<PAGE>



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

                                   FORM 10-Q


     /X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                    For the quarterly period ended September 30, 1998.

                                       OR


     / /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                         For The Transition Period From ____ To ____

                              Commission File Number 0-23385


                                BRASS EAGLE INC.
            (Exact name of registrant as specified in its charter)

                Delaware                               71-0578572
          (State or other jurisdiction                    I.R.S. Employer
          of incorporation of organization)            Identification Number


                    1203A North Sixth Street, Rogers, Arkansas 72756
                  (Address of principal executive offices) (zip code)

                                  501-986-9090
                (Registrant's telephone number, including area code)

          Indicate by a check mark whether the Registrant (1) has filed all
          reports required to be filed by Section 13 or 15(d) of the Securities

          Exchange Act of 1934 during the preceding 12 months (or for such
          shorter period that the Registrant was required to file such reports)
          Yes  X No  :  and (2) has been subject to such filing requirements
          for the past 90 days.
          Yes    No   X

          The number of shares of the Registrant's Common Stock, $0.01 par
          value, outstanding as of October 21, 1998 was 7,241,951.
<PAGE>
                                BRASS EAGLE INC.


                                   FORM 10-Q

                        QUARTER ENDED SEPTEMBER 30, 1998

                                     INDEX
                                     ======

                                                                 Page
                                                                 ----

PART I:        FINANCIAL INFORMATION

          Item 1.   Condensed Financial Statements
                    Condensed Balance Sheets as of September 30,
                    1998 (unaudited) and December 31, 1997. . .  1-2


                    Condensed Statements of Operations for the
                    Three and Nine Months ended September 30,
                    1998(unaudited)and September 30, 1997
                    (unaudited)  . . . . . . . . . . . . . . . . 3

                    Condensed Statements of Cash Flows for the
                    Three and Nine Months Ended September 30,

                    1998 (unaudited)and September 30, 1997
                    (unaudited). . . . . . . . . . . . . . . . . 4-5

                    Notes to Condensed Financial Statements. . . 6-8

          Item 2.   Management's Discussion and Analysis of
                    Financial Condition and Results of

                    Operations. . . . . . . . . . . . . . . . .  9-14

PART II:  OTHER INFORMATION

          Item 2.   Changes in Securities and Use of Proceeds. . 15

          Item 6.   Exhibits and Reports on Form 8-K. . . . . .  16


SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . .  17
<PAGE>

                                BRASS EAGLE INC.


PART I:   FINANCIAL INFORMATION
ITEM 1.   -  FINANCIAL STATEMENTS

                              CONDENSED BALANCE SHEETS
                          (In thousands except share data)
<TABLE>
<CAPTION>
                                      SEPTEMBER 30,         DECEMBER 31,
                                          1998                 1997
                                          ----                 ----
<S>                                     <C>                 <C>
                                               (unaudited)
     ASSETS
Current assets
     Cash & cash equivalents            $  4,970            $     504
     Securities available-for-sale             0               12,659
     Accounts receivable _ 
      less allowance for
      doubtful accounts of $502
      in 1998 and $118 in 1997            14,140               12,242
     Due from affiliate                       63                2,024
     Inventories                          11,945                3,584
     Prepaid expenses and other
      current assets                       1,828                1,216
                                        --------              -------
          Total current assets            32,946               32,229
Property and equipment, net                5,143                1,334
Other assets
     Intangible assets, net                2,611                2,666
                                        --------            ---------
                                        $ 40,700            $  36,229
                                        ========            =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
     Current maturities of
      long-term debt                    $    398            $     698
     Accounts payable and
      accrued expenses                     8,937                6,256
     Due to affiliate                          0                2,737
                                        --------            ---------
          Total current liabilities        9,335                9,691
Long-term debt, less current
 maturities                                   12                   18
Deferred income taxes                        143                  365

</TABLE>

                                   -1-
<PAGE>
                                BRASS EAGLE INC.


CONDENSED BALANCE SHEET (Continued)

                              CONDENSED BALANCE SHEETS
                          (In thousands except share data)
<TABLE>
<CAPTION>
                                      SEPTEMBER 30,         DECEMBER 31,
                                          1998                 1997
                                          ----                 ----
<S>                                     <C>                 <C>
                                                (unaudited)
Stockholders' equity
     common stock, $.01 par
      value, 10,000,000
      shares authorized,
      issued and outstanding
      7,241,291 in 1998, and
      7,225,121 in 1997                         72                  72
     Additional paid-in capital             25,659              25,631
     Retained earnings                       5,479                 452
                                        ----------          ----------
                                            31,210              26,155
                                        ----------          ----------
                                        $   40,700          $   36,229
                                        ==========          ==========
</TABLE>
See accompanying notes to condensed financial statement






















                                      -2-
<PAGE>
                                BRASS EAGLE INC
                       CONDENSED STATEMENTS OF OPERATIONS
                 (In thousands except share and per share data)
<TABLE>
<CAPTION>
                         THREE MONTHS ENDED            NINE MONTHS ENDED
                             SEPTEMBER 30,                 SEPTEMBER 30,
                         -------------------           -------------------
                         1998           1997           1998           1997
                         ----           ----           ----           ----
<S>                      <C>            <C>            <C>            <C>
                             (unaudited)                    (unaudited)

Net sales                $  13,527      $   9,909      $ 48,682       $  21,814
Cost of sales                8,870          6,645        31,319          14,639
                         ---------      ---------      --------       ---------
Gross profit                 4,657          3,264        17,363           7,175

Operating expenses           2,628          1,665         9,326           3,638
                         ---------      ---------      --------       ---------
Operating income             2,029          1,599         8,037           3,537

Interest income/(expense)       69           (58)           300           (181)
                         ---------      ---------      --------       ---------
Income before income
  taxes                      2,098          1,541         8,337           3,356

Provision for income
  taxes                        808            590         3,198           1,285
                         ---------      ---------      --------       ---------

Net income               $   1,290      $     951      $   5,139      $   2,071
                         =========      =========      =========      =========

Net income per share:
     Basic               $    0.18      $    0.21      $    0.71      $    0.45
     Pro forma basic          0.18           0.19           0.71           0.41
     Diluted                  0.17           0.17           0.67           0.38
     Pro forma diluted        0.17           0.12           0.67           0.27

Weighted Average Shares Outstanding:
     Basic               7,241,223      4,608,871      7,238,173      4,608,871
     Pro forma basic     7,241,223      5,028,150      7,238,173      5,028,150
     Diluted             7,661,870      5,455,853      7,676,460      5,458,984
     Pro forma diluted   7,661,870      7,652,824      7,676,460      7,655,955
</TABLE>



See accompanying notes to condensed financial statements.

                                      -3-
<PAGE>
                                BRASS EAGLE INC.
                       CONDENSED STATEMENT OF CASH FLOWS

                                 (In Thousands)
<TABLE>
<CAPTION>   
                                                  NINE MONTHS ENDED
                                                     SEPTEMBER 30,
                                             -----------------------------
                                             1998                     1997
                                             ----                     ----
<S>                                          <C>                      <C>
                                                       (Unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income                                   $  5,139                 $ 2,071
Adjustments to reconcile net income to net 
 cash from operating activities
     Deferred income taxes                        (584)                  (96)
     Depreciation and amortization               1,102                    556
     Provision for doubtful accounts               384                      0
     Stock Compensation Expense                     20                    298
Changes in assets and liabilities
     Accounts receivable                       (2,837)                (6,214)
     Inventories                               (8,361)                (2,962)
     Prepaid expenses and other assets             205                  (715)
     Accounts payable and accrued expenses       2,681                  4,971
     Due from affiliate                          1,961                      0
                                             ---------                -------
Net cash provided by (used in) Operating
 activities                                      (290)                (2,091)
                                             ---------                -------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment            (4,757)                  (668)
Sales of securities available-for-sale          55,763                      0
Purchase of securities available-for-sale     (43,104)                      0
Distribution to Daisy                          (2,737)                      0
                                             ---------                -------
Net cash provided by (used in) investing
 activities                                      5,165                  (668)
                                             ---------                -------

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt                       (306)                  (271)
Net payments on intercompany debt                    0                  3,038
Exercise of stock options less shares
 forfeited  for taxes                             (103)                     0
                                             ----------               -------
Net cash provided by (used in) financing
 activities                                       (409)                 2,767
                                             ----------               -------
</TABLE>
                                   -4-
<PAGE>
                                BRASS EAGLE INC.


CONDENSED STATEMENT OF CASH FLOW (Continued)

                       CONDENSED STATEMENT OF CASH FLOWS
                                 (In Thousands)
<TABLE>
<CAPTION>   
                                                  NINE MONTHS ENDED
                                                     SEPTEMBER 30,
                                             -----------------------------
                                             1998                     1997
                                             ----                     ----
<S>                                          <C>                      <C>
                                                       (Unaudited)
NET CHANGE IN CASH                                4,466                     8
                                             ----------               -------
CASH AT BEGINNING  OF PERIOD                        504                     0
CASH AT END OF PERIOD                        $    4,970               $     8
                                             ==========               =======

Supplemental disclosures of cash flow information
     Cash paid during the year for:
          Interest                           $       62               $   199
          Taxes                                   4,120                     0
</TABLE>
See accompanying notes to condensed financial statements.





















                                      -5-
<PAGE>
                                BRASS EAGLE INC.

                    Notes to Condensed Financial Statements
          (All information for the three and nine month periods ended
                    September 30, 1998 and 1997 is unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies and practices followed by the Company are
as follows:

DESCRIPTION OF BUSINESS:  Brass Eagle Inc. (the `Company' or `Brass Eagle') is
a leading manufacturer of paintball guns and other paintball products. The
Company sells its products through both foreign and major national domestic
retailers.  The financial statements have been prepared using certain estimates
and allocations (see below) and include only the accounts of Brass Eagle.

