary differences that generated deferred tax liabilities
(assets) under SFAS No. 109 as of December 31, 2000 and 1999 are as follows:

2000 1999
--------------- -------------

Deferred tax assets
Current-
Non-deductible accruals $ 103,136 $104,085
Non-current-
Net operating tax loss carryforwards 2,524,428 2,169,628
Asset tax carryforwards 154,149 100,149
---------------- --------------
2,781,713 2,373,862
---------------- --------------
Deferred tax liabilities
Current-
Inventories (639,400) (445,143)
---------------- ---------------
Net deferred tax assets 2,142,313 1,928,719
Valuation allowance (2,142,313) (1,928,719)

---------------- ----------------
$ - $ -
================ ================

Due to the uncertainty of the realization of the net deferred income tax assets,
the Company has provided a 100% valuation allowance for the related potential
future tax savings.

F-13

Tax loss carryforwards-

As of December 31, 2000 the Mexican subsidiaries had net operating loss and
asset tax carryforwards, which will be indexed for inflation through the date
used to offset future taxable income, as follows (translated from Mexican pesos
to U.S. dollars at the December 31, 2000 exchange rate):

Net
Operating Asset
Loss Tax
Expiration Date Carryforwards Carryforwards

2004 $2,063,661 $ -
2005 2,174,883 -
2008 1,604,543 48,320
2009 355,851 51,829
2010 1,013,914 54,000
--------------- ----------------
$7,212,852 $ 154,149
=============== ================

The U.S. holding company is subject to U.S. income taxes. The only deferred
income tax items are tax loss carryforwards that have been reduced 100% by a
valuation allowance. As of December 31, 2000 tax loss carryforwards of the U.S.
holding company are as follows:

Expiration Date Amount

2018 $129,975
2019 183,027
2020 551,132
------------
$864,134
============

8. Issuance of common stock:
- ---------------------------------

On July 22, 1999, the Company increased its common stock in the amount of $2,000
through the issuance of 200,000 shares of common stock for cash. Additional
paid-in capital of $418,010 resulted from this transaction. Madison and Wall
exercised 25,000 options in October 2000 resulting in increases of $250 of
common stock and $49,750 of additional paid-in capital.

9. Common and preferred stock:
- -----------------------------------

The Company is authorized to issue 20,000,000 shares of common stock at a par
value of $.01 per share. In addition, the Company is authorized to issue
3,000,000 shares of preferred stock, none of which was issued as of December 31,
2000. The features of the preferred stock may vary, among other things, as to
the rate of dividend, conversion privilege and liquidation rights, based upon
the resolution of the Board of Directors at the time of issuance.

10. Additional paid-in capital:

In June 2000 Madison and Wall exchanged $300,000 of debt principal and interest
for 150,000 shares of common stock from the personal holdings of Kolozs. A
contribution of capital was recorded for the amount of the debt reduction. The
Company also issued an option to Madison and Wall for 250,000 new shares of the
Company's common stock at $2.00 per share. No expense has been recorded for
these options or the 200,000 options granted in September 2000 because the
options that vested when granted are estimated to have no value at their
measurement dates which are the grant dates.

F-14

11. Earnings (loss) per common share and stock options:
- -----------------------------------------------------------

Basic earnings (loss) per common share is computed by dividing the net income or
loss by the weighted average number of common shares outstanding. Diluted
earnings (loss) per share reflects the possible dilution that could occur if all
options or contracts to issue common stock were exercised or converted. Basic
loss per share is the same as diluted loss per share in 2000 and 1999.

As of December 31, 2000 the Company has issued the following options and
warrants:

- - 105,000 warrants to Kashner Davidson Securities Corporation in June 1999 at
$2.50 per share expiring in June 2004.

- - 250,000 options to Madison and Wall in June 2000 at $2.00 per share with no
specific expiration date.

- - 200,000 options to employees in June 2000 at the initial public offering
price expiring in June 2010.

- - 75,000 options to outside directors in April 2000 at the initial public
offering price expiring in April 2010.

- - 200,000 options to Madison and Wall in September 2000 at $2.00 per share
with no specific expiration date. 25,000 options were exercised in October
2000.

- - 275,000 options to Schmidt in October 2000 at $2.00 per share expiring on
December 31, 2005.

12. Royalties:

The Company has entered into two licensing agreements requiring royalty payments
ranging from 4% to 5% of specified product sales. Royalties are charged to
expense under the licensing agreements and totaled $264,000 and $105,000 in 2000
and 1999, respectively. Pursuant to these agreements, the future minimum
guaranteed royalty payments are approximately $225,000 in 2001, $285,000 in 2002
and $350,000 thereafter. These licensing agreements expire on July 29, 2008 and
December 31, 2002 with automatic renewals through July 29, 2018 and December 31,
2007 for Lotto and L.A. Gear, respectively.

