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: March 31, 2001


                                       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 0-18083


                            Williams Controls, Inc.
             (Exact name of registrant as specified in its charter)

             Delaware                                             84-1099587
  -------------------------------                            -------------------
  (State or other jurisdiction of                              (I.R.S. Employer
   incorporation or organization)                            Identification No.)

14100 SW 72nd Avenue, Portland, Oregon                              97224
---------------------------------------                           ----------
(Address of principal executive office)                           (zip code)


               Registrant's telephone number, including area code:
                                 (503) 684-8600


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                  Yes      No  X
                                      ---     ---

The number of shares outstanding of the registrant's  common stock as of April
30, 2001: 19,921,114


<PAGE>


                             Williams Controls, Inc.

                                      Index


                                                                           Page
                                                                          Number

Part I.  Financial Information

  Item 1.  Financial Statements

           Consolidated Balance Sheets, March 31, 2001
             (unaudited) and September 30, 2000                             1

           Unaudited Consolidated Statements of Operations,
             three and six months ended March 31, 2001 and 2000
             (as restated)                                                  2

           Unaudited Consolidated Statements of Cash Flows,
             six months ended March 31, 2001 and 2000
             (as restated)                                                  3

           Notes to Unaudited Consolidated Financial Statements            4-7

  Item 2.  Management's Discussion and Analysis
             of Financial Condition and Results of Operations              8-11


Part II.  Other Information

  Item 1.  Legal Proceedings                                                12

  Item 2.  Changes in Securities and Use of Proceeds                        12

  Item 3.  Defaults Upon Senior Securities                                  12

  Item 4.  Submission of Matters to a Vote of Security Holders              12

  Item 5.  Other Information                                                12

  Item 6.  Exhibits and Reports on Form 8-K                                 12

           Signature Page                                                   12








<PAGE>


                                     Part I

Item 1.
                             Williams Controls Inc.
                           Consolidated Balance Sheets
         (Dollars in thousands, except share and per share information)
<TABLE>
<CAPTION>
<S>                                                                   <C>                     <C>

                                                                            March 31,             September 30,
                                                                              2001                    2000
                                                                          (unaudited)
                                                                       -------------------    ---------------------
                           ASSETS
Current Assets:
   Cash and cash equivalents                                                 $    935                 $      30
   Trade and other accounts receivable, less allowance of $618 and
     $508 at March 31, 2001 and September 30, 2000, respectively                9,352                    11,357
   Inventories                                                                  4,691                     8,016
   Other current assets                                                           819                     1,158
                                                                       -------------------    ---------------------
     Total current assets                                                      15,797                    20,561

   Property plant and equipment, net                                           18,618                    21,486
   Investment in and note receivable from affiliate                             1,615                     1,615
   Goodwill and intangible assets, net                                            510                     5,165
   Other assets                                                                   520                       322
                                                                       -------------------    ---------------------
     Total assets                                                            $ 37,060                 $  49,149
                                                                       ===================    =====================

            LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
   Accounts payable                                                          $ 11,222                 $  11,363
   Accrued expenses                                                             6,024                     4,574
   Non-refundable deposit                                                           -                       500
   Current portion of long-term debt and capital leases                        15,127                    21,802
   Secured subordinated debt, net                                               4,280                         -
                                                                       -------------------     --------------------
      Total current liabilities                                                36,653                    38,239

Long-term debt and capital lease obligations                                    3,866                     4,567
Other liabilities                                                               3,671                     3,259
Convertible subordinated debt, net                                              2,061                     2,040

Commitments and contingencies

Shareholders' equity (deficit):
   Preferred stock ($.01 par value, 50,000,000 authorized;
      78,400 issued and outstanding at March 31, 2001
      and September 30, 2000)                                                       1                         1
   Common stock ($.01 par value, 50,000,000 authorized;
      19,921,114 issued at March 31, 2001 and
      September 30, 2000)                                                         199                       199
   Additional paid-in capital                                                  23,069                    21,744
   Accumulated deficit                                                        (31,583)                  (20,023)
   Treasury stock (130,200 shares at March 31, 2001
      and September 30, 2000)                                                    (377)                     (377)
   Note receivable                                                               (500)                     (500)
                                                                       -------------------     --------------------
      Total shareholders' equity (deficit)                                     (9,191)                    1,044
                                                                       -------------------     --------------------

        Total liabilities and shareholders' equity (deficit)                 $ 37,060                 $  49,149
                                                                       ===================     ====================




        The accompanying notes are an integral part of these balance sheets.
</TABLE>

<PAGE>


                                       1



                             Williams Controls, Inc.
                      Consolidated Statements of Operations
         (Dollars in thousands, except share and per share information)
                                  (unaudited)
<TABLE>
<CAPTION>
<S>                                            <C>                <C>                <C>                <C>



                                               Three months       Three months         Six months        Six months
                                                   Ended              Ended              Ended             Ended
                                                  March 31,          March 31,          March 31,         March 31,
                                                    2001               2000               2001              2000
                                                                   (as restated,                        (as restated,
                                                                    see Note 3)                          see Note 3)
                                               --------------     --------------     --------------     --------------

Sales                                             $15,030            $17,596            $30,009            $33,473
Cost of sales                                      12,207             13,089             24,831             24,475
                                               --------------     --------------     --------------     --------------
Gross margin                                        2,823              4,507              5,178              8,998

Operating expenses:
  Research and development                          1,022              1,474              1,967              3,171
  Selling                                             339                425                767                865
  Administration                                    2,362              2,404              4,777              4,256
  Loss on impairment of assets - PPT                    -                  -              1,996                  -
  Loss on impairment of assets - ProActive          4,366                  -              4,366                  -
                                               --------------     --------------     --------------     --------------
    Total operating expenses                        8,089              4,303             13,873              8,292
                                               --------------     --------------     --------------     --------------

Earnings (loss) from operations                    (5,266)               204             (8,695)               706

Other (income) expenses:
   Interest income                                      -                (40)                 -               (110)
   Interest expense                                 1,067                562              2,140              1,191
   Other (income) expense, net                        (16)               (28)               (24)               (36)
   Equity interest in loss of affiliate                 -                867                  -              2,233
                                               --------------     --------------     --------------     --------------
     Total other expenses                           1,051              1,361              2,116              3,278
                                               --------------     --------------     --------------     --------------


Loss from operations before
   income tax benefit                              (6,317)            (1,157)           (10,811)           (2,572)
Income tax benefit                                      -               (169)                 -               (272)
                                               --------------     --------------     --------------     --------------

Net loss                                           (6,317)              (988)           (10,811)            (2,300)

Dividends on preferred stock                         (602)              (150)              (749)              (297)
                                               --------------     --------------     --------------     --------------
Net loss allocable to common
  shareholders                                    $(6,919)          $ (1,138)          $(11,560)           $(2,597)
                                               ==============     ==============     ==============     ==============


Net loss per common share - basic                 $ (0.35)           $ (0.06)           $ (0.58)           $ (0.13)
                                               ==============     ==============     ==============     ==============
Weighted average shares used in per share
  calculation basic                              19,790,914         19,786,742         19,790,914         19,782,585
                                               ==============     ==============     ==============     ==============

Net loss per common share - diluted               $ (0.35)           $ (0.06)           $ (0.58)           $ (0.13)
                                               ==============     ==============     ==============     ==============
Weighted  average  shares  used in per  share
calculation - diluted                            19,790,914         19,786,742         19,790,914         19,782,585
                                               ==============     ==============     ==============     ==============


</TABLE>

        The accompanying notes are an integral part of these statements.