INTERIM RESULTS (UNAUDITED):  The accompanying condensed balance sheet at
September 30, 1998 and the condensed statements of operations for the three and
nine month periods ended September 30, 1998 and 1997 and condensed cash flows
for the nine month periods ended September 30, 1998 and 1997 are unaudited.  In
the opinion of management, these statements have been prepared on the same
basis as the audited financial statements and include all adjustments,
consisting of only normal recurring adjustments necessary for the fair
presentation of the results of the interim periods.  The data disclosed in
these notes to the financial statements for those interim periods are also
unaudited.  The results of operations for the three and nine month periods
ended September 30, 1998 are not necessarily indicative of the results expected
for the full calendar year.  Because all of the disclosures required by
generally accepted accounting principles are not included, these interim
statements should be read in conjunction with the financial statements and
notes thereto contained in the Company's 1997 Annual Report.

ALLOCATIONS AND USE OF ESTIMATES:  During the three-month and nine-month
periods ended September 30, 1997 Brass Eagle shared operational and
administrative facilities with Daisy Manufacturing Company (`Daisy').  As a
result, certain manufacturing, selling, and administrative expenses had to be
allocated from Daisy to Brass Eagle.  Allocations were based on various
activities including quantity of inventory produced, quantity of inventory
received, number of shipments, headcount, and estimates of time spent on Brass
Eagle's paintball related operations.  Management believes that these
allocations are based on a reasonable method.  Sales, returns, material cost,
and direct labor cost were not allocated because they could be specifically
identified to Brass Eagle.  Since November of 1997 the Company has been
operating on a stand-alone basis and no longer shares administrative or
operating facilities with Daisy; therefore, no allocations were required for
the three and nine-month periods ended September 30, 1998.

Management must make estimates and assumptions in preparing financial
statements that affect the amounts reported therein and the disclosures
provided.  These estimates, allocations, and assumptions may change in the
future and future results could differ.
                                   -6-
<PAGE>
                                BRASS EAGLE INC.

                    Notes to Condensed Financial Statements
          (All information for the three and nine month periods ended
                    September 30, 1998 and 1997 is unaudited)

NOTE 1 (Continued)

CASH AND CASH EQUIVALENTS:  Cash and cash equivalents include cash, time
deposits, and readily marketable securities with original maturities of 3
months or less.

PRO FORMA BASIC AND PRO FORMA DILUTED NET INCOME PER SHARE:  The Company's
presentation of earnings per share includes a presentation of pro forma basic
earnings per share to comply with the regulations of the Securities and
Exchange Commission.  Pro forma basic net income per share has been computed by
dividing net income by the weighted average number of common shares outstanding
during the period, plus the weighted average number of shares issued in the
initial public offering whose proceeds would have been used to pay the
divisional equity to Daisy, as if these shares had been outstanding during all
periods presented.  Pro forma diluted net income per share has been presented
in order to compare diluted earnings per share for 1998 to 1997, considering
the additional shares, including overallotments, issued in the Initial Public
Offering in November, 1997.  Accordingly, both diluted and pro forma diluted
net income per share for 1998 are identical.  Pro forma diluted net income per
share for 1997 has been computed by dividing net income by the diluted shares
plus the number of shares issued in the Company's Initial Public Offering,
including overallotments, as if these shares were outstanding during the three
and nine month periods ended September 30, 1997.  In addition, the computation
of earnings per share included in the September 30, 1997 Form 10-Q have been
updated to comply with the Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 128 `Earnings Per Share' and the Securities
and Exchange Commission Staff Accounting Bulletin (SAB 98).


NOTE 2 - SECURITIES AVAILABLE-FOR-SALE

Securities available-for-sale consisted of interest bearing securities, which
were held to maturity and therefore no realized gain or loss was recorded
during the three and nine months ended September 30, 1998.  During the three
and nine months ended September 30, 1998 unrealized losses were $2 and $0 and
there were no unrealized gains.  Comprehensive income (net income plus
unrealized gains and losses on securities available-for-sale) was $1,288 and
$5,139 for the three and nine months ended September 30, 1998.



                                   -7-
<PAGE>
                                   BRASS EAGLE INC.


NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

NOTE 3 - INVENTORIES

Inventories consist of the following components (in thousands):
<TABLE>
<CAPTION>
                                             September 30,       December 31,
                                                 1998                1997
                                             ------------        -----------
<S>                                          <C>                 <C>
Finished goods                               $   7,660           $  2,320
Raw materials                                    4,285              1,264
                                             ---------           --------
                                             $  11,945           $  3,584
                                             =========           ========
</TABLE>

NOTE 4 - NONCASH TRANSACTIONS

The company acquired the rights to the hyberball concept and certain other
assets in exchange for trade receivables of $371,000.  The rights to the
hyperball concept are being amortized over 60 months.


NOTE 5 - EMPLOYEE BENEFIT PLAN

The Company participated in a defined benefit pension plan, which covered the
Company's eligible employees and New Daisy's Eligible employees.  At the end of
1997, the Company intended to establish a defined benefit plan of its own by
transferring the liabilities for its employees into a separate defined benefit
plan to be maintained exclusively for Brass Eagle employees.  The liability was
to be funded by the transfer of a like amount of assets.  In 1998, the plan was
amended to increase the minimum lump sum payment to vested participants.
Because most of the Company's employees participating in this plan will receive
lump sum payments, the Company has decided not to establish a separate defined
benefit pension plan at this time.  Employees not receiving lump sum
distributions will continue to have a vested account balance in the Daisy
Manufacturing Company Retirement Income Plan.








                                   -8-
<PAGE>
                              BRASS EAGLE INC.


ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the accompanying
condensed financial statements for the three and nine month periods ended
September 30, 1998 and September 30, 1997 and the 1997 Annual Report.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this filing and elsewhere (such as in other filings by
the Company with the Securities and Exchange Commission (`SEC'), press
releases, presentations by the company or its management and oral statements)
may constitute `forward-looking statements' within the meaning of the Private
Securities Litigation Reform Act of 1995.  Such statements may include, among
other things, statements regarding the Company's financial position, results of
operations, market position, product development, regulatory matters, growth
opportunities and growth rates, acquisition and divestiture opportunities, and
other similar forecasts and statements of expectation.  Words such as
`expects', `anticipates', `intends', `plans', `believes', `seeks', `estimates',
`should' and variations of these words and similar expressions, are intended to
identify these forward-looking statements.  Such statements are not statements
of historical fact.  Rather, they are based on the Company's estimates,
assumptions, projections and current expectations, and are not guarantees of
future performance.  The Company disclaims any obligation to update or revise
any forward-looking statement based upon the occurrence of future events, the
receipt of new information, or otherwise.  Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.  Factors that could
cause the Company's actual results to differ materially from the results,
projections and expectations expressed in the forward-looking statements
include, among others, the following possibilities: (i) intensifying
competition, including specifically the intensification of price competition,
the entry of new competitors and the introduction of new products by new and
existing competitors; (ii) failure to obtain new customers or retain existing
customers; (iii) inability to carry out marketing and sales plans; (iv) loss of
key executives; (v) general economic and business conditions which are less
favorable than expected; and (vi) unanticipated changes in industry trends.






                                   -9-
<PAGE>
                              BRASS EAGLE INC.

YEAR 2000

As is true for most companies the Year 2000 computer issue could create a risk
for Brass Eagle Inc.  If systems do not correctly recognize date information
when the year changes to 2000, there could be an adverse impact on the
Company's operations.  The risk for Brass Eagle exists in the following areas:
systems used by the company to run its business, systems used by the Company's
suppliers and systems used by the Company's customers and service providers.

Brass Eagle is in the process of conducting a comprehensive inventory and
evaluation of its systems.  The Company's information technology ('IT')
infrastructure consists of a business enterprise resource planning ('ERP')
system, departmental workstations, application servers, and a network system
that links all systems at each location.  It is important to the Company's
operations that these computer systems are compliant.  The Company also has
several non-IT systems that use dates electronically that are being reviewed
for compliance.  These include security systems, fire detection systems, gas
detection systems, voice mail and phone systems, electrical systems,
workstations, radio frequency equipment and telecommunication.

At present all application and departmental servers have been tested; 75% of
networking infrastructure has been certified and the ERP Unix server has been
upgraded.

During 1997, the Company upgraded its primary business enterprise system to a
version that is Year 2000 compliant.  The Company's goal is to have all
internal systems Year 2000 compliant by December 31, 1998.  The Company plans
to complete comprehensive, full system testing in the fourth quarter of 1998.
The underlying database and raw data have been either modified to support four
digit years or the application has been modified and tested to support correct
date calculations using two digit years.

Brass Eagle is also in the process of contacting its critical suppliers to
determine that the suppliers' operations and the products and services they
provide are Year 2000 compliant.  Where practicable, Brass Eagle will attempt
to mitigate its risks with respect to the failure of suppliers to be Year 2000
ready.  In the event that suppliers are not Year 2000 compliant, the Company
may seek alternative sources of suppliers.

Brass Eagle has sent an initial questionnaire to several customers.  We will be
testing invoicing of the critical customers and evaluate them further.  All
customers with whom we trade production EDI documents are scheduled for systems
testing this year.

Brass Eagle is in the process of testing or certifying that its service
providers are Year 2000 compliant.

Since Brass Eagle is a relatively new company, most of its computer equipment
and software is Year 2000 certified.  The estimated cost for the Company to
become Year 2000 compliant is approximately $35,000.

                                   -10-
<PAGE>
                              BRASS EAGLE INC.


YEAR 2000 (Continued)

The Company plans to perform the required modifications described in the
previous paragraphs in order to become compliant.  The Company's contingency
plan for compliance is to implement the actions indicated in the previous
paragraphs.  Management deems the implementation of these actions to be
sufficient for Year 2000 remediation.  Contingency plans for the failure to
implement compliance procedures have not been completed because it is the
Company's intent to complete all required modifications and to test such
modifications thoroughly prior to December 31, 1998.