At December 31, 2000 the Company owed royalties of $202,151, net of withholding
taxes, to Lotto of which $93,985 was due in July 2000 and $108,166 was due in
January 2001. The Company has not paid these royalties, and Lotto has not
notified the Company that it is in default of the royalty agreement as of the
issuance of these financial statements.

F-15

13. Stock compensation plan:

The Company adopted the 2000 Stock Compensation Plan (the "Plan") in April 2000
for the granting of options to employees, directors and advisors to acquire up
to 350,000 shares of the Company's common stock. The Plan authorizes the
granting of incentive stock options to employees of the Company and nonqualified
stock options to employees, directors and advisors. The exercise price of
incentive stock options shall not be less than the fair market value of the
shares on the date of the grant. The exercise price of nonqualified stock
options is established on the date of the grant. The Board of Directors or
committee administering the Plan will determine the number of shares, exercise
price, period during which the option may be exercised (which may not exceed ten
years), and any other terms and conditions of the option. The Plan terminates in
April 2010.

In April 2000 the Company granted nonqualified options to purchase 75,000 shares
of common stock to outside directors and in June 2000 granted incentive stock
options to purchase 200,000 shares to employees at the initial public offering
price. The options to the outside directors vested immediately. The options to
employees vest 20% per year over a period of five years and expire 10 years
after the date of grant. No compensation expense has been disclosed because
Management believes that the initial public offering price (the exercise price)
would be significantly above the estimated fair market value of the shares at
the date of the grants and the options have no value at their measurement dates
which are the grant dates.

14. Concentrations of credit risk:

Financial instruments that potentially expose the Company to credit risk consist
principally of cash and cash equivalents and trade receivables. Cash and cash
equivalents are placed with high quality financial institutions, and the Company
limits the amount of credit exposure with any one financial institution.

No sales to any single customer accounted for more than 10% of net sales in 2000
or 1999.

15. Contingencies:

The Company has not paid various taxes on which surcharges of approximately
$106,000 have been computed. The surcharges have not been recorded since the
Company believes that such amounts will be eliminated through negotiations with
the tax authorities.

16. Reductions of accounts payable:

Reductions of accounts payable include a gain of $295,306 from the settlement of
accounts payable to a vendor and $192,531 from the cancellation of a number of
small amounts of old accounts payable to companies no longer in business or that
have not had any activity and have not sought payment for several years. These
reductions have been recorded as other income because they reduce costs and
expenses of prior years.

F-16

17. Segment and related information:

The Company as two reportable segments for financial statement purposes. The
Company manufactures and sells footwear to large, international footwear
distributors as well as to its distribution segment. The Company also sells
footwear, sportswear and accessories to the same distributors and retailers
using the same personnel and distribution methods. Substantially all of the
Company's sales are in Mexico and all of the Company's long-lived assets are
located in Mexico. Although sales and cost of sales by product line for each
brand are reported to the chief decision maker, operating expenses are allocated
to distribution and manufacturing operations and not to product lines. The
following information is reviewed by the chief decision maker for each
reportable segment:

2000
------------------------------------------------------------------------------

Corporate
Distribution Manufacturing Eliminations Items Consolidation

Sales to customers $5,578,019 $1,411,103 $ - $ - $6,989,122
Intersegment sales 26,788 745,090 (771,878) - -

---------- ---------- ------------ ---------- ----------
Net sales $5,604,807 $2,156,193 $(771,878) $ - $6,989,122
========== ========== ============ ========== ==========

Operating income (loss) 535,635 (1,086,575) (5,483) (143,109) (699,532)
Depreciation and amortization 12,879 151,221 - - 164,100
Reductions of accounts payable - 487,837 - - 487,837
Extinguishment of bank debt 1,815,473 2,242,542 - - 4,058,015
Capital expenditures 49,515 4,265 - - 53,780
Identifiable assets 3,877,539 1,145,308 - 105,732 5,128,579

1999

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

Corporate
Distribution Manufacturing Eliminations Items Consolidation

Sales to customers $3,715,764 $1,717,490 $ - $ - $5,433,254
Intersegment sales - 820,914 (820,914) - -

---------- ---------- ------------ ---------- -----------
Net sales $3,715,764 $2,538,404 $(820,914) $ - $5,433,254
========== ========== ============ ========== ===========

Operating income (loss) 112,330 (1,310,486) (6,331) (114,388) (1,318,875)
Depreciation and amortization 12,338 144,875 - - 157,213
Capital expenditures 28,721 2,563 - - 31,284
Identifiable assets 2,868,499 1,585,760 - 13,575 4,467,834

Net sales by product type to unaffiliated customers are summarized below and
include all brands:

2000 1999
-------------- -------------

Footwear $4,860,532 $3,398,455
Sportswear 1,297,661 1,311,358
Accessories 830,929 723,441

-------------- --------------
$6,989,122 $5,433,254
============== ==============

F-17

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers.