                                       2
<PAGE>


                             Williams Controls, Inc.
                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                         <C>                  <C>


                                               Six Months          Six Months
                                                 Ended               Ended
                                                March 31,           March 31,
                                                  2001                2000
                                                                  (as restated,
                                                                   see Note 3)
                                             --------------      ---------------
Cash flows from operating activities:
  Net loss                                     $(10,811)            $ (2,300)
Adjustments  to reconcile net loss
  to net cash provided by operations:
      Depreciation and amortization               2,193                1,439
      Equity interest in loss of affiliate            -                2,233
      Loss from impairment of assets - PPT        1,996                    -
      Loss from impairment of assets - ProActive  4,366                    -
Changes in working capital:
      Receivables, net                            2,005                 (319)
      Inventories                                 3,325                 (449)
      Accounts payable and accrued expenses         662                  785
      Other                                         787                  335
                                             --------------      ---------------
Net cash provided by operating activities         4,523                1,724


Cash flows from investing activities:
  Payments for property, plant and equipment       (671)              (1,148)
                                             --------------      ---------------
Net cash used in investing activities              (671)              (1,148)


Cash flows from financing activities:
  Net borrowings (repayments) of long-term
    debt and capital lease obligations           (7,376)               1,800
  Net proceeds from secured subordinated debt     4,576                    -
  Payments under term notes                           -               (2,368)
  Preferred dividends                              (147)                (147)
  Proceeds from issuance of common stock              -                   36
                                             --------------      ---------------
Net cash used in financing activities            (2,947)                (679)

Net cash used in discontinued operations              -               (1,470)

Net increase (decrease) in cash and cash            905               (1,573)
  equivalents
Cash and cash equivalents at beginning of
  period                                             30                2,323
                                             --------------      ---------------
Cash and cash equivalents at end of period     $    935             $    750

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

Supplemental disclosure of cash flow
  information:
      Interest paid                           $   1,066             $  1,170

      Income taxes paid (refund)              $    (158)            $      -
                                             --------------      ---------------
Supplemental disclosure of non-cash
  investing and financing activities

Capital leases for equipment                   $      -             $    200

Dividends accrued not paid                     $    147             $    150

Dividends for implied return on preferred      $    455             $      -
  stock

Secured subordinated debt issuance costs       $     57             $      -

Secured subordinated debt discount             $    813             $      -
                                             --------------      ---------------



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

                                      3
<PAGE>

                             Williams Controls, Inc.
              Notes to Unaudited Consolidated Financial Statement
                Three and Six Months ended March 31, 2001 & 2000
            (Dollars in thousands, except share & per share amounts)


Cautionary Statement: This report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, those statements relating to development
of new products, the financial condition of the Company, the ability to increase
distribution  of the Company's  products,  integration of businesses the Company
acquires,   disposition   of  any  current   business  of  the  Company.   These
forward-looking  statements are subject to the business and economic risks faced
by the  Company  including  the  ability of the  Company to  generate  or obtain
sufficient  working  capital to continue its  operations.  The Company's  actual
results could differ materially from those anticipated in these  forward-looking
statements  as a  result  of the  factors  described  above  and  other  factors
described elsewhere in this report.

1.  Organization

Williams  Controls,  Inc.,  including its  wholly-owned  subsidiaries,  Williams
Controls Industries, Inc. ("Williams");  Aptek Williams, Inc. ("Aptek"); Premier
Plastic   Technologies,   Inc.  ("PPT");   ProActive   Acquisition   Corporation
("ProActive");  GeoFocus,  Inc.  ("GeoFocus");  NESC  Williams,  Inc.  ("NESC");
Williams  Technologies,  Inc.  ("Technologies");   Williams  World  Trade,  Inc.
("WWT");  Kenco/Williams,  Inc.  ("Kenco");  Techwood  Williams,  Inc.  ("TWI");
Agrotec  Williams,  Inc.  ("Agrotec")  and its  80%  owned  subsidiaries  Hardee
Williams,  Inc.  ("Hardee") and Waccamaw Wheel  Williams,  Inc.  ("Waccamaw") is
hereinafter referred to as the "Company" or "Registrant."

2.  Interim Consolidated Financial Statements

The unaudited interim  consolidated  financial  statements have been prepared by
the Company and, in the opinion of management,  reflect all material adjustments
which are  necessary  to a fair  statement  of results for the  interim  periods
presented.  The interim  results are not  necessarily  indicative of the results
expected for the entire fiscal year. Certain information and footnote disclosure
made in the last annual  report on Form 10-K have been  condensed or omitted for
the interim  consolidated  statements.  Certain costs are estimated for the full
year and  allocated to interim  periods  based on activity  associated  with the
interim period.  Accordingly,  such costs are subject to year-end adjustment. It
is the Company's opinion that, when the interim consolidated statements are read
in  conjunction  with the  September  30, 2000 annual  report on Form 10-K,  the
disclosures are adequate to make the information  presented not misleading.  The
interim  consolidated  financial  statements include the accounts of the Company
and its subsidiaries.  All significant  inter-company  accounts and transactions
have been eliminated.

3.  Restatement

During the fourth  quarter of the fiscal  year ended  September  30,  2000,  the
Company applied the provisions of Emerging  Issues Task Force 99-10  "Percentage
Used to  Determine  the  amount of Equity  Method  Losses"  (EITF  99-10) in the
calculation  of  Equity  Interest  in  Loss  of  Affiliate  in its  Consolidated
Financial  Statements.   This  pronouncement  provides  for  the  percentage  of
ownership to be determined by the  liquidation  order of the investment  held to
the total of each particular level of investment held by the investor  contained
in the financial  statements of the investee.  The Company's  investment in Ajay
Sports,  Inc.,  an affiliate,  consists of common and preferred  stock and notes
receivable.  For the first three-quarters of the fiscal year ended September 30,
2000, the Equity  Interest in Loss of Affiliate was computed  utilizing only the
percentage of common stock  ownership held by the Company in Ajay. The effect of
EITF  99-10 in the  fourth  quarter of 2000 was to  substantially  increase  the
Company's  Equity  Interest in Loss of Affiliate from amounts that were recorded
using only the  percentage of common stock  ownership.  EITF 99-10 was effective
for the  Company's  first quarter of fiscal 2000,  accordingly,  the Company has
restated its previously  reported quarterly and six month amounts to reflect the
proper  application  of  EITF  99-10.  The  effect  of this  restatement  on the
operating results for the three and six months ended March 31, 2000 as follows:
<TABLE>
<CAPTION>
<S>                                 <C>              <C>            <C>                  <C>

                                         Three Months Ended                 Six Months Ended
                                           March 31, 2000                    March 31, 2000
                                    As Previously        As            As Previously        As
                                       Reported      Restated             Reported       Restated

Loss from operations
  before income tax benefit         $    (440)       $ (1,157)       $     (709)         $ (2,572)

Net loss                                 (271)           (988)             (437)           (2,300)

Net loss allocable to common
 shareholders                            (421)          (1,138)            (734)           (2,597)

Net loss per common share-basic         (0.02)           (0.06)           (0.04)           ( 0.13)

Net loss per common share-diluted       (0.02)           (0.06)           (0.04)            (0.13)