RESULTS OF OPERATIONS

The following table sets forth operations data as a percentage of sales for the
periods indicated:
<TABLE>
<CAPTION>
                            Three Months Ended                Nine Months Ended
                               September 30,                    September 30,
                         ----------------------             -----------------
                         1998           1997                1998      1997
                         ----           ----                ----      ----
<S>                      <C>            <C>                 <C>       <C>
Sales                    100.0%         100.0%              100.0%    100.0%
Cost of sales             65.6%          67.1%               64.3%     67.1%
Gross profit              34.4%          32.9%               35.7%     32.9%
Operating expenses        19.4%          16.8%               19.2%     16.7%
Operating income          15.0%          16.1%               16.5%     16.2%
Net income                 9.5%           9.6%               10.6%      9.5%
</TABLE>


THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997

SALES.  Sales increased by 36.4% to $13.5 million for the three months ended
September 30, 1998 compared to $9.9 million for the three months ended
September 30, 1997.  The increase in sales was due to the increased popularity
of paintball play, increased domestic distribution to mass merchandisers and
increased unit volume for all products.

Domestic sales increased by 36.8% to $13.0 million (or 95.8% of sales) for the
three months ended September 30, 1998 from $9.5 million (or 96.2% of sales) for
the three months ended September 30, 1997.  International sales increased by
50.9% to $563,000 (or 4.2% of sales) for the three months ended September 30,
1998 from $373,000 (or 3.8% of sales) for the three months ended September 30,
1997.

                                   -11-
<PAGE>
                              BRASS EAGLE INC.


THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997 (Continued)

GROSS PROFIT.  Gross profit as a percentage of net sales increased to 34.4% for
the three months ended September 30, 1998, as compared to 32.9% for the three
months ended September 30, 1997.  This increase was primarily due to a change
in the product mix and increased absorption of fixed overhead, which resulted
in higher gross profit percentage.  In addition, cost of sales for the three
months ended September 30, 1998 included $376,000 relating to the start-up
costs associated with the Company's new paintball manufacturing facility that
commenced pilot production in the third quarter.

OPERATING EXPENSES.  Operating expenses increased by 52.9% to $2.6 million for
the three months ended September 30, 1998 compared to $1.7 million for the
three months ended September 30, 1997.  This represented an increase from 16.8%
of sales to 19.4% of sales as a result of additional compensation and benefits
related to increased staffing and additional distribution, advertising and
promotional expenses.

OPERATING INCOME.  Operating income increased by 25.0% to $2.0 million for the
three months ended September 30, 1998 as compared to $1.6 million for the three
months ended September 30, 1997.  The increase was primarily due to higher unit
sales volume and improved gross profit percentages.

Interest.  The Company recorded interest income of $69,000 for the three months
ended September 30, 1998  compared to interest expense of $58,000 for the three
months ended September 30, 1997.  The change was primarily due to investment
income earned on cash and cash equivalents versus interest expense on
outstanding borrowings in 1997.

INCOME TAX RATE.  The Company's effective federal and state income tax rate was
38.5% for the three months ended September 30, 1998 and 38.3% for the three
months ended September 30, 1997.


NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997

SALES.  Sales increased by 123.4% to $48.7 million for the first nine months of
1998 compared to $21.8 million the first nine months of 1997.  The increase in
sales was primarily due to higher unit volume of all products due to increased
popularity of paintball play and increased domestic distribution to mass
merchandisers.

Domestic sales increased by 136.8% to $47.6 million (or 97.7% of sales) for the
nine months ended September 30, 1998 from $20.1 million (or 92.2% of sales) for
the nine months ended September 30, 1997.  International sales decreased by
35.3% to $1.1 million (or 2.3% of sales) for the nine months ended September
30, 1998 from $1.7 million (or 7.8% of sales) for the nine months ended
September 30, 1997.
                                   -12-
<PAGE>
                              BRASS EAGLE INC.


NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997 (Continued)

GROSS PROFIT.  Gross profit as a percentage of net sales increased to 35.7% for
the first nine months of 1998 compared to 32.9% for the first nine months of
1997 primarily due to product mix changes and increased absorption of fixed
overhead which resulted in a higher gross profit percentage.  In addition, cost
of sales for the nine months ended September 30, 1998 included $667,000 in
start-up costs associated with the Company's new paintball manufacturing
facility that commenced pilot production in the third quarter.

OPERATING EXPENSES.  Operating expenses increased by 158.3% to $9.3 million for
the first nine months of 1998 compared to $3.6 million for the first nine
months of 1997.  This increase from 16.7% of sales to 19.2% of sales was a
result of an additional allowance for doubtful accounts corresponding to the
increases in sales and receivables, additional outside services, additional
compensation related to increased staffing and related benefits and additional
distribution, advertising and promotional expenses.

OPERATING INCOME.  Operating income increased by 128.6% to $8.0 million for the
first nine months of 1998 compared to $3.5 million for the first nine months of
1997. The increase was primarily due to higher unit sales volume and improved
gross profit percentages.

INTEREST.  The Company recorded interest income of $300,000 for the first nine
months of 1998 compared to interest expense of $181,000 for the first nine
months of 1997.  The changes were primarily due to investment income from the
net proceeds of the Initial Public Offering and interest earned on cash and
cash equivalents versus interest expenses on outstanding borrowings in 1997.

INCOME TAX RATE.  The Company's effective federal and state income tax rate was
38.4% for the nine months ended September 30, 1998 compared to 38.3% for the
nine months ended September 30, 1997.


LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities for the nine months ended September 30,
1998 was $290,000, which consisted primarily of net income of $5.1 million,
depreciation and amortization expense of $1.1 million, less net increases in
accounts receivable of $2.5 million, an increase in accounts payable and
accrued expenses and prepaid expenses of $2.9 million, an increase in inventory
of $8.4 million and a decrease in `Due from Affiliate' of $2.0 million, and a
decrease in deferred taxes of $584,000.

The $11.9 million inventory balance includes finished product assembled for a
significant order scheduled to ship in October, 1998.  Inventories are expected
to be significantly lower by year-end.
                                      -13-
<PAGE>
                                BRASS EAGLE INC.


LIQUIDITY AND CAPITAL RESOURCES (Continued)

Net cash provided by investing activities was $5.2 million for the nine months
ended September 30, 1998.  This resulted from net proceeds on sales of
securities available-for-sale of $12.7 million, reduced by a distribution of
$2.7 million to Daisy and the purchase of property and equipment of $4.8
million.

The proceeds from the sale of available-for-sale securities were used to fund
the increase in inventory, receivables and the new paintball facility.  In
addition, excess funds have been reinvested in shorter-term cash equivalents to
provide added liquidity.

The majority of the property and equipment purchases related to the addition of
a paintball manufacturing facility that commenced pilot production in the third
quarter.  Full production is expected to begin early in the fourth quarter.
Equipment and leasehold improvements, including installation of equipment, is
estimated to cost $4.4 million.  The Company has expended $3.6 million for the
new facility through September 30, 1998. Total start-up charges of $667,000
related to the new paintball facility were included in cost of sales for the
nine months ended September 30, 1998.

Net cash used in financing activities was $409,000 in the nine months ended
September 30, 1998 which consisted of a $306,000 reduction of long-term debt
and the proceeds from the issuance of shares upon exercise of stock options
less shares forfeited for taxes of $103,000.

As of September 30, 1998 the Company had a non-interest bearing term debt with
a remaining face value of $390,000 payable to the prior owners of BEI, secured
by specific equipment.  The note had an imputed interest rate of 8.4% and was
paid in full on October 3, 1998.

At September 30, 1998 the Company had working capital of $23.6 million. The
Company paid the intercompany borrowings from Daisy with the proceeds from the
Initial Public Offering and has in place a $10 million line of credit with Bank
of America.

The Company believes that funds generated from operations, together with
borrowings under the credit facility, will be adequate to meet its anticipated
cash requirements for at least the next 18 months.  The Company may, when and
if the opportunity arises, acquire other businesses involved in activities or
having product lines that are compatible with those of the Company or pursue
the vertical integration of production capabilities for one or more of the
Company's products which are currently purchased from third parties.  The
capital expenditures that would be associated with any such activities that may
occur in the future would be funded with available cash and cash equivalents,
borrowings from the credit facility, working capital, or a combination of such
sources.


                                      -14-
<PAGE>
                                BRASS EAGLE INC.



PART II:  OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

(d)  Use of proceeds information:

In previous filings the Company reported $25,703,000 in net proceeds from the
Initial Public Offering, Registration No. 333-36179, which became effective
11/25/97.

The following table shows how the Company used the proceeds from the Initial
Public Offering:
<TABLE>
<CAPTION>
                                                            Amount
                                                            ------
     <S>                                                    <C>
     Funding distribution of divisional equity to
          Daisy                                             $ 11,578,559
     Construction of plant, building and facilities:                   0
     Purchase and installation of machinery and
          equipment:                                           4,757,000
     Purchases of real estate:                                         0
     Acquisition of other businesses:                                  0
     Repayment of indebtedness:                                2,204,000
     Working capital:                                          7,163,441
     Temporary investments:                                            0
                                                            ------------
                                                            $ 25,703,000
                                                            ============
</TABLE>















                                   -15-
<PAGE>
                                BRASS EAGLE INC.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     The following exhibits are filed with this Report or are incorporated
herein by reference to previously filed material:

(a)  Exhibits

Exhibit
Number    Description of Document
------    -----------------------

10(i)     Lease agreement between Leroy Locke & Bonnie Locke and Brass Eagle
          dated August 1, 1998.

11        Statement of Computation of Earnings Per Share

27        Financial Data Schedule
-------------------------------------------------------------------------------
(b)  Reports on Form 8-K:

None





























                                   -16-
<PAGE>
                                BRASS EAGLE INC.




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

                                   Brass Eagle Inc.




                                   By:  /s/  J. R. Brian Hanna
                                             J. R. Brian Hanna
                                        Vice President-Finance and Chief
                                        Financial Officer and Treasurer
                                        (on behalf of the Registrant and as the
                                        Registrant's principal Financial and
                                        Accounting Officer)

































                                   -17-
<PAGE>
                                  BRASS EAGLE INC.



                                 EXHIBIT INDEX
                                 --------------

     The following exhibits are filed with this Report or are incorporated
herein by reference to previously filed material:

NUMBER    DESCRIPTION OF DOCUMENT
------    -----------------------

10(i)     Lease agreement between Leroy Locke & Bonnie Locke and Brass Eagle
          dated August 1, 1998.