Pursuant to Section 2.02-1 of the Texas Business Corporation Act, a
corporation may indemnify an individual made a party to a proceeding because the
individual is or was a director against liability incurred in his official
capacity with the corporation including expenses and attorneys fees.
Article VI of the Articles of Incorporation provides as follows:
"The Corporation shall indemnify any director or officer, or former
director or officer of the Corporation, or any person who may have served at its
request as a director or officer of another corporation of which this
Corporation owns shares of capital stock or of which it is a creditor to the
fullest extent permitted by the Texas Business Corporation act and as provided
in the By-laws of the Corporation."
Article VII of the by-laws provides as follows:
"Section 1. Indemnification.
The corporation shall indemnify its present or former directors and
officers, employees, agents and other persons to the fullest extent permissible
by, and in accordance with, the procedures contained in Article 2.02 of the
Texas Business Corporation Act. Such indemnification shall not be deemed to be
exclusive of any other rights to which a director, officer, agent or other
person may be entitled, consistent with law, under any provision of the articles
of Incorporation or By-laws of the corporation, any general or specific action
of the board of directors, the terms of any contract, or as may be permitted or
required by law."
"Section 2. Insurance and Other Arrangements
"Pursuant to Section R of Article 2.02-1of the Texas Business
Corporation Act, the corporation may purchase and maintain insurance or another
arrangement on behalf of any person who is or was a director, officer, employee,
or agent or the corporation or who is or was serving at the request of the
corporation a a director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, against any liability asserted against him or
her and incurred by him or her in such capacity or arising out of his or her
status as such person, whether or not the corporation would have the power to
indemnify him or her against that liability under article 2.02-1 of the Texas
Business Corporation Act."

Item 25. Other Expenses of Issuance and Distribution

Estimated expenses in connection with the public offering by the Company of the
securities offered hereunder are as follows:

Securities and Exchange Commission Filing Fee $ 7.900
NASD Filing Fee* 3,426
Nasdaq Application and Listing Fee 9,000
Boston Stock Exchange Filing Fee 14,000
Fees payable to Madison & Wall 220,000
Accounting Fees and Expenses* 150,000
Legal Fees and Expenses 100,000
Printing* 20,000
Fees of Transfer Agent and Registrar* 3,500
Underwriters' Non-Accountable Expense Allowance 220,000
Miscellaneous* 2,174
-----
Total* $750,000
========

* Estimated.

Item 26. Recent Sales of Unregistered Securities
In November 1998, the registrant issued 2,600,000 shares of its common
stock to Carol Kolozs, its Chief Executive Officer and founder, in exchange for
all of his interest in Aarica Holdings Mexico, S. A. de C. V., a newly organized
Mexican holding company which had acquired from him substantially all of the
stock of four Mexican subsidiaries. Mr. Kolozs was founder of the registrant and
relied upon the exemption from registration provided by

II-1

section 4 (2) of the Securities Act of 1933, as amended (the "Securities Act")
for transactions not involving a public offering. No underwriter was involved in
the transaction and the certificate for Mr. Kolozs' shares was stamped with a
restrictive legend and a stop transfer order was placed on the transfer records
of the company. Mr. Kolozs transferred 200,000 of his shares in July 1999 to
Madison & Wall for services rendered to the company in connection with the
private placement in June 1999. Madison & Wall agreed to take the shares for
investment and not with a view to distribution. The certificate is stamped with
a restrictive legend and a stop transfer order was placed on the transfer
records of the company. In June 2000, the company granted Madison & Wall options
to purchase 250,000 shares at $2.00 per share in partial consideration for the
conversion of its debt to additional capital in the company. In September 2000,
the company granted Madison & Wall options to purchase 200,000 shares at $2.00
per share in consideration for services rendered to the company through
September 2000. In October 2000, Madison & Wall purchased 25,000 shares at $2.00
per share ($50,000) pursuant to the September 2000 options to provide working
capital to the company. The certificate is stamped with a restrictive legend and
a stop transfer order was placed on the transfer records of the company. The
options and shares purchased thereunder were taken for investment and not with a
view to distribution. The certificate and options are marked with a restrictive
legend restricting transferability in the absence of an effective registration
statement or an opinion of counsel satisfactory to the company that registration
is not required. In February 2001, Madison & Wall sold 10,000 shares, which it
had acquired in the private placement in June 1999 described in the next
paragraph, to an independent third party for $8.50 per share and loaned the
proceeds to the company for working capital. The note is non-interest bearing,
due June 30, 2001, and may be converted into common stock of the company through
the exercise of existing options held by Madison & Wall. The purchaser from
Madison & Wall took the shares for investment and not with a view for
distribution. The certificate bears a restricting legend restricting
transferability in the absence of an effective registration statement or an
opinion of counsel satisfactory to the company that registration is not
required.