No  additional  income tax benefit was recorded in the three or six months ended
March 31, 2000 as a result of the  restatement of the Equity Interest in Loss of
Affiliate.
</TABLE>


4.  Going Concern Matters

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of  liabilities  in the normal  course of  business.  For the three months ended
March 31,  2001 and 2000,  the  Company  incurred  losses of $6,919 and  $1,138,
respectively,  and for the six months  ended March 31, 2001 and 2000 the Company
incurred losses of $11,560 and $2,597,  respectively.  In addition, the majority
of the  Company's  accounts  payable are  significantly  past due; the Company's
working  capital  deficit  increased  from  $(17,678) at  September  30, 2000 to
$(20,856) at March 31, 2001; and stockholders'  equity has decreased from $1,044
at  September  30,  2000 to a deficit of $(9,191) at March 31,  2001.  Also,  as
described in Note 8 to the  Unaudited  Consolidated  Financial  Statements,  the
Company was not in compliance  with its debt covenants under the credit facility
with its primary  bank (the Bank) and the Company has extended the debt due with
another  bank.  The Company was also in default on debt payments to the Bank for
Bank  Term  Loans III and IV,  each as  defined  in Note 8,  below.  Although  a
forbearance  agreement  was reached with the Bank through the original  terms of
the credit  facility  and term  loans,  no waivers  have been  obtained  and the
default has not been cured. Furthermore,  the credit facility with the Company's
primary  bank matures on July 11, 2001.  As a result,  although the  forbearance
agreement was reached,  the Company has  classified its debt owed to the Bank of
$13,598 as current liabilities in the accompanying Consolidated Balance Sheet at
March 31, 2001.

During the second quarter of fiscal 2001, the Company had fully borrowed and was
in an overadvance  position  under its credit  facility until the Company raised
$4,576, net of expenses,  from a private placement of debt in February 2001. The
$4,576 raised was in the form of $4,950 of secured subordinated debentures which
are due March 1, 2002,  bearing interest at 12% and include warrants to purchase
the  Company's  common  stock at $1.375  per share for each  $2.00 of  principal
amounts of the debentures  purchased.  The Private  Placement funds were used to
pay down bank debt,  including the overadvance  from the Bank and to support the
operations  of the  Company.  Due to the lack of  borrowing  capacity  under the
credit facility,  the Company's  working capital  deficit,  the Company's debts,
including  accounts payable,  and other factors as outlined herein,  the Company
has a significant lack of liquidity.  Accordingly, the Company's continuation as
a going concern is dependent upon,  among other things,  its ability to generate
sufficient  cash flow to meet its  obligations on a timely basis, to comply with
the terms of its credit facility,  to obtain additional financing or refinancing
as may be required,  and ultimately to attain  profitability.  The above matters
raise a  substantial  doubt about the  Company's  ability to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability  and  classification  of asset carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.

5.  Comprehensive Income (Loss)

In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  ("SFAS")  130,  "Reporting   Comprehensive
Income",  which requires  companies to report a measure of all changes in equity
except those resulting from  investments by owners and  distributions to owners.
Total  comprehensive  (loss) for the three  months ended March 31, 2001 and 2000
was $(6,317) and $(988), respectively, and consisted solely of net loss, and for
the six months ended March 31, 2001 and 2000 the total comprehensive  (loss) was
$(10,811) and $(2,300),  respectively,  and consisted  solely of net loss. As of
March 31, 2001, accumulated other comprehensive loss was $(31,583) and consisted
of accumulated deficit.

6.  Earnings (loss) per Share

Basic  earnings per share ("EPS") and diluted EPS are computed using the methods
prescribed by Statement of Financial Accounting Standards No. 128, "Earnings Per
Share."  Basic EPS is  calculated  using the  weighted-average  number of common
shares  outstanding  for the  period  and  diluted  EPS is  computed  using  the
weighted-average  number of common shares and dilutive common  equivalent shares
outstanding

Following  is a  reconciliation  of basic EPS and  diluted  EPS:

<TABLE>
<CAPTION>
<S>                                      <C>       <C>          <C>          <C>      <C>         <C>
                                               Three Months Ended                  Three Months Ended
                                                 March 31, 2001                      March 31, 2000
                                                                                     (as restated)
                                         --------------------------------    -------------------------------
                                                                  Per                                Per
                                                                 Share                              Share
                                           Loss      Shares      Amount        Loss      Shares     Amount

       Net loss from operations          $(6,317)                             $  (988)
       Less-Preferred stock dividends       (602)                                (150)
                                         ---------                           ---------
       Basic EPS-
         Net loss allocable to
         common shareholders             $(6,919)   19,790,914   $ (0.35)     $(1,138)  19,786,742   $(0.06)
                                                                =========                          =========
       Effect of dilutive securities -
         Stock options and warrants            -           -                        -           -
         Convertible preferred stock           -           -                        -           -
         Convertible subordinated debt         -           -                        -           -
       Diluted EPS -                     ---------  ----------                --------  ----------
         Net loss allocable to
         common shareholders             $(6,919)   19,790,914   $ (0.35)     $(1,138)  19,786,742   $(0.06)
                                         ========= ============ =========    ========= =========== =========


                                                Six Months Ended                    Six Months Ended
                                                 March 31, 2001                      March 31, 2000
                                                                                     (as restated)
                                         --------------------------------    -------------------------------
                                                                  Per                                Per
                                                                 Share                              Share
                                           Loss      Shares      Amount        Loss      Shares     Amount

       Net loss from operations          $(10,811)                            $(2,300)
       Less-Preferred stock dividends        (749)                                (297)
                                         ---------                           ---------
       Basic EPS-
         Net loss allocable to
         common shareholders            $(11,560)   19,790,914   $ (0.58)     $(2,597)  19,782,585   $(0.13)
                                                                =========                          =========
       Effect of dilutive securities -
         Stock options and warrants            -           -                        -           -
         Convertible preferred stock           -           -                        -           -
         Convertible subordinated debt         -           -                        -           -
       Diluted EPS -                     ---------  ----------                --------  ----------
         Net loss allocable to
         common shareholders            $(11,560)   19,790,914   $ (0.58)     $(2,597)  19,782,585   $(0.13)
                                         ========= ============ =========    ========= =========== =========

</TABLE>

     At March 31, 2001 and 2000,  the Company had options and warrants  covering
     6,236,879 and 3,412,106 shares, respectively, of the Company's common stock
     that were not considered in the respective  dilutive EPS calculations since
     they would  have been  antidilutive.  In both  periods,  conversion  of the
     preferred  shares  and  convertible   subordinated  debt  would  have  been
     antidilutive and therefore was not considered in the computation of diluted
     earnings per share.

7.   Inventories

     Inventories consisted of the following:

                                       March  31,            September 30,
                                          2001                   2000
                                  -------------------     ------------------
       Raw material                     $3,130                 $6,108
       Work in process                   1,108                  1,088
       Finished goods                      453                    820
                                  -------------------     -------------------
                                        $4,691                 $8,016
                                  -------------------     -------------------

Finished goods include component parts and finished product ready for shipment.