11        Statement of Computation of Earnings Per Share

27        Financial Data Schedule
<PAGE>
                              BRASS EAGLE INC.              EXHIBIT 10(i)

                              LEASE AGREEMENT
                              ---------------

     This AGREEMENT, made, entered into and effective this 1st day of August,
1998, by and between LEROY LOCKE & BONNIE LOCKE, HIS WIFE, 12513 Wildlife Road,
Neosho, Missouri, hereinafter referred to as `LESSORS', and BRASS EAGLE INC.,
1203A North Sixth Street, Rogers, Arkansas 72756, hereinafter referred to as
`LESSEE', WITNESSETH:

     WHEREAS, the said Lessors are the owners of certain real estate located
and situated in Neosho, Newton County, Missouri, more particularly described as
follows, to wit:

     1)   Building located at 4251 Doniphan Drive, Neosho, Newton County,
          Missouri, containing 24,564 square feet, plus existing parking spaces
          and ingress and egress.
     2)   Building #2 at the same location, containing 6, 480 square feet, and
          Buildings #3, 4 and 5 and the surrounding approximately eight (8)
          acres, within the fenced-in area;

     WHEREAS, the said Lessee desires to lease said property,

     NOW, THEREFORE, IT IS MUTUALLY AGREED TO BY AND BETWEEN THE PARTIES HERETO
AS FOLLOWS:

     1.   (a)  All prior Leases for the same premises between the parties are
          hereby terminated and replaced by this Lease Agreement.

          (b)  That the Lessors do hereby agree to lease, let, rent and demise
          unto the said Lessee the hereinabove described property for a period
          of fifty-four (54) months beginning on the 1st day of August, 1998,
          and Lessee shall have three (3) consecutive options to renew for
          periods of sixty (60) months each at the rental rate indicated in
          Section 10 herein.  Each renewal shall require sixty (60) days prior
          written notice.

          (c)  Lessor hereby leases to Lessee and Lessee hereby leases from
          Lessor, the Premises subject to the terms and conditions contained on
          this Lease.  Lessor agrees, so long as Lessee fully complies with all
          the terms covenants and conditions of this Lease, that Lessee may
          peaceably have, hold and enjoy the Premises during the Term.

     2.   The Lessee shall pay the Lessors six thousand seven hundred dollars
     ($6,700.00) per month, as and for said lease consideration, the first
     month's rent being payable upon the execution of this agreement, the
     receipt and sufficiency of which is hereby acknowledged.
<PAGE>
                              BRASS EAGLE INC.


LEASE AGREEMENT(Continued)

     3.   IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that absolute
     and unqualified possession of the hereinabove described premises shall be
     delivered to the Lessees upon the execution of this agreement.  The Lessor
     agrees that they shall, upon termination of this lease, unless said lease
     is renewed, peacefully surrender possession of the premises and the
     Lessors shall have the right to re-enter and take possession of the
     premises and the Lessee shall peacefully surrender possession thereof to
     the Lessors upon written demand.  All rights and interest of the Lessee
     shall cease and terminate, provided nothing herein shall effect the
     Lessor's right to rental for the term herein specified.

     4.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that should
     destruction or waste be permitted on the property outside of the terms of
     this agreement by the Lessee or default of any other condition or covenant
     contained in this agreement (including payment of rent as described in
     paragraph one), unless such destruction, waste or default be cured within
     fifteen (15) days of receipt of written notice setting forth the defaults
     or conditions, the Lessors shall have the right to re-enter and take
     possession of the premises and the Lessee shall peacefully surrender
     possession thereof to the Lessors upon such written demand and all rights
     and interest of the Lessee shall cease and terminate, provided that
     nothing herein contained shall affect the Lessor's right to rental for the
     term herein specified.

     5.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that the
     Lessee shall not assign this lease or sub-let the premises or any part
     thereof, or permit any person to occupy the same without the prior written
     consent of the Lessors.

     6.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that the real
     estate taxes on the premises for the above described property shall be
     payable by the Lessors.

     7.  IT IS EXPRESSLY UNDERSTOOD AND AGREED that the Lessors shall provide
     casualty insurance only on the hereinabove described premises.  The Lessee
     agrees to provide liability and content insurance on the above described
     building, should they so desire.

     8.   LESSEE FURTHER COVENANTS AND AGREES TO:

          (a)  Make all modifications to the building for manufacture of
               Paintballs to be in compliance with Federal and State
               Regulations;

          (b)  To commit no waste or damages on said premises and to permit
               none to be done;
<PAGE>
                              BRASS EAGLE INC.


LEASE AGREEMENT(Continued)

     9.   IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that the 
     Lessee agrees to save and hold harmless the Lessors from any and all
     liability or liabilities occasioned by the negligence or careless acts of
     the Lessee.

     10.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that if Lessee
     chooses a five-year option to renew this Lease that the parties shall
     review the rental at that time, and it may be adjusted up or down to
     reflect the current fair market rental; but in no event shall any increase
     exceed 6% over the prior term's rental.  All remaining terms and
     conditions of this Lease Agreement shall remain in full force and effect.

     11.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that this
     agreement is binding upon the heirs, executors, administrators, successor
     and assigns of the parties hereto

     12.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that all
     erasures and interlineations herein contained are approved before signing
     and become a part of this agreement.

     13.  Lessor agrees to make the following improvements to premises:

          (a)  Cement loading dock, driveways on south end of building at the
               three (3) dock doors.

          (b)  Drywall and paint employees cafeteria area.

          (c)  Either pave or ensure roadway from front of building through
               north side of building can withstand constant use of tanker
               delivery vehicles.

          (d)  Seal building #2 and ceiling of any cracks and / or leakage.

     14.  Notwithstanding anything herein, Lessee may terminate this Lease at
     any time upon 180 days prior notice, if continued occupation of the
     Premises is inconsistent with Lessee's business.

     15.  In the event Lessors shall propose to sell all or part of the eight
     (8) acre parcel on which the buildings in this Lease are situated, Lessee
     shall have a right of first refusal to purchase the property from Lessor
     on the same terms and conditions of Lessor's proposed sale.  Any purchaser
     of the premises shall take subject to this Real Estate Lease Agreement.

     16.  The parties agree that this Lease and the Options to Renew will
     survive the death of either or both of the Lessors.
<PAGE>
                              BRASS EAGLE INC.


LEASE AGREEMENT(Continued)

IN WITNESS WHEREOF, the parties hereto have set their hands and seals the day
and year first above written.


                              /s/   Leroy Locke    
                                   LEROY LOCKE/Lessor


                              /s/   Bonnie Locke   
                                   BONNIE LOCKE/Lessor

                              BRASS EAGLE INC.
                              By:  /s/ Steven R. DeMent, VP of Operations
                                   Lessee
<PAGE>
                              BRASS EAGLE INC.                   Exhibit 11


                 STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
                 (In thousands except share and per share data)
<TABLE>
<CAPTION>
                              THREE MONTHS ENDED       NINE MONTHS ENDED
                                  SEPTEMBER 30,           SEPTEMBER 30,
                              -------------------      -------------------
                              1998        1997         1998        1997
                              ----        ----         ----        ----
<S>                           <C>         <C>          <C>         <C>
BASIC NET INCOME PER SHARE
     Net income available to
      Common stockholders     $1,290,000  $  951,000   $5,139,000  $2,071,000
                              ==========  ==========   ==========  ==========
     Weighted average common
      shares outstanding       7,241,223   4,608,871    7,238,173   4,608,871
                              ==========  ==========   ==========  ==========
     Basic net income per
      share                   $     0.18  $     0.21   $     0.71  $     0.45
                              ==========  ==========   ==========  ==========
Pro FORMA BASIC NET INCOME PER SHARE
     Net income available to
      common stockholders     $1,290,000  $  951,000   $5,139,000  $2,071,000
                              ==========  ==========   ==========  ==========
     Weighted average common
      shares outstanding       7,241,223   4,608,871    7,238,173   4,608,871
     Theoretical shares issued
      whose proceeds would have
      been used to pay
      divisional equity                0     419,279            0     419,279
                              ----------  ----------   ----------  ----------
     Pro forma basic weighted
      average shares
      outstanding              7,241,223   5,028,150    7,238,173   5,028,150
                              ==========  ==========   ==========  ==========
     Pro forma basic net
      income per share        $     0.18  $     0.19   $     0.71  $     0.41
                              ==========  ==========   ==========  ==========
DILUTED NET INCOME PER SHARE
     Net income available to
      common stockholders     $1,290,000  $  951,000   $5,139,000  $2,071,000
                              ==========  ==========   ==========  ==========
     Pro forma basic weighted
      average common shares
      outstanding              7,241,223   5,028,150    7,238,173   5,028,150
     Add dilutive effect of
      stock options              420,647     427,703      438,287     430,834
                              ----------  ----------   ----------  ----------
</TABLE>
<PAGE>
                              BRASS EAGLE INC.