In June 1999, the registrant sold 200,000 shares of its common stock to
17 persons at $2.50 per share or an aggregate of $500,000, in a private offering
pursuant to Rule 506 of Regulation D under the Securities Act. The shares were
sold in units consisting of 10,000 shares at $25,000 per unit. Each investor
represented to the registrant and the selling agent that he/she was an
accredited investor as defined in Regulation D. The units were sold though
Kashner Davidson Securities Corporation, a member firm of the National
association of Securities Dealers, Inc. The registrant received gross proceeds
of $500,000 and paid Kashner Davidson commissions of 10% on the securities sold
by Kashner Davidson and granted warrants to Kashner Davidson to purchase 105,000
shares of the registrant's common stock at $2.50 per share, exercisable for five
years. The securities were sold without registration in reliance upon the
exemption from registration provided by Regulation D. The certificates issued
bear a restrictive legend prohibiting transfer in the absence of an effective
registration statement or an opinion of counsel that registration is not
required. Each investor was screened by the issuer and the selling agent prior
to accepting his/her subscription and provided support for the representation
that he/she was an accredited investor. The shares sold in the private offering
will be subject to a lock-up with the underwriter for a period of six months
from the date of this prospectus.

In June 2000, Mr. Kolozs transferred 150,000 shares of common stock at
$2.00 per share from his personal holdings to Madison & Wall in consideration
for Madison & Wall's cancellation of an outstanding note in the amount of
$300,000 owed by the company. Madison & Wall agreed to take the shares for
investment and not with a view to distribution. The certificate is stamped with
a restrictive legend and a stop transfer order was placed on the transfer
records of the company. No underwriter was involved in the transaction. The
parties relied upon the exemption contained in section 4(1) of the Securities
Act for transactions by any person other than an issuer, underwriter or dealer.

In April 2000, the company's board of directors granted options to
purchase 25,000 shares each to James Schnorf, Robert E. Schmidt, Jr. and Patrick
L. M. Williams, all of whom are directors of the company. The options are for a
term of six years, shall expire 10 years from the date of grant and may be
exercised 20% each year, beginning April 2000 at the offering price of the
common stock in this offering. The options may not be transferred except by the
laws of descent and distribution and may not be exercised for more than three
years after the director ceases to be a director of the company.

In June 2000, the company's board of directors granted options to
purchase 100,000 shares of the company's common stock to each of John J. Stitz,
the Chief Financial Officer and Emanuel Bartoni, Commercial Director of the
company's subsidiary in Mexico at the offering price of the common stock in this
offering. The options were granted under the company's stock compensation plan
and are intended to be incentive options under Section 422 of the Internal
Revenue Code of 1986. The options vest 20% each year beginning June 27, 2001 and
may not be transferred except by the laws of descent and distribution and may
not be exercised for more than 90 days after they cease to be an employee of the
company.

II-2

All of the above options were granted in reliance on the exemption from
registration contained in Section 4(2) of the Securities Act for transactions
not involving a public offering. The shares and options may be included in a
registration statement on Form S-8 upon conclusion of the company's public
offering.

In October 2000, the company granted options to purchase 275,000 shares
of its common stock to Robert E. Schmidt, Jr., a director, for $2.00 per share
as partial consideration for the Schmidt International loans and extensions. The
option is exercisable for five years beginning January 1, 2001, must be
exercised in 25,000 share increments and may be called by the company beginning
in April 2001 if the closing price of the company's stock is $15 per share for
ten consecutive trading days. The company relied upon the exemption contained in
section 4(2) of the Securities Act for transactions not involving a public
offering.