8.  Debt

On June 30, 1998, the Company  restructured its credit facility with the Bank to
consist of a revolving  credit  facility  of up to  $16,500,  a $3,100 term loan
(Term Loan I) and a $2,700  real estate  loan.  In  December  1998,  the Company
borrowed  $2,500 under Term Loan II. In July 1999, the Company  borrowed  $2,500
under  Term Loan III.  In  February  2000,  the  Company  borrowed  $1,000 as an
over-advance  (Term Loan IV) of its credit  agreement.  Under the revolver,  the
Company  can borrow up to $14,000  (as per  amendment  to the credit  agreement)
based upon a borrowing base availability  calculated using specified percentages
of eligible  accounts  receivable and inventory.  The revolver bears interest at
the Bank's prime rate plus 2.00%,  (10% at March 31, 2001).  The Real Estate and
Term Loan I loans bear  interest  at the  Bank's  prime rate plus 2.25% and Term
Loan III and an  over-advance  bear interest at the banks prime rate plus 3.25%.
The loans and the revolving  credit  facility  mature on July 11, 2001. The Real
Estate  loan is being  amortized  over  twenty  years  and Term  Loan I is being
amortized over seven years with all remaining principal  outstanding due at July
11, 2001.  The advance under Term Loan II was repaid during 2000.  Term Loan III
is being  amortized  over  eighteen  months,  with an original  maturity date of
February 2000. The over-advance is  non-amortizing  with an original maturity of
July 15,  2000.  Subsequent  amendments  to the credit  agreement  provided  for
payment by November 15, 2000,  of both Term Loan III and the  over-advance.  The
Company did not repay Term Loan III or the  over-advance  as per the amended due
date,  and is in  default  under the terms of the  credit  agreement  under this
provision.  All loans are  secured  by  substantially  all of the  assets of the
Company.

The loan agreement  prohibits payment of dividends by the Company except for the
Series A Preferred  dividend,  and  requires  the  Company to  maintain  minimum
working  capital of $12,000  and minimum  tangible  net worth,  as  defined,  of
$11,500.  The loan also  prohibits  additional  indebtedness  and  common  stock
repurchases except through the use of proceeds from stock options exercised, and
restricts  capital  expenditures  to an amount not to exceed $10,500 for the two
years ended September 30, 1999 and not to exceed $2,500 annually thereafter.  In
addition,  the loan  limits  incremental  operating  lease  obligations  to $600
annually.  Fees under the loan agreement  include an unused revolver fee of .25%
and a prepayment penalty fee declining from 3% in 1998 to 0.5% in the year 2001.
The  prepayment  fee is waived if the loan is repaid with proceeds from the sale
of assets or is refinanced with an affiliate of the Bank. At March 31, 2001, the
Company was not in compliance with its debt covenants for debt with the Bank and
was in default on debt  payments  to the Bank for Bank Term Loans III and IV. No
waivers have been obtained and the default has not been cured. Furthermore,  the
credit facility matures on July 11, 2001. As a result,  although the forbearance
agreement was reached,  the Company has classified all of its debt with the Bank
of $13,598 as a current liability in the accompanying Consolidated Balance Sheet
at March 31, 2001. (See Note 4)

9.  Subordinated Debt and Preferred Stock

In  February  2001,  the  Company  issued 12%  secured  subordinated  debentures
totaling $4,950,  due March 1, 2002. Net proceeds to the Company after expenses,
were $4,576 and were used for the payment of bank debt  obligations  and general
operating  purposes.  The  debentures  are secured by  mortgages on certain real
property owned by the Company,  subordinate to certain other senior indebtedness
(as defined). In addition,  the Company issued to each purchaser of debentures a
three year warrant to purchase common stock of the Company,  par value $0.01 per
share,  at $1.375 per share for each  $2.00 of  principal  amount of  debentures
purchased.  The Company also issued the placement  agent a three year warrant to
purchase  shares of the  Company's  common  stock equal to 7.0% of the number of
warrants  issued to the  purchasers.  The exercise price of the placement  agent
warrants is $1.375 per share. The fair value of warrants issued,  totaling $870,
is included as "Additional Paid in Capital" within  Shareholders' Equity with an
offset of $813 against the "Secured  Subordinated  Debt" for the warrants issued
to debenture  holders and an increase of $57 in other  assets for the  placement
agent warrants in the accompanying Consolidated Balance Sheet. The fair value of
the warrants has been allocated using relative fair values.  The discount of the
debentures and the debt issuance costs are being  amortized  using the effective
interest method over the lives of the debt, which is one year.

The  conversion  price for the warrants  issued in  connection  with the secured
subordinated  debt shall be adjusted if the Company sells or distributes  common
stock,  options or warrants to purchase  common stock or securities  convertible
into common stock at a price below the conversion  price of the warrants  issued
in connection with the secured  subordinated debt, subject to certain exceptions
defined  in the  agreement.  The  formula  for  adjustment  is as defined in the
agreement.


In April 2000, the Company issued 7.5% convertible subordinated debentures in an
aggregate  principal amount of $2,140,  due March 31, 2003 including $140 issued
in lieu of the  underwriting  fee. The  debentures  are  unsecured  obligations,
subordinate  to  all  senior  indebtedness  (as  defined).  The  debentures  are
convertible  into shares of the Company's common stock, at a conversion price of
$2.00 per share. In addition, the Company issued to each purchaser of debentures
a three year warrant to purchase common stock of the Company equal to 20% of the
shares of common stock into which such purchaser's debenture is convertible. The
exercise price of the warrants is $2.375 per share. The conversion price for the
convertible  subordinated  debt and  warrants  shall be  adjusted if the Company
sells or distributes common stock,  options or warrants to purchase common stock
or  securities  convertible  into common  stock at a price below the  conversion
price of the  convertible  subordinated  debt,  subject  to  certain  exceptions
defined  in the  agreement.  The  formula  for  adjustment  is as defined in the
agreement.  As a result of the  issuance  of the  secured  subordinated  debt in
February 2001, the conversion  prices of the convertible  subordinated  debt and
the warrants were adjusted to approximately $1.93 and $2.28,  respectively.  The
revised  conversion price does not represent a beneficial  conversion feature to
the holders of the convertible subordinated debt.



In April 1998,  the Company  completed a private  placement of 80,000  shares of
Series A convertible redeemable preferred stock at $100 per share. The preferred
stock  bears a  dividend  rate of 7.5%,  which  is  payable  quarterly,  and was
convertible at the option of the holder into  2,909,091  shares of the Company's
common stock.  Dividends are  cumulative and have  preference  over other equity
distributions.  The preferred  stock  conversion  price shall be adjusted if the
Company  sells or  distributes  common  stock,  options or  warrants to purchase
common stock or  securities  convertible  into common stock at a price below the
preferred stock  conversion  price.  The formula for adjustment is as defined in
the agreement.  The preferred stock conversion price was previously  adjusted to
approximately $2.70 as a result of the issuance of the convertible  subordinated
debt in April 2000. As a result of the issuance of the secured subordinated debt
in  February  2001,  the  preferred  stock  conversion  price  was  adjusted  to
approximately  $2.54.  The revised  conversion  price  resulted in a  beneficial
conversion  feature.  Accordingly,  the  Company  recorded a non-cash  charge of
approximately $455 for additional preferred dividends to account for the implied
value of the beneficial conversion feature.
<PAGE>

10.  Dispositions

PPT
In July 2000,  the Company  entered  into an  agreement to sell PPT, its plastic
injection molding subsidiary,  subject to certain  conditions.  This transaction
was not  consummated  and has been  terminated.  As a result of the inability to
sell PPT and after  reviewing  PPT's  history of operating  problems,  workforce
levels and profitability, PPT operations have been terminated. Management of PPT
has  evaluated  the  realizability  of the  assets of PPT based on the  closure.
Accordingly,  the Company recorded an impairment loss on PPT's property,  plant,
and  equipment  of  $1,996  and  established  additional  reserves  of $490  for
estimated  un-collectible accounts receivable.  Total assets of PPT at March 31,
2001 and September 30, 2000 were $4,519 and $9,469, respectively.  Net sales and
loss from  operations  of PPT were $1,827, $(1,227) and $2,565 and $(1,094) for
the three months ended March 31, 2001 and 2000, respectively. Net sales and loss
from  operations of PPT were $4,026 and $(4,833) and $3,796 and $(1,902) for the
six months ended March 31, 2001 and 2000, respectively.

Geofocus
The Company  continues  to market its GPS  equipment  subsidiary,  However as of
March 31, 2001 no sale had been consummated.  Accordingly, GeoFocus continues to
be consolidated in the accompanying  consolidated  financial  statements.  Total
assets of  GeoFocus  at March 31,  2001 were not  material  to the  consolidated
financial  statements.  Net sales and income  (loss) of  GeoFocus  were $204 and
$(152) and $270 and $(26) for the three  months  ended  March 31, 2001 and 2000,
respectively.  Net sales and income  (loss) of GeoFocus were $332 and $(299) and
$658 and $7 for the six months ended March 31, 2001 and 2000, respectively.

11.      Loss on Impairment of Assets - ProActive

In July 1999, the Company purchased the ProActive Pedals (ProActive) division of
Active Tools  Manufacturing  Co., Inc.  ProActive is a designer and developer of
patented   adjustable  food  pedal  systems  and  modular  pedal  systems.   The
acquisition  was  accounted  for using the  purchase  method of  accounting  and
resulted in $1,820 being allocated to developed  technology,  $1,439 to a patent
and patent license agreement  acquired and $2,162 to goodwill,  representing the
excess of the  purchase  price over the fair value of the  assets  acquired  and
liabilities  assumed.  At March 31, 2001, the carrying value of the goodwill and
intangible assets of ProActive was $4,366.

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" (SFAS 121),  long-lived  assets held and used by the Company are
reviewed for impairment  whenever  events or changes in  circumstances  indicate
that the  carrying  amount of an asset may not be  recoverable.  For purposes of
evaluating the recoverability of long-lived  assets, the recoverability  test is
performed using undiscounted net cash flows of the assets.

ProActive's  current sales volumes of adjustable  and modular foot pedal systems
are limited to one contract that ProActive has with a third party. Additionally,
as a result of the Company's overall capital  constraints,  the Company does not
possess the financial  resources to further develop  additional sales volumes or
to achieve the sales volumes originally  projected for ProActive.  Further, as a
result of the recent efforts by W.Y. Campbell & Co. to assist in the sale of the
Company or its operating units, limited interest in ProActive has been expressed
by potential buyers.

As a result of the above  factors,  management  performed an analysis to measure
the impairment of the long-lived assets of ProActive in accordance with SFAS 121
as of March 31, 2001.  Based on management's  analysis it was concluded that the
undiscounted  value of the projected cash flows of ProActive's  current business
was less than the  carrying  value of the  assets of  ProActive  as of March 31,
2001. As a result of this conclusion,  the Company recorded an impairment charge
related to ProActive's  remaining  carrying value of the goodwill and intangible
assets,  totaling $4,366. This amount has been reflected as a separate line item
within the operating  expenses of the consolidated  statements of operations for
the three and six month periods ended March 31, 2001.


12.  Reclassifications

Certain amounts previously reported in the financial  statements as of September
30,  2000 and for the  three  and six  months  ended  March  31,  2000 have been
reclassified to conform to current fiscal year presentation.







                                       6
<PAGE>

13.    Segment Information

<TABLE>
<CAPTION>
<S>                                                    <C>                 <C>                <C>                 <C>


                                                        Three months        Three Months         Six months         Six months
                                                           Ended               Ended               Ended               Ended
                                                          March 31,           March 31,           March 31,           March 31,
                                                            2001                2000                2001                2000
                                                       ---------------     --------------     ---------------     --------------

Sales by classes of similar products
Vehicle components                                            $14,457            $16,908             $29,109            $31,932
Electrical components and GPS                                     573                688                 900              1,541
                                                       ---------------     --------------     ---------------     --------------
                                                              $15,030            $17,596             $30,009            $33,473
                                                       ===============     ===============    ===============     ==============

Earnings (loss) from operations
Vehicle components
  Before loss on impairment of assets                         $  (473)            $  470             $  (714)          $  2,120
  Loss on impairment of assets                                 (4,366)                 -              (6,362)                 -
                                                       ---------------     --------------      ---------------     --------------
  Total vehicle components                                     (4,839)               470              (7,076)             2,120
Electrical components and GPS                                    (427)              (266)             (1,619)            (1,414)
                                                       ---------------     --------------      ---------------     --------------
                                                              $(5,266)            $  204              $(8,695)            $  706
                                                       ===============     ==============      ===============     ==============

Identifiable assets
Vehicle components                                                                                    $24,039            $45,013
Electrical components and GPS                                                                          10,793             11,619
Corporate                                                                                               2,228              5,783
                                                                                               ---------------     --------------
Total assets - continuing operations                                                                   37,060             62,415
                                                                                               ---------------     --------------
Agricultural equipment - discontinued operations                                                            -              1,468
                                                                                               ---------------     --------------
Total assets                                                                                          $37,060            $63,883
                                                                                               ===============     ==============

Capital expenditures
Vehicle components                                            $   555            $   766              $   658            $   961
Electrical components and GPS                                       9                183                   13                187
                                                       ---------------     --------------      ---------------     --------------
Total capital expenditures                                    $   564            $   949              $   671            $ 1,148
                                                       ===============     ==============      ===============     ==============


Depreciation and amortization
Vehicle components                                            $   861            $   646              $ 2,034            $ 1,264
Electrical components and GPS                                      95                 72                  159                175
                                                       ---------------     --------------      ---------------     --------------
Total depreciation and amortization                           $   956            $   718              $ 2,193            $ 1,439
                                                       ===============     ==============      ===============     ==============
</TABLE>


                                       7
<PAGE>

Item 2.
                             Williams Control, Inc.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                (Dollars in thousands, except per share amounts)

Financial Position and Capital Resources
Financial Condition, Liquidity and Capital Resources

The Company  continued to experience  liquidity  difficulties  during the second
fiscal  quarter ended March 31, 2001.  During the second  quarter of fiscal 2001
the Company  reported a $6,919 loss  compared to a loss of $1,138 for the second
quarter of fiscal 2000. Included in the second quarter 2001 loss was a charge of
$4,366,  for an  impairment  loss for the full amount of the  goodwill and other
intangible assets related to the Company's adjustable pedal business,  which was
acquired in July 1999. The Company's  working capital deficit has increased from
$(17,678)  at September  30, 2000 to  $(20,856) at March 31, 2001  stockholders'
equity has  declined  to a deficit of $(9,191) at March 31, 2001 and the Company
has accrued, but not paid, dividends on its preferred stock.

Also, as described in Note 8 to the Unaudited Consolidated Financial Statements,
the Company was not in compliance  with its debt covenants with the Bank and was
in  default  on debt  payments  to the Bank for Bank  Term  Loans III and IV. No
waivers have been  obtained  and the default has not been cured,  and although a
forbearance  agreement  was reached with the Bank through the original  terms of
the  loans,  all of the debt with the Bank of  $13,598  has been  classified  as
current liabilities in the accompanying  Consolidated Balance Sheet at March 31,
2001.  During the second  quarter of fiscal 2001, the Company had fully borrowed
and was in an overadvance  position under its credit agreement until the Company
raised $4,576,  net of expenses,  from a Private Placement in February 2001. The
$4,576 raised was in the form of $4,950 of secured subordinated debentures which
are due March 1, 2002,  bearing interest at 12% and include warrants to purchase
the  Company's  common  stock at $1.375  per share for each  $2.00 of  principal
amounts of the debentures  purchased.  The Private  Placement funds were used to
pay down bank debt,  including an  overadvance  from the Bank and to support the
operations of the Company.

As previously reported, the Company retained the investment banking firm of W.Y.
Campbell & Co. to investigate available strategic alternatives including selling
all or part of the Company to a third party or raising  sufficient equity and/or
debt financing to support the  operations of the Company.  On February 22, 2001,
the board of  directors  of the  Company  announced  that based on the review of
these strategic alternatives, it would immediately pursue a sale of the Company,
or its individual  operating  subsidiaries,  as a means to maximize value to its
shareholders. The Company has retained W.Y. Campbell & Co. to assist in the sale
of the Company or its  operating  units.  Although  the Company has obtained the
private placement funds and a forbearance from the Bank to enable the Company to
pursue the sale  process,  additional  financing may be required to complete the
sale  process.  There is no  assurance  that the Company  will be able to obtain
adequate working capital in the amounts needed to sustain its operations or sell
its  business  or  parts  of it in a  timely  fashion.  If  the  Company  is not
successful in these  pursuits it may be forced into a  reorganization  under the
United States Bankruptcy Code.

In addition,  due to the Company's  financial  difficulties,  it has substantial
outstanding  payables with  essentially  all of its suppliers of raw  materials,
components and services. As a result of these long outstanding  payables,  these
vendors  could decide to  discontinue  the  Company's  supply of raw  materials,
components  and  services  which  could  cause  a  disruption  in the  Company's
production  and  operations.  The  Company's  business,   prospects,   financial
condition and results of operations may be materially adversely affected by such
a disruption or delay.

The above  matters  raise a  substantial  doubt about the  Company's  ability to
continue  as a going  concern.  The  financial  statements  do not  include  any
adjustments  relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.

Cash increased $905 at March 31, 2001 compared to September 30, 2000,  primarily
as a result of cash flow from operations,  the secured  subordinated  debentures
issued  in  February  2001,  offset  by the  paydown  of debt.  Cash  flow  from
operations  increased  to $4,523 for the six months  ended  March 31,  2001 from
$1,724 for the six months ended March 31, 2001.  The increase was  primarily due
to the decrease in receivables and inventories  between years. The positive cash
flow from  operations  for the six months  ended March 31, 2001 differs from the
net loss from  operations  primarily  because of noncash  operating  expenses of
$2,193 for depreciation and amortization, an impairment loss on assets at PPT of
$1,996,  an  impairment  loss on assets at  ProActive  of $4,366,  a decrease in
receivables  of $2,005,  a decrease in  inventories of $3,325 and an increase in
accounts payable and accrued expenses of $662.

Cash flow from financing activities was a use of $2,947 for the six months ended
March 31, 2001 as  compared to a use of $679 for the six months  ended March 31,
2000,  reflecting  net  payments  on  debt of  $6,791,  $585  of  capital  lease
obligations,  $147 of preferred stock  dividends  paid, all partially  offset by
$4,576 of net proceeds received from the secured subordinated  debentures issued
in February 2001.

Guaranty of Affiliate Debt
United States National Bank has notified the Company that it intends to exercise
its rights  under the  Company's  guaranty  of $1.3  million of the debt of Ajay
Sports, Inc. ("Ajay"),  an affiliate of the Company.  The Company's former chief
executive  officer,  Thomas W. Itin, who is an officer and  shareholder of Ajay,
has  guaranteed  this  obligation  to the Company,  along with certain loans and
investments  made by the Company to and in Ajay. Mr. Itin has taken the position
that, as a result of his retirement,  this guarantee and his other guarantees of
certain loans and investment in and to Ajay are no longer in effect. The Company
disagrees with the position taken by Mr. Itin.

Delisting from the Nasdaq National Market
The Company  received a ruling from the Nasdaq that the  Company's  common stock
will be de-listed from the Nasdaq National Market as its net tangible assets are
below the  required  minimum  for  listing on the Nasdaq  National  Market.  The
Company is currently  appealing  this ruling.  If the Company's  securities  are
delisted from the Nasdaq National Market, it may apply for listing on the Nasdaq
Small Cap Market,  provided at that time it meets the  requirement for inclusion
on that market.  If the  Company's  securities do not meet the  requirement  for
inclusion of the NASDAQ  Small Cap Market,  the price of its common stock may be
obtained on either the electronic bulletin board or on pink sheets.

Recent Appointment of New Director
The Company recently appointed Douglas Hailey to fill the vacant position on the
Board of Directors.  Mr. Hailey is a Vice  President of the  Investment  Banking
Division of the investment banking firm of Taglich Brothers, Inc. As part of the
Placement  Agent  Agreement  for the Private  Placement of the $4,950 of Secured
Subordinated  Debentures due March 1, 2002 Taglich Brothers,  Inc. was permitted
one board seat.  Mr Hailey was  appointed on March 13, 2001 and his term expires
in 2002.

Market Risk
The Company may be exposed to future  interest rate changes on its variable rate
debt which totalled $13,598 at March 31, 2001. The Company does not believe that
a hypothetical  10 percent  change in end of period  interest rates would have a
material effect on the Company's cash flow.

Recent FASB Pronouncements
In June 2000 the FASB issued Statement of Financial Accounting Standards No.138,
"Accounting  for Certain  Derivative  Instruments  and Hedging  Activities  - an
amendment of FASB Statement No. 133" ("SFAS 138").  In June 1999 the FASB issued
Statement of Financial  Accounting  Standards No. 137, Accounting for Derivative
Instruments  and Hedging  Activities."  ("SFAS 137") SFAS 137 is an amendment to
SFAS 133,  "Accounting for Derivative  Instruments and hedging Activities." SFAS
133,  as  amended  by SFAS  137 and 138  establishes  accounting  and  reporting
standards  for all  derivative  instruments.  SFAS 133 and 138 are effective for
fiscal years beginning after June 15, 2000. The Company adopted the new standard
in fiscal 2001.  The Company has made an assessment of its potential  derivative
instruments  and based on that  assessment  the adoption of SFAS 133 and 138 has
had no impact on the Company's financial position or results of operations.
<PAGE>

Results of Operations
Three months  ended March 31, 2001  compared to the three months ended March 31,
2000, as restated (Note 3)

Sales

Total sales  decreased  $2,566,  or 14.6%,  to $15,030 in the second  quarter of
fiscal 2001 from $17,596 in the second quarter of fiscal 2000,  primarily due to
lower unit sales volumes in the Company's  Vehicle  Components  segment and to a
lesser degree, the Company's Electrical Components and GPS business segment.

Sales in the Vehicle  component  business segment  decreased $2,451, or 14.5% to
$14,457 from the sales levels achieved in the second quarter of fiscal 2000. The
most  significant  factor in the  decline  was lower  unit  sales of  electronic
throttle controls (ETC). Additionally, in February the management of the Company
began closing the operations of its Premier  Plastics  Technology  (PPT) plastic
injection  molding and tooling  subsidiary,  resulting  in lower sales  volumes.
Except for some completion of existing  orders,  PPT ceased  operations on March
31, 2001. The Company  previously  recorded an impairment loss of $1,996 related
to PPT in the first  quarter of 2001.  PPT sales were  $1,827 and $2,566 for the
quarter ended March 31, 2001 and 2000, respectively.

The Electrical  Components and GPS component  business  segment sales  decreased
$115 to $573 from the second  quarter  fiscal 2000 sales  levels  primarily as a
result of lower sales volumes of the Company's electronic sensors.


Gross Margin

Gross  Margins  from  operations  were  $2,823,  or 18.8% of sales in the second
quarter  of 2001  compared  to  $4,507,  or 25.6% of sales in the  corresponding
quarter of 2000.  The reduced gross profit  margins were  partially due to lower
sales levels.  Additionally,  the Company's  liquidity  constraints  have caused
disruptions   in  the  Company's   materials   flow,   resulting  in  production
inefficiencies  and higher product  shipping costs,  thus further reducing gross
profit margins.



Operating Expenses

Operating expenses,  excluding Loss on Impairment of Assets, were $3,723 for the
three months ended March 31, 2001 compared to $4,303 for the  comparable  fiscal
2000 period,  a decrease of $580,  or 13.5%,  primarily as a result of decreased
research  and  development  expenses  and  administrative  expenses.   Operating
expenses,  excluding Loss on Impairment of Assets, as a percentage of net sales,
increased to 24.8% in the second quarter of fiscal 2001 compared to 24.5% in the
comparable 2000 quarter.

Research and  development  expenses  decreased $452, to $1,022 during the second
quarter of fiscal 2001 compared to $1,474 in the comparable  fiscal 2000 period.
As a percent of sales,  research and development expenses decreased from 8.4% to
6.8%. This is primarily due to significant  expenditures  and higher payroll for
employees working for the Chrysler RS Program in early fiscal 2000. This program
was  cancelled  during the latter half of fiscal  2000.  Last year  research and
development  expenses  increased  to support  new  product  development  for the
automotive and truck ETC and adjustable foot pedal products, and for development
of sensor-related  products and for existing customers.  This year the focus has
shifted to production of adjustable foot pedals and sensor-related products.

Administrative  expenses  declined  $42 to $2,362  during the second  quarter of
fiscal  2001  compared to $2,404 in  comparable  fiscal 2000 period due to lower
overall spending on  administrative  expenditures  offset by expenses related to
the closing of PPT.

In July 1999,  the Company  acquired the  Adjustable  Pedal  Business and patent
rights and contributed additional working capital for product development of the
Company's  adjustable pedal design.  The Company's  current sales volume of this
product is limited  and as a result of the  Company's  capital  constraints  the
Company  does not possess the  resources  to further  develop  additional  sales
volumes and to achieve the sale volumes originally projected.  The current level
of cash flows from the adjustable  pedal business do not support the realization
of the carrying  value of the  business'  intangible  assets.  Accordingly,  the
Company  recognized an impairment  loss of $4,366 in the quarter ended March 31,
2001 for the Goodwill and other intangible assets related to this business.


Interest and Other Expenses
Interest  expense  increased  $505 or 89.9% to $1,067 in the  second  quarter of
fiscal 2001 from $562 in the second  quarter of fiscal 2000 due to  amortization
of the Secured  Subordinated  Debenture warrant discounts (Note 9), amortization
of costs  related to obtaining  the  additional  financing  and higher  interest
rates.

The Company recognized no share of equity income (loss) in its affiliate,  Ajay,
for the quarter ended March 31, 2001 due to unavailability  of information.  The
Company's  share of any loss is not  expected  to be  material  based on  Ajay's
previously  reported  results for  continuing  operations  for the period  ended
September  30, 2000 and the  Company's  percentage  to be used for recording its
equity  interest in results of  affiliate.  As such,  current  figures  report a
decrease in  recognized  equity loss in Ajay of $867 for the quarter ended March
31, 2001  compared to the quarter  ended March 31, 2000  primarily due to Ajay's
prior year's losses from discontinued operations.

Net loss available to common shareholders
Net loss allocable to common shareholders was $(0.35) in the quarter ended March
31,  2001  compared  to $(0.06)  in the  comparative  prior  year  period due to
decreased  gross  margins,  the loss on the impairment of the goodwill and other
intangibles  related to the Company's  adjustable  pedal  business and increased
interest expense offset by decreased research and development and administration
expenses and equity  interest in loss of  affiliate.  The  effective  income tax
rates  were  0.00% and 14.6% for the  quarters  ended  March 31,  2001 and 2000,
respectively.  The Company is in a net operating loss carry forward position and
is  providing  a 100%  valuation  allowance  on all  deferred  tax assets in the
current fiscal year due to going concern issues.

Results of Operations
Six months ended March 31, 2001 compared to the six months ended March 31, 2000,
as restated (Note 3)

Total sales decreased  $3,464,  or 10.3%, to $30,009 for the first six months of
fiscal 2001 from $33,473 for the first six months of fiscal 2000,  primarily due
to lower unit sales volumes in the Company's Vehicle Components segment and to a
lesser degree, the Company's Electrical Components and GPS business segment.

Sales in the Vehicle  component  business segment  decreased  $2,823, or 8.8% to
$29,109 over the sales  levels  achieved in the first six months of fiscal 2000.
The most  significant  factor in the decline was lower unit sales of  electronic
throttle controls (ETC). Additionally, in February the management of the Company
began closing the operations of PPT,  resulting in lower sales  volumes.  Except
for some completion of existing orders, PPT ceased operations on March 31, 2001.
PPT sales were  $4,026 and $3,796 for the six months  ended  March 31,  2001 and
2000, respectively.


The Electrical  Components and GPS component  business  segment sales  decreased
$641 to $900 over the second  quarter  fiscal 2000 sales  levels  primarily as a
result of lower sales volumes of the Company's electronic sensors.


Gross Margin

Gross Margins from  operations  were $5,178,  or 17.3% of sales in the first six
months of fiscal 2001 compared to $8,998, or 26.9% of sales in the corresponding
six month period of 2000. The reduced gross profit margins were partially due to
lower overall sales levels.  Additionally,  the Company's liquidity  constraints
have caused disruptions in the Company's materials flow, resulting in production
inefficiencies  and higher  shipping costs,  thus further  reducing gross profit
margins.


Operating Expenses


Operating expenses,  excluding Loss on Impairment of Assets, were $7,511 for the
six months  ended March 31, 2001  compared to $8,292 for the  comparable  fiscal
2000  period,  a decrease of $781,  or 9.4%,  primarily as a result of decreased
research  and  development  expenses.  Operating  expenses,  excluding  Loss  on
Impairment of Assets,  as a percentage  of net sales,  increased to 25.0% in the
second quarter of fiscal 2001 compared to 24.8% in the comparable 2000 quarter.

Research and development  expenses  decreased $1,204, to $1,967 during the first
six months of fiscal  2001  compared  to $3,171 in the  comparable  fiscal  2000
period,  a 38.0%  decline.  As a percent  of  sales,  research  and  development
expenses  decreased  from 9.5% to 6.6%.  This is  primarily  due to  significant
expenditures  and higher  payroll  for  employees  working  for the  Chrysler RS
Program in early fiscal 2000. This program was cancelled  during the latter half
of fiscal 2000. Last year research and development expenses increased to support
new product  development  for the automotive  and truck ETC and adjustable  foot
pedal  products,  and for  development of  sensor-related  products for existing
customers.  This year the focus has shifted to  production  of  adjustable  foot
pedals and sensor-related products.

Administrative  expenses increased $521 to $4,777 during the first six months of
fiscal 2001 compared to $4,256 in comparable  fiscal 2000 period due to expenses
related to the closing of PPT.

After  reviewing  PPT's history of operating  losses and operating  problems and
profitability,  the PPT operations have been  terminated.  Management of PPT has
evaluated  the  realizability  of the  assets  of  PPT  based  on  the  closure.
Accordingly,  the Company  recorded an impairment loss on PPT's property,  plant
and  equipment  of  $1,966  and  established  additional  reserves  of $490  for
estimated  uncollectible  accounts  receivable  during  the first six  months of
fiscal  2001.  Except for some  completion  of existing  orders,  PPT ceased all
operations by March 31, 2001.

In July 1999 the Company  acquired  the  Adjustable  Pedal  Business  and patent
rights and contributed additional working capital for product development of the
Company's  adjustable pedal design.  The Company's  current sales volume of this
product is limited  and as a result of the  Company's  capital  constraints  the
Company  does not possess the  resources  to further  develop  additional  sales
volumes and to achieve the sale volumes originally projected.  The current level
of cash flows from the adjustable  pedal business do not support the realization
of the carrying  value of the  business'  intangible  assets.  Accordingly,  the
Company  recognized an impairment  loss of $4,366 in the quarter ended March 31,
2001 for the Goodwill and other intangible assets related to this business.


Interest and Other Expenses
Interest  expense  increased $949 or 79.7%, to $2,140 in the first six months of
fiscal  2001  from  $1,191  in the  first  six  months  of  fiscal  2000  due to
amortization of the Secured  Subordinated  Debenture warrant discounts (Note 9),
amortization  of costs related to obtaining the additional  financing and higher
interest rates.

The Company recognized no share of equity income (loss) in its affiliate,  Ajay,
for six months ended March 31, 2001 due to  unavailability  of information.  The
Company's  share of any loss is not  expected  to be  material  based on  Ajay's
previously  reported  results for  continuing  operations  for the period  ended
September  30, 2000 and the  Company's  percentage  to be used for recording its
equity  interest in results of  affiliate.  As such,  current  figures  report a
decrease in  recognized  equity loss in Ajay of $2,233 for the six months  ended
March 31, 2001 compared to the six months ended March 31, 2000  primarily due to
Ajay's prior year's losses from discontinued operations.

Net loss available to common shareholders
Net loss allocable to common  shareholders  was $(0.58) for the first six months
ended March 31, 2001  compared to $(0.13) in the  comparative  prior year period
due to decreased  gross margins,  the loss on the impairment of the goodwill and
other intangible assets related to the Company's adjustable pedal business, loss
on impairment of assets of PPT,  additional  expenses  related to the closing of
PPT and increased  interest expense offset by decreased research and development
and equity  interest in loss of affiliate.  The effective  income tax rates were
0.00% and 10.6% for the six months ended March 31, 2001 and 2000,  respectively.
The Company is in a net operating loss carry forward position and is providing a
100%  valuation  allowance on all deferred tax assets in the current fiscal year
due to going concern issues.



                                       11
<PAGE>



                                     Part II

Item 1.   Legal Proceedings

          None

Item 2.   Changes in Securities and Use of Proceeds



          On February 28, 2001, the Company completed a private placement of 200
          units, each unit consisting of: (i) a $25,000 12% secured subordinated
          debenture;  and (ii) a three year  common  stock  purchase  warrant to
          purchase  12,500 shares of the  Company's  common stock at an exercise
          price of $1.375 per share (the "Warrant"). The aggregate consideration
          received by the Company was  $5,000,000.  The Company  relied upon the
          exemptions from  registration  provided by Section 4(2) and/or 4(6) of
          the Securities Act of 1933 (the "Securities Act"), as amended,  and/or
          Rule  506 of  Regulation  D  promulgated  thereunder  based  upon  (i)
          representations from each of the Purchasers of the Units that they are
          accredited  investors with  experience in investing in securities such
          that they could evaluate the merits and risks related to the Company's
          securities;  (ii) that no general  solicitation  of the securities was
          made  by the  Company;  (iii)  each  of the  Purchasers  of the  Units
          represented  to the Company  that they were  acquiring  the shares for
          their own account and not with a view  towards  further  distribution;
          (iv)  the  securities  issued  to the  Purchasers  of the  Units  were
          "restricted  securities"  as  that  term is  defined  under  Rule  144
          promulgated   under  the  Securities   Act;  (v)  the  Company  placed
          appropriate  restrictive legends on the Certificates  representing the
          securities;  and (vi)  prior to  completion  of the  transaction,  the
          Purchasers  of the Units were  informed  in writing of the  restricted
          nature of the securities,  provided with all information regarding the
          Company as required  under Rule 502 of Regulation D and were given the
          opportunity  to ask  questions of and receive  additional  information
          from the Company regarding its financial condition and operations. The
          Company issued a Warrant (as discussed in the following paragraph) and
          paid a cash fee of $350,000 to Taglich Brothers,  Inc. ("Taglich") for
          its  services  as  Placement  Agent in  connection  with  the  private
          placement.

          Concurrently  with the closing of the private  placement,  the Company
          issued a three year common stock purchase  warrant to purchase 175,000
          shares of the  Company's  common stock at an exercise  price of $1.375
          per share (the  "Warrant")  to Taglich.  The  Company  relied upon the
          exemptions from  registration  provided by Section 4(2) and/or 4(6) of
          the  Securities  Act, as  amended,  and/or  Rule 506 of  Regulation  D
          promulgated  thereunder based upon (i) representations from Taglich or
          its principals  that they are accredited  investors with experience in
          investing in securities  such that they could  evaluate the merits and
          risks  related  to the  Company's  securities;  (ii)  that no  general
          solicitation of the securities was made by the Company;  (iii) Taglich
          or its principals  represented to the Company that they were acquiring
          the  securities  for their  own  account  and not with a view  towards
          further distribution; (iv) the Warrants are "restricted securities" as
          that term is defined under Rule 144  promulgated  under the Securities
          Act; (v) the Company  placed  appropriate  restrictive  legends on the
          certificates  representing  the  securities  regarding the  restricted
          nature  of these  securities;  and (vi)  prior  to  completion  of the
          transaction, Taglich or its principals were informed in writing of the
          restricted  nature of the  securities,  provided with all  information
          regarding  the Company as required  under Rule 502 of Regulation D and
          were given the opportunity to ask questions of and receive  additional
          information  from the Company  regarding its  financial  condition and
          operations.


Item 3.   Defaults Upon Senior Securities

          On November 15,  2000,  the Company  defaulted  under the terms of its
          credit  agreement with the Bank when it failed to repay Term Loans III
          and  IV in  the  remaining  principal  amounts  of  $694  and  $1,000,
          respectively,  both due on November 15, 2000. As of December 31, 2000,
          the Company was not in  compliance  with its debt  covenants  with the
          Bank