STATEMENT OF COMPUTATION OF EARNINGS PER SHARE (Continued)

                 STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
                 (In thousands except share and per share data)
<TABLE>
<CAPTION>
                              THREE MONTHS ENDED       NINE MONTHS ENDED
                                  SEPTEMBER 30,           SEPTEMBER 30,
                              -------------------      -------------------
                              1998        1997         1998        1997
                              ----        ----         ----        ----
<S>                           <C>         <C>          <C>         <C>
     Weighted average dilutive
      common shares
      outstanding              7,661,870   5,455,853    7,676,460   5,458,984
                              ==========  ==========   ==========  ==========
          Diluted net income
           per share          $     0.17  $     0.17   $     0.67  $     0.38
                              ==========  ==========   ==========  ==========
PRO FORMA DILUTED NET INCOME PER SHARE
     Net income available to
      Common stockholders     $1,290,000  $  951,000   $5,139,000  $2,071,000
                              ==========  ==========   ==========  ==========
     Weighted average common
      shares outstanding       7,241,223   4,608,871    7,238,173   4,608,871
     Common shares sold in the
      Offering, including
      overallotments                   0   2,616,250            0   2,616,250
     Add dilutive effect of
      stock options              420,647     427,703      438,287     430,834
                              ----------  ----------   ----------   ---------
     Pro forma weighted
      average Dilutive common
      shares outstanding       7,661,870   7,652,824    7,676,460   7,655,955
                              ==========  ==========   ==========  ==========
     Pro forma diluted net
      income per share        $     0.17  $     0.12   $     0.67  $     0.27
                              ==========  ==========   ==========  ==========
</TABLE>
<PAGE>
[{"type": "10-Q", "sequence": "1", "description": "3RD QTR 10Q", "secsgml_size_bytes": 56372}]
{"company-data": {"conformed-name": "BRASS EAGLE INC", "cik": "0001046112", "assigned-sic": "5990", "irs-number": "710578572", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-23385", "film-number": "98733637"}, "business-address": {"street1": "1203 A N 6TH ST", "city": "ROGERS", "state": "AR", "zip": "72756", "phone": "5016214390"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549

                                   FORM 10-Q

     /X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                    For the quarterly period ended September 30, 1998.

                                       OR

     / /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                         For The Transition Period From ____ To ____

                              Commission File Number 0-23385

                                BRASS EAGLE INC.
            (Exact name of registrant as specified in its charter)

                Delaware                               71-0578572
          (State or other jurisdiction                    I.R.S. Employer
          of incorporation of organization)            Identification Number

                    1203A North Sixth Street, Rogers, Arkansas 72756
                  (Address of principal executive offices) (zip code)

                                  501-986-9090
                (Registrant's telephone number, including area code)

          Indicate by a check mark whether the Registrant (1) has filed all
          reports required to be filed by Section 13 or 15(d) of the Securities

          Exchange Act of 1934 during the preceding 12 months (or for such
          shorter period that the Registrant was required to file such reports)
          Yes  X No  :  and (2) has been subject to such filing requirements
          for the past 90 days.
          Yes    No   X

          The number of shares of the Registrant's Common Stock, $0.01 par
          value, outstanding as of October 21, 1998 was 7,241,951.
BRASS EAGLE INC.

                                   FORM 10-Q

                        QUARTER ENDED SEPTEMBER 30, 1998

                                     INDEX
                                     ======

                                                                 Page
                                                                 ----

PART I:        FINANCIAL INFORMATION

          Item 1.   Condensed Financial Statements
                    Condensed Balance Sheets as of September 30,
                    1998 (unaudited) and December 31, 1997. . .  1-2

                    Condensed Statements of Operations for the
                    Three and Nine Months ended September 30,
                    1998(unaudited)and September 30, 1997
                    (unaudited)  . . . . . . . . . . . . . . . . 3

                    Condensed Statements of Cash Flows for the
                    Three and Nine Months Ended September 30,

                    1998 (unaudited)and September 30, 1997
                    (unaudited). . . . . . . . . . . . . . . . . 4-5

                    Notes to Condensed Financial Statements. . . 6-8

          Item 2.   Management's Discussion and Analysis of
                    Financial Condition and Results of

                    Operations. . . . . . . . . . . . . . . . .  9-14

PART II:  OTHER INFORMATION

          Item 2.   Changes in Securities and Use of Proceeds. . 15

          Item 6.   Exhibits and Reports on Form 8-K. . . . . .  16

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . .  17
BRASS EAGLE INC.

PART I:   FINANCIAL INFORMATION
ITEM 1.   -  FINANCIAL STATEMENTS

                              CONDENSED BALANCE SHEETS
                          (In thousands except share data)
SEPTEMBER 30,         DECEMBER 31,
                                          1998                 1997
                                          ----                 ----
(unaudited)
     ASSETS
Current assets
     Cash & cash equivalents            $  4,970            $     504
     Securities available-for-sale             0               12,659
     Accounts receivable _ 
      less allowance for
      doubtful accounts of $502
      in 1998 and $118 in 1997            14,140               12,242
     Due from affiliate                       63                2,024
     Inventories                          11,945                3,584
     Prepaid expenses and other
      current assets                       1,828                1,216
                                        --------              -------
          Total current assets            32,946               32,229
Property and equipment, net                5,143                1,334
Other assets
     Intangible assets, net                2,611                2,666
                                        --------            ---------
                                        $ 40,700            $  36,229
                                        ========            =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
     Current maturities of
      long-term debt                    $    398            $     698
     Accounts payable and
      accrued expenses                     8,937                6,256
     Due to affiliate                          0                2,737
                                        --------            ---------
          Total current liabilities        9,335                9,691
Long-term debt, less current
 maturities                                   12                   18
Deferred income taxes                        143                  365
-1-
BRASS EAGLE INC.

CONDENSED BALANCE SHEET (Continued)

                              CONDENSED BALANCE SHEETS
                          (In thousands except share data)
SEPTEMBER 30,         DECEMBER 31,
                                          1998                 1997
                                          ----                 ----
(unaudited)
Stockholders' equity
     common stock, $.01 par
      value, 10,000,000
      shares authorized,
      issued and outstanding
      7,241,291 in 1998, and
      7,225,121 in 1997                         72                  72
     Additional paid-in capital             25,659              25,631
     Retained earnings                       5,479                 452
                                        ----------          ----------
                                            31,210              26,155
                                        ----------          ----------
                                        $   40,700          $   36,229
                                        ==========          ==========
See accompanying notes to condensed financial statement

                                      -2-
BRASS EAGLE INC
                       CONDENSED STATEMENTS OF OPERATIONS
                 (In thousands except share and per share data)
THREE MONTHS ENDED            NINE MONTHS ENDED
                             SEPTEMBER 30,                 SEPTEMBER 30,
                         -------------------           -------------------
                         1998           1997           1998           1997
                         ----           ----           ----           ----
(unaudited)                    (unaudited)

Net sales                $  13,527      $   9,909      $ 48,682       $  21,814
Cost of sales                8,870          6,645        31,319          14,639
                         ---------      ---------      --------       ---------
Gross profit                 4,657          3,264        17,363           7,175

Operating expenses           2,628          1,665         9,326           3,638
                         ---------      ---------      --------       ---------
Operating income             2,029          1,599         8,037           3,537

Interest income/(expense)       69           (58)           300           (181)
                         ---------      ---------      --------       ---------
Income before income
  taxes                      2,098          1,541         8,337           3,356

Provision for income
  taxes                        808            590         3,198           1,285
                         ---------      ---------      --------       ---------

Net income               $   1,290      $     951      $   5,139      $   2,071
                         =========      =========      =========      =========

Net income per share:
     Basic               $    0.18      $    0.21      $    0.71      $    0.45
     Pro forma basic          0.18           0.19           0.71           0.41
     Diluted                  0.17           0.17           0.67           0.38
     Pro forma diluted        0.17           0.12           0.67           0.27

Weighted Average Shares Outstanding:
     Basic               7,241,223      4,608,871      7,238,173      4,608,871
     Pro forma basic     7,241,223      5,028,150      7,238,173      5,028,150
     Diluted             7,661,870      5,455,853      7,676,460      5,458,984
     Pro forma diluted   7,661,870      7,652,824      7,676,460      7,655,955
See accompanying notes to condensed financial statements.

                                      -3-
BRASS EAGLE INC.
                       CONDENSED STATEMENT OF CASH FLOWS

                                 (In Thousands)
NINE MONTHS ENDED
                                                     SEPTEMBER 30,
                                             -----------------------------
                                             1998                     1997
                                             ----                     ----
(Unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income                                   $  5,139                 $ 2,071
Adjustments to reconcile net income to net 
 cash from operating activities
     Deferred income taxes                        (584)                  (96)
     Depreciation and amortization               1,102                    556
     Provision for doubtful accounts               384                      0
     Stock Compensation Expense                     20                    298
Changes in assets and liabilities
     Accounts receivable                       (2,837)                (6,214)
     Inventories                               (8,361)                (2,962)
     Prepaid expenses and other assets             205                  (715)
     Accounts payable and accrued expenses       2,681                  4,971
     Due from affiliate                          1,961                      0
                                             ---------                -------
Net cash provided by (used in) Operating
 activities                                      (290)                (2,091)
                                             ---------                -------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment            (4,757)                  (668)
Sales of securities available-for-sale          55,763                      0
Purchase of securities available-for-sale     (43,104)                      0
Distribution to Daisy                          (2,737)                      0
                                             ---------                -------
Net cash provided by (used in) investing
 activities                                      5,165                  (668)
                                             ---------                -------

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt                       (306)                  (271)
Net payments on intercompany debt                    0                  3,038
Exercise of stock options less shares
 forfeited  for taxes                             (103)                     0
                                             ----------               -------
Net cash provided by (used in) financing
 activities                                       (409)                 2,767
                                             ----------               -------
-4-
BRASS EAGLE INC.

CONDENSED STATEMENT OF CASH FLOW (Continued)

                       CONDENSED STATEMENT OF CASH FLOWS
                                 (In Thousands)
NINE MONTHS ENDED
                                                     SEPTEMBER 30,
                                             -----------------------------
                                             1998                     1997
                                             ----                     ----
(Unaudited)
NET CHANGE IN CASH                                4,466                     8
                                             ----------               -------
CASH AT BEGINNING  OF PERIOD                        504                     0
CASH AT END OF PERIOD                        $    4,970               $     8
                                             ==========               =======

Supplemental disclosures of cash flow information
     Cash paid during the year for:
          Interest                           $       62               $   199
          Taxes                                   4,120                     0
See accompanying notes to condensed financial statements.

                                      -5-
BRASS EAGLE INC.

                    Notes to Condensed Financial Statements
          (All information for the three and nine month periods ended
                    September 30, 1998 and 1997 is unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies and practices followed by the Company are
as follows:

DESCRIPTION OF BUSINESS:  Brass Eagle Inc. (the `Company' or `Brass Eagle') is
a leading manufacturer of paintball guns and other paintball products. The
Company sells its products through both foreign and major national domestic
retailers.  The financial statements have been prepared using certain estimates
and allocations (see below) and include only the accounts of Brass Eagle.

INTERIM RESULTS (UNAUDITED):  The accompanying condensed balance sheet at
September 30, 1998 and the condensed statements of operations for the three and
nine month periods ended September 30, 1998 and 1997 and condensed cash flows
for the nine month periods ended September 30, 1998 and 1997 are unaudited.  In
the opinion of management, these statements have been prepared on the same
basis as the audited financial statements and include all adjustments,
consisting of only normal recurring adjustments necessary for the fair
presentation of the results of the interim periods.  The data disclosed in
these notes to the financial statements for those interim periods are also
unaudited.  The results of operations for the three and nine month periods
ended September 30, 1998 are not necessarily indicative of the results expected
for the full calendar year.  Because all of the disclosures required by
generally accepted accounting principles are not included, these interim
statements should be read in conjunction with the financial statements and
notes thereto contained in the Company's 1997 Annual Report.

ALLOCATIONS AND USE OF ESTIMATES:  During the three-month and nine-month
periods ended September 30, 1997 Brass Eagle shared operational and
administrative facilities with Daisy Manufacturing Company (`Daisy').  As a
result, certain manufacturing, selling, and administrative expenses had to be
allocated from Daisy to Brass Eagle.  Allocations were based on various
activities including quantity of inventory produced, quantity of inventory
received, number of shipments, headcount, and estimates of time spent on Brass
Eagle's paintball related operations.  Management believes that these
allocations are based on a reasonable method.  Sales, returns, material cost,
and direct labor cost were not allocated because they could be specifically
identified to Brass Eagle.  Since November of 1997 the Company has been
operating on a stand-alone basis and no longer shares administrative or
operating facilities with Daisy; therefore, no allocations were required for
the three and nine-month periods ended September 30, 1998.

Management must make estimates and assumptions in preparing financial
statements that affect the amounts reported therein and the disclosures
provided.  These estimates, allocations, and assumptions may change in the
future and future results could differ.
                                   -6-
BRASS EAGLE INC.

                    Notes to Condensed Financial Statements
          (All information for the three and nine month periods ended
                    September 30, 1998 and 1997 is unaudited)

NOTE 1 (Continued)

CASH AND CASH EQUIVALENTS:  Cash and cash equivalents include cash, time
deposits, and readily marketable securities with original maturities of 3
months or less.

PRO FORMA BASIC AND PRO FORMA DILUTED NET INCOME PER SHARE:  The Company's
presentation of earnings per share includes a presentation of pro forma basic
earnings per share to comply with the regulations of the Securities and
Exchange Commission.  Pro forma basic net income per share has been computed by
dividing net income by the weighted average number of common shares outstanding
during the period, plus the weighted average number of shares issued in the
initial public offering whose proceeds would have been used to pay the
divisional equity to Daisy, as if these shares had been outstanding during all
periods presented.  Pro forma diluted net income per share has been presented
in order to compare diluted earnings per share for 1998 to 1997, considering
the additional shares, including overallotments, issued in the Initial Public
Offering in November, 1997.  Accordingly, both diluted and pro forma diluted
net income per share for 1998 are identical.  Pro forma diluted net income per
share for 1997 has been computed by dividing net income by the diluted shares
plus the number of shares issued in the Company's Initial Public Offering,
including overallotments, as if these shares were outstanding during the three
and nine month periods ended September 30, 1997.  In addition, the computation
of earnings per share included in the September 30, 1997 Form 10-Q have been
updated to comply with the Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 128 `Earnings Per Share' and the Securities
and Exchange Commission Staff Accounting Bulletin (SAB 98).

NOTE 2 - SECURITIES AVAILABLE-FOR-SALE

Securities available-for-sale consisted of interest bearing securities, which
were held to maturity and therefore no realized gain or loss was recorded
during the three and nine months ended September 30, 1998.  During the three
and nine months ended September 30, 1998 unrealized losses were $2 and $0 and
there were no unrealized gains.  Comprehensive income (net income plus
unrealized gains and losses on securities available-for-sale) was $1,288 and
$5,139 for the three and nine months ended September 30, 1998.

                                   -7-
BRASS EAGLE INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

NOTE 3 - INVENTORIES

Inventories consist of the following components (in thousands):
September 30,       December 31,
                                                 1998                1997
                                             ------------        -----------
Finished goods                               $   7,660           $  2,320
Raw materials                                    4,285              1,264
                                             ---------           --------
                                             $  11,945           $  3,584
                                             =========           ========
NOTE 4 - NONCASH TRANSACTIONS

The company acquired the rights to the hyberball concept and certain other
assets in exchange for trade receivables of $371,000.  The rights to the
hyperball concept are being amortized over 60 months.

NOTE 5 - EMPLOYEE BENEFIT PLAN

The Company participated in a defined benefit pension plan, which covered the
Company's eligible employees and New Daisy's Eligible employees.  At the end of
1997, the Company intended to establish a defined benefit plan of its own by
transferring the liabilities for its employees into a separate defined benefit
plan to be maintained exclusively for Brass Eagle employees.  The liability was
to be funded by the transfer of a like amount of assets.  In 1998, the plan was
amended to increase the minimum lump sum payment to vested participants.
Because most of the Company's employees participating in this plan will receive
lump sum payments, the Company has decided not to establish a separate defined
benefit pension plan at this time.  Employees not receiving lump sum
distributions will continue to have a vested account balance in the Daisy
Manufacturing Company Retirement Income Plan.

                                   -8-
BRASS EAGLE INC.

ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the accompanying
condensed financial statements for the three and nine month periods ended
September 30, 1998 and September 30, 1997 and the 1997 Annual Report.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this filing and elsewhere (such as in other filings by
the Company with the Securities and Exchange Commission (`SEC'), press
releases, presentations by the company or its management and oral statements)
may constitute `forward-looking statements' within the meaning of the Private
Securities Litigation Reform Act of 1995.  Such statements may include, among
other things, statements regarding the Company's financial position, results of
operations, market position, product development, regulatory matters, growth
opportunities and growth rates, acquisition and divestiture opportunities, and
other similar forecasts and statements of expectation.  Words such as
`expects', `anticipates', `intends', `plans', `believes', `seeks', `estimates',
`should' and variations of these words and similar expressions, are intended to
identify these forward-looking statements.  Such statements are not statements
of historical fact.  Rather, they are based on the Company's estimates,
assumptions, projections and current expectations, and are not guarantees of
future performance.  The Company disclaims any obligation to update or revise
any forward-looking statement based upon the occurrence of future events, the
receipt of new information, or otherwise.  Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.  Factors that could
cause the Company's actual results to differ materially from the results,
projections and expectations expressed in the forward-looking statements
include, among others, the following possibilities: (i) intensifying
competition, including specifically the intensification of price competition,
the entry of new competitors and the introduction of new products by new and
existing competitors; (ii) failure to obtain new customers or retain existing
customers; (iii) inability to carry out marketing and sales plans; (iv) loss of
key executives; (v) general economic and business conditions which are less
favorable than expected; and (vi) unanticipated changes in industry trends.

                                   -9-
BRASS EAGLE INC.

YEAR 2000

As is true for most companies the Year 2000 computer issue could create a risk
for Brass Eagle Inc.  If systems do not correctly recognize date information
when the year changes to 2000, there could be an adverse impact on the
Company's operations.  The risk for Brass Eagle exists in the following areas:
systems used by the company to run its business, systems used by the Company's
suppliers and systems used by the Company's customers and service providers.

Brass Eagle is in the process of conducting a comprehensive inventory and
evaluation of its systems.  The Company's information technology ('IT')
infrastructure consists of a business enterprise resource planning ('ERP')
system, departmental workstations, application servers, and a network system
that links all systems at each location.  It is important to the Company's
operations that these computer systems are compliant.  The Company also has
several non-IT systems that use dates electronically that are being reviewed
for compliance.  These include security systems, fire detection systems, gas
detection systems, voice mail and phone systems, electrical systems,
workstations, radio frequency equipment and telecommunication.

At present all application and departmental servers have been tested; 75% of
networking infrastructure has been certified and the ERP Unix server has been
upgraded.

During 1997, the Company upgraded its primary business enterprise system to a
version that is Year 2000 compliant.  The Company's goal is to have all
internal systems Year 2000 compliant by December 31, 1998.  The Company plans
to complete comprehensive, full system testing in the fourth quarter of 1998.
The underlying database and raw data have been either modified to support four
digit years or the application has been modified and tested to support correct
date calculations using two digit years.

Brass Eagle is also in the process of contacting its critical suppliers to
determine that the suppliers' operations and the products and services they
provide are Year 2000 compliant.  Where practicable, Brass Eagle will attempt
to mitigate its risks with respect to the failure of suppliers to be Year 2000
ready.  In the event that suppliers are not Year 2000 compliant, the Company
may seek alternative sources of suppliers.

Brass Eagle has sent an initial questionnaire to several customers.  We will be
testing invoicing of the critical customers and evaluate them further.  All
customers with whom we trade production EDI documents are scheduled for systems
testing this year.

Brass Eagle is in the process of testing or certifying that its service
providers are Year 2000 compliant.

Since Brass Eagle is a relatively new company, most of its computer equipment
and software is Year 2000 certified.  The estimated cost for the Company to
become Year 2000 compliant is approximately $35,000.

                                   -10-
BRASS EAGLE INC.

YEAR 2000 (Continued)

The Company plans to perform the required modifications described in the
previous paragraphs in order to become compliant.  The Company's contingency
plan for compliance is to implement the actions indicated in the previous
paragraphs.  Management deems the implementation of these actions to be
sufficient for Year 2000 remediation.  Contingency plans for the failure to
implement compliance procedures have not been completed because it is the
Company's intent to complete all required modifications and to test such
modifications thoroughly prior to December 31, 1998.

RESULTS OF OPERATIONS

The following table sets forth operations data as a percentage of sales for the
periods indicated:
Three Months Ended                Nine Months Ended
                               September 30,                    September 30,
                         ----------------------             -----------------
                         1998           1997                1998      1997
                         ----           ----                ----      ----
Sales                    100.0%         100.0%              100.0%    100.0%
Cost of sales             65.6%          67.1%               64.3%     67.1%
Gross profit              34.4%          32.9%               35.7%     32.9%
Operating expenses        19.4%          16.8%               19.2%     16.7%
Operating income          15.0%          16.1%               16.5%     16.2%
Net income                 9.5%           9.6%               10.6%      9.5%
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997

SALES.  Sales increased by 36.4% to $13.5 million for the three months ended
September 30, 1998 compared to $9.9 million for the three months ended
September 30, 1997.  The increase in sales was due to the increased popularity
of paintball play, increased domestic distribution to mass merchandisers and
increased unit volume for all products.

Domestic sales increased by 36.8% to $13.0 million (or 95.8% of sales) for the
three months ended September 30, 1998 from $9.5 million (or 96.2% of sales) for
the three months ended September 30, 1997.  International sales increased by
50.9% to $563,000 (or 4.2% of sales) for the three months ended September 30,
1998 from $373,000 (or 3.8% of sales) for the three months ended September 30,
1997.

                                   -11-
BRASS EAGLE INC.

THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997 (Continued)

GROSS PROFIT.  Gross profit as a percentage of net sales increased to 34.4% for
the three months ended September 30, 1998, as compared to 32.9% for the three
months ended September 30, 1997.  This increase was primarily due to a change
in the product mix and increased absorption of fixed overhead, which resulted
in higher gross profit percentage.  In addition, cost of sales for the three
months ended September 30, 1998 included $376,000 relating to the start-up
costs associated with the Company's new paintball manufacturing facility that
commenced pilot production in the third quarter.

OPERATING EXPENSES.  Operating expenses increased by 52.9% to $2.6 million for
the three months ended September 30, 1998 compared to $1.7 million for the
three months ended September 30, 1997.  This represented an increase from 16.8%
of sales to 19.4% of sales as a result of additional compensation and benefits
related to increased staffing and additional distribution, advertising and
promotional expenses.

OPERATING INCOME.  Operating income increased by 25.0% to $2.0 million for the
three months ended September 30, 1998 as compared to $1.6 million for the three
months ended September 30, 1997.  The increase was primarily due to higher unit
sales volume and improved gross profit percentages.

Interest.  The Company recorded interest income of $69,000 for the three months
ended September 30, 1998  compared to interest expense of $58,000 for the three
months ended September 30, 1997.  The change was primarily due to investment
income earned on cash and cash equivalents versus interest expense on
outstanding borrowings in 1997.

INCOME TAX RATE.  The Company's effective federal and state income tax rate was
38.5% for the three months ended September 30, 1998 and 38.3% for the three
months ended September 30, 1997.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997

SALES.  Sales increased by 123.4% to $48.7 million for the first nine months of
1998 compared to $21.8 million the first nine months of 1997.  The increase in
sales was primarily due to higher unit volume of all products due to increased
popularity of paintball play and increased domestic distribution to mass
merchandisers.

Domestic sales increased by 136.8% to $47.6 million (or 97.7% of sales) for the
nine months ended September 30, 1998 from $20.1 million (or 92.2% of sales) for
the nine months ended September 30, 1997.  International sales decreased by
35.3% to $1.1 million (or 2.3% of sales) for the nine months ended September
30, 1998 from $1.7 million (or 7.8% of sales) for the nine months ended
September 30, 1997.
                                   -12-
BRASS EAGLE INC.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997 (Continued)

GROSS PROFIT.  Gross profit as a percentage of net sales increased to 35.7% for
the first nine months of 1998 compared to 32.9% for the first nine months of
1997 primarily due to product mix changes and increased absorption of fixed
overhead which resulted in a higher gross profit percentage.  In addition, cost
of sales for the nine months ended September 30, 1998 included $667,000 in
start-up costs associated with the Company's new paintball manufacturing
facility that commenced pilot production in the third quarter.

OPERATING EXPENSES.  Operating expenses increased by 158.3% to $9.3 million for
the first nine months of 1998 compared to $3.6 million for the first nine
months of 1997.  This increase from 16.7% of sales to 19.2% of sales was a
result of an additional allowance for doubtful accounts corresponding to the
increases in sales and receivables, additional outside services, additional
compensation related to increased staffing and related benefits and additional
distribution, advertising and promotional expenses.

OPERATING INCOME.  Operating income increased by 128.6% to $8.0 million for the
first nine months of 1998 compared to $3.5 million for the first nine months of
1997. The increase was primarily due to higher unit sales volume and improved
gross profit percentages.

INTEREST.  The Company recorded interest income of $300,000 for the first nine
months of 1998 compared to interest expense of $181,000 for the first nine
months of 1997.  The changes were primarily due to investment income from the
net proceeds of the Initial Public Offering and interest earned on cash and
cash equivalents versus interest expenses on outstanding borrowings in 1997.

INCOME TAX RATE.  The Company's effective federal and state income tax rate was
38.4% for the nine months ended September 30, 1998 compared to 38.3% for the
nine months ended September 30, 1997.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities for the nine months ended September 30,
1998 was $290,000, which consisted primarily of net income of $5.1 million,
depreciation and amortization expense of $1.1 million, less net increases in
accounts receivable of $2.5 million, an increase in accounts payable and
accrued expenses and prepaid expenses of $2.9 million, an increase in inventory
of $8.4 million and a decrease in `Due from Affiliate' of $2.0 million, and a
decrease in deferred taxes of $584,000.

The $11.9 million inventory balance includes finished product assembled for a
significant order scheduled to ship in October, 1998.  Inventories are expected
to be significantly lower by year-end.
                                      -13-
BRASS EAGLE INC.

LIQUIDITY AND CAPITAL RESOURCES (Continued)

Net cash provided by investing activities was $5.2 million for the nine months
ended September 30, 1998.  This resulted from net proceeds on sales of
securities available-for-sale of $12.7 million, reduced by a distribution of
$2.7 million to Daisy and the purchase of property and equipment of $4.8
million.

The proceeds from the sale of available-for-sale securities were used to fund
the increase in inventory, receivables and the new paintball facility.  In
addition, excess funds have been reinvested in shorter-term cash equivalents to
provide added liquidity.

The majority of the property and equipment purchases related to the addition of
a paintball manufacturing facility that commenced pilot production in the third
quarter.  Full production is expected to begin early in the fourth quarter.
Equipment and leasehold improvements, including installation of equipment, is
estimated to cost $4.4 million.  The Company has expended $3.6 million for the
new facility through September 30, 1998. Total start-up charges of $667,000
related to the new paintball facility were included in cost of sales for the
nine months ended September 30, 1998.

Net cash used in financing activities was $409,000 in the nine months ended
September 30, 1998 which consisted of a $306,000 reduction of long-term debt
and the proceeds from the issuance of shares upon exercise of stock options
less shares forfeited for taxes of $103,000.

As of September 30, 1998 the Company had a non-interest bearing term debt with
a remaining face value of $390,000 payable to the prior owners of BEI, secured
by specific equipment.  The note had an imputed interest rate of 8.4% and was
paid in full on October 3, 1998.

At September 30, 1998 the Company had working capital of $23.6 million. The
Company paid the intercompany borrowings from Daisy with the proceeds from the
Initial Public Offering and has in place a $10 million line of credit with Bank
of America.

The Company believes that funds generated from operations, together with
borrowings under the credit facility, will be adequate to meet its anticipated
cash requirements for at least the next 18 months.  The Company may, when and
if the opportunity arises, acquire other businesses involved in activities or
having product lines that are compatible with those of the Company or pursue
the vertical integration of production capabilities for one or more of the
Company's products which are currently purchased from third parties.  The
capital expenditures that would be associated with any such activities that may
occur in the future would be funded with available cash and cash equivalents,
borrowings from the credit facility, working capital, or a combination of such
sources.

                                      -14-
BRASS EAGLE INC.

PART II:  OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

(d)  Use of proceeds information:

In previous filings the Company reported $25,703,000 in net proceeds from the
Initial Public Offering, Registration No. 333-36179, which became effective
11/25/97.

The following table shows how the Company used the proceeds from the Initial
Public Offering:
Amount
                                                            ------
Funding distribution of divisional equity to
          Daisy                                             $ 11,578,559
     Construction of plant, building and facilities:                   0
     Purchase and installation of machinery and
          equipment:                                           4,757,000
     Purchases of real estate:                                         0
     Acquisition of other businesses:                                  0
     Repayment of indebtedness:                                2,204,000
     Working capital:                                          7,163,441
     Temporary investments:                                            0
                                                            ------------
                                                            $ 25,703,000
                                                            ============
-15-
BRASS EAGLE INC.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     The following exhibits are filed with this Report or are incorporated
herein by reference to previously filed material:

(a)  Exhibits

Exhibit
Number    Description of Document
------    -----------------------

10(i)     Lease agreement between Leroy Locke & Bonnie Locke and Brass Eagle
          dated August 1, 1998.

11        Statement of Computation of Earnings Per Share

27        Financial Data Schedule
-------------------------------------------------------------------------------
(b)  Reports on Form 8-K:

None

                                   -16-
BRASS EAGLE INC.

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

                                   Brass Eagle Inc.

                                   By:  /s/  J. R. Brian Hanna
                                             J. R. Brian Hanna
                                        Vice President-Finance and Chief
                                        Financial Officer and Treasurer
                                        (on behalf of the Registrant and as the
                                        Registrant's principal Financial and
                                        Accounting Officer)

                                   -17-
BRASS EAGLE INC.

                                 EXHIBIT INDEX
                                 --------------

     The following exhibits are filed with this Report or are incorporated
herein by reference to previously filed material:

NUMBER    DESCRIPTION OF DOCUMENT
------    -----------------------

10(i)     Lease agreement between Leroy Locke & Bonnie Locke and Brass Eagle
          dated August 1, 1998.

11        Statement of Computation of Earnings Per Share

27        Financial Data Schedule
BRASS EAGLE INC.              EXHIBIT 10(i)

                              LEASE AGREEMENT
                              ---------------

     This AGREEMENT, made, entered into and effective this 1st day of August,
1998, by and between LEROY LOCKE & BONNIE LOCKE, HIS WIFE, 12513 Wildlife Road,
Neosho, Missouri, hereinafter referred to as `LESSORS', and BRASS EAGLE INC.,
1203A North Sixth Street, Rogers, Arkansas 72756, hereinafter referred to as
`LESSEE', WITNESSETH:

     WHEREAS, the said Lessors are the owners of certain real estate located
and situated in Neosho, Newton County, Missouri, more particularly described as
follows, to wit:

     1)   Building located at 4251 Doniphan Drive, Neosho, Newton County,
          Missouri, containing 24,564 square feet, plus existing parking spaces
          and ingress and egress.
     2)   Building #2 at the same location, containing 6, 480 square feet, and
          Buildings #3, 4 and 5 and the surrounding approximately eight (8)
          acres, within the fenced-in area;

     WHEREAS, the said Lessee desires to lease said property,

     NOW, THEREFORE, IT IS MUTUALLY AGREED TO BY AND BETWEEN THE PARTIES HERETO
AS FOLLOWS:

     1.   (a)  All prior Leases for the same premises between the parties are
          hereby terminated and replaced by this Lease Agreement.

          (b)  That the Lessors do hereby agree to lease, let, rent and demise
          unto the said Lessee the hereinabove described property for a period
          of fifty-four (54) months beginning on the 1st day of August, 1998,
          and Lessee shall have three (3) consecutive options to renew for
          periods of sixty (60) months each at the rental rate indicated in
          Section 10 herein.  Each renewal shall require sixty (60) days prior
          written notice.

          (c)  Lessor hereby leases to Lessee and Lessee hereby leases from
          Lessor, the Premises subject to the terms and conditions contained on
          this Lease.  Lessor agrees, so long as Lessee fully complies with all
          the terms covenants and conditions of this Lease, that Lessee may
          peaceably have, hold and enjoy the Premises during the Term.

     2.   The Lessee shall pay the Lessors six thousand seven hundred dollars
     ($6,700.00) per month, as and for said lease consideration, the first
     month's rent being payable upon the execution of this agreement, the
     receipt and sufficiency of which is hereby acknowledged.
BRASS EAGLE INC.

LEASE AGREEMENT(Continued)

     3.   IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that absolute
     and unqualified possession of the hereinabove described premises shall be
     delivered to the Lessees upon the execution of this agreement.  The Lessor
     agrees that they shall, upon termination of this lease, unless said lease
     is renewed, peacefully surrender possession of the premises and the
     Lessors shall have the right to re-enter and take possession of the
     premises and the Lessee shall peacefully surrender possession thereof to
     the Lessors upon written demand.  All rights and interest of the Lessee
     shall cease and terminate, provided nothing herein shall effect the
     Lessor's right to rental for the term herein specified.

     4.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that should
     destruction or waste be permitted on the property outside of the terms of
     this agreement by the Lessee or default of any other condition or covenant
     contained in this agreement (including payment of rent as described in
     paragraph one), unless such destruction, waste or default be cured within
     fifteen (15) days of receipt of written notice setting forth the defaults
     or conditions, the Lessors shall have the right to re-enter and take
     possession of the premises and the Lessee shall peacefully surrender
     possession thereof to the Lessors upon such written demand and all rights
     and interest of the Lessee shall cease and terminate, provided that
     nothing herein contained shall affect the Lessor's right to rental for the
     term herein specified.

     5.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that the
     Lessee shall not assign this lease or sub-let the premises or any part
     thereof, or permit any person to occupy the same without the prior written
     consent of the Lessors.

     6.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that the real
     estate taxes on the premises for the above described property shall be
     payable by the Lessors.

     7.  IT IS EXPRESSLY UNDERSTOOD AND AGREED that the Lessors shall provide
     casualty insurance only on the hereinabove described premises.  The Lessee
     agrees to provide liability and content insurance on the above described
     building, should they so desire.

     8.   LESSEE FURTHER COVENANTS AND AGREES TO:

          (a)  Make all modifications to the building for manufacture of
               Paintballs to be in compliance with Federal and State
               Regulations;

          (b)  To commit no waste or damages on said premises and to permit
               none to be done;
BRASS EAGLE INC.

LEASE AGREEMENT(Continued)

     9.   IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that the 
     Lessee agrees to save and hold harmless the Lessors from any and all
     liability or liabilities occasioned by the negligence or careless acts of
     the Lessee.

     10.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that if Lessee
     chooses a five-year option to renew this Lease that the parties shall
     review the rental at that time, and it may be adjusted up or down to
     reflect the current fair market rental; but in no event shall any increase
     exceed 6% over the prior term's rental.  All remaining terms and
     conditions of this Lease Agreement shall remain in full force and effect.

     11.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that this
     agreement is binding upon the heirs, executors, administrators, successor
     and assigns of the parties hereto

     12.  IT IS FURTHER AGREED BY AND BETWEEN THE PARTIES HERETO, that all
     erasures and interlineations herein contained are approved before signing
     and become a part of this agreement.

     13.  Lessor agrees to make the following improvements to premises:

          (a)  Cement loading dock, driveways on south end of building at the
               three (3) dock doors.

          (b)  Drywall and paint employees cafeteria area.

          (c)  Either pave or ensure roadway from front of building through
               north side of building can withstand constant use of tanker
               delivery vehicles.

          (d)  Seal building #2 and ceiling of any cracks and / or leakage.

     14.  Notwithstanding anything herein, Lessee may terminate this Lease at
     any time upon 180 days prior notice, if continued occupation of the
     Premises is inconsistent with Lessee's business.

     15.  In the event Lessors shall propose to sell all or part of the eight
     (8) acre parcel on which the buildings in this Lease are situated, Lessee
     shall have a right of first refusal to purchase the property from Lessor
     on the same terms and conditions of Lessor's proposed sale.  Any purchaser
     of the premises shall take subject to this Real Estate Lease Agreement.

     16.  The parties agree that this Lease and the Options to Renew will
     survive the death of either or both of the Lessors.
BRASS EAGLE INC.

LEASE AGREEMENT(Continued)

IN WITNESS WHEREOF, the parties hereto have set their hands and seals the day
and year first above written.

                              /s/   Leroy Locke    
                                   LEROY LOCKE/Lessor

                              /s/   Bonnie Locke   
                                   BONNIE LOCKE/Lessor

                              BRASS EAGLE INC.
                              By:  /s/ Steven R. DeMent, VP of Operations
                                   Lessee
BRASS EAGLE INC.                   Exhibit 11

                 STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
                 (In thousands except share and per share data)
THREE MONTHS ENDED       NINE MONTHS ENDED
                                  SEPTEMBER 30,           SEPTEMBER 30,
                              -------------------      -------------------
                              1998        1997         1998        1997
                              ----        ----         ----        ----
BASIC NET INCOME PER SHARE
     Net income available to
      Common stockholders     $1,290,000  $  951,000   $5,139,000  $2,071,000
                              ==========  ==========   ==========  ==========
     Weighted average common
      shares outstanding       7,241,223   4,608,871    7,238,173   4,608,871
                              ==========  ==========   ==========  ==========
     Basic net income per
      share                   $     0.18  $     0.21   $     0.71  $     0.45
                              ==========  ==========   ==========  ==========
Pro FORMA BASIC NET INCOME PER SHARE
     Net income available to
      common stockholders     $1,290,000  $  951,000   $5,139,000  $2,071,000
                              ==========  ==========   ==========  ==========
     Weighted average common
      shares outstanding       7,241,223   4,608,871    7,238,173   4,608,871
     Theoretical shares issued
      whose proceeds would have
      been used to pay
      divisional equity                0     419,279            0     419,279
                              ----------  ----------   ----------  ----------
     Pro forma basic weighted
      average shares
      outstanding              7,241,223   5,028,150    7,238,173   5,028,150
                              ==========  ==========   ==========  ==========
     Pro forma basic net
      income per share        $     0.18  $     0.19   $     0.71  $     0.41
                              ==========  ==========   ==========  ==========
DILUTED NET INCOME PER SHARE
     Net income available to
      common stockholders     $1,290,000  $  951,000   $5,139,000  $2,071,000
                              ==========  ==========   ==========  ==========
     Pro forma basic weighted
      average common shares
      outstanding              7,241,223   5,028,150    7,238,173   5,028,150
     Add dilutive effect of
      stock options              420,647     427,703      438,287     430,834
                              ----------  ----------   ----------  ----------
BRASS EAGLE INC.

STATEMENT OF COMPUTATION OF EARNINGS PER SHARE (Continued)

                 STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
                 (In thousands except share and per share data)
THREE MONTHS ENDED       NINE MONTHS ENDED
                                  SEPTEMBER 30,           SEPTEMBER 30,
                              -------------------      -------------------
                              1998        1997         1998        1997
                              ----        ----         ----        ----
Weighted average dilutive
      common shares
      outstanding              7,661,870   5,455,853    7,676,460   5,458,984
                              ==========  ==========   ==========  ==========
          Diluted net income
           per share          $     0.17  $     0.17   $     0.67  $     0.38
                              ==========  ==========   ==========  ==========
PRO FORMA DILUTED NET INCOME PER SHARE
     Net income available to
      Common stockholders     $1,290,000  $  951,000   $5,139,000  $2,071,000
                              ==========  ==========   ==========  ==========
     Weighted average common
      shares outstanding       7,241,223   4,608,871    7,238,173   4,608,871
     Common shares sold in the
      Offering, including
      overallotments                   0   2,616,250            0   2,616,250
     Add dilutive effect of
      stock options              420,647     427,703      438,287     430,834
                              ----------  ----------   ----------   ---------
     Pro forma weighted
      average Dilutive common
      shares outstanding       7,661,870   7,652,824    7,676,460   7,655,955
                              ==========  ==========   ==========  ==========
     Pro forma diluted net
      income per share        $     0.17  $     0.12   $     0.67  $     0.27
                              ==========  ==========   ==========  ==========