Item 27. Exhibits

Exhibit No Item
Exhibit 1.1 Form of Underwriting Agreement.(1)
Exhibit 1.2 Form of Underwriters' Warrant Agreement.(1)
Exhibit 3.1 Articles of Incorporation of the Registrant. (3)
Exhibit 3.2 Bylaws of the Registrant (3)
Exhibit 5.1 Opinion of Maurice J. Bates L.L.C.(3)
Exhibit 10.1 Corrected Stock Compensation Plan (3)
Exhibit 10.2 Warrant Agreement with American Stock Transfer & Trust Company. (3)
Exhibit 10.3 (i) Loan Agreement with Robert E. Schmidt, Jr. (3)
(ii) First Amendment to Loan Agreement (3)
(iii) Second Amendment to Loan Agreement (3)
(iv) Third Amendment to Loan Agreement (3)
(v) Amended and Restated Pledge Agreement (3)
(vi) Assignment of Loan (3)
(vii) Amended and Restated Guaranty Agreement (3)
(viii) Amended and Restated Security Agreement. (3)
(ix) Guaranty Agreement, Aarica Holdings, Inc. (3)
(x) Amended and Restated Guaranty Agreement, Taimex Industries, S.A. de C.V. (3)
(xi) Amended and Restated Guaranty Agreement, Aarica Sport, S.A. de C.V. (3)
(xii) Schmidt Note Extension to 12/15/00. (3)
(xiii) Schmidt Note Extension to 2/15/01.(3)
(xiv) Schmidt Note Extension to 5/15/01.(1)
Exhibit 10.4 Warrant Agreement with Kashner Davidson Securities Corporation (3)
Exhibit 10.5 Lease on Nasco building. (3)
Exhibit 10.6 Sublease on Mexico City offices. (3)
Exhibit 10.7 License agreement with L.A. Gear. (3)
Exhibit 10.8 License agreement with Lotto. (3)
Exhibit 10.9 Sample purchase order for Wilson Sporting Goods Co. DE Mexico, SA. DE CV (3)
Exhibit 10.10 Sample purchase order for K-Swiss. (3)
Exhibit 10.11 Copy of Nasco union contract. (3)
Exhibit 10.12 Sample employee contract. (3)
Exhibit 10.13 Conversion of Madison & Wall note. (3
(i) Extension of time to reduce exercise price of options. (1)
Exhibit 10.14 Madison & Wall Consulting Agreement, as amended (3)
Exhibit 10.15 Schmidt option (3)
Exhibit 10.16 Madison & Wall September 2000 option (3)
Exhibit 10.17 Madison & Wall Jan 01 note (1)
Exhibit 10.18 Fifth Amendment to Schmidt Loan Agreement with note (1)
Exhibit 21 Subsidiaries of the Registrant. (3)
Exhibit 23.1 Consent of Arthur Andersen, Certified Public Accountants.(1)
Exhibit 23.2 Consent of Maurice J. Bates, L.L.C. included in opinion filed as Exhibit 5.1 to this
registration statement. (3)
--------------
(1) Filed herewith
(2) To be filed by amendment
(3) Previously filed

II-3

Item 28. Undertakings

The undersigned registrant hereby undertakes as follows:

(1) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

(2) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration
Statement to:

(a) Include any Prospectus required by Section 10(a)(3) of the
Securities Act;

b) Reflect in the Prospectus any facts or events which,
individually or together, represent a fundamental change in
the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected on the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and

(3) For determining liability under the securities act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.

(4) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the
initial bona fide offering of those securities.

(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy, as expressed in the Act and is, therefore,
unenforceable.

(6) In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
shares of the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.

(7) For the purposes of determining any liability under the Securities
Act, treat the information omitted from the form of prospectus filed
as part of a registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as of the time it was
declared effective.

II-4

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorizes this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Orlando, State of Florida on April 11, 2001.

Aarica Holdings, Inc.

By: /s/ Carol Kolozs
----------------
Carol Kolozs, President,
Principal Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below constitutes and appoints Carol Kolozs and John J. Stitz,
and each for them, his true and lawful attorney-in-fact and agent, with full
power of substitution and re-substitution, for him and in his name, place and
stead, in any and all capacities (until revoked in writing), to sign any and all
further amendments to this Registration Statement (including post-effective
amendments), and to file same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
such attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person thereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, or their substitutes may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature Title Date

/s Carol Kolozs President, Director April 11, 2001
- -------------------
Carol Kolozs (Principal Executive Officer)

/s/ John J. Stitz Chief Financial Officer, Secretary, April 11, 2001
- -----------------
John J, Stitz Treasurer (Principal Financial
Officer)

/s/ James R. Schnorf Director April 11, 2001
- --------------------
James R. Schnorf

/s/ Patrick L. M. Williams Director April 11, 2001
- --------------------------
Patrick L. M. Williams

/s/ Robert E. Schmidt, Jr. Director April 11, 2001
- -------------------------
Robert E. Schmidt, Jr.

II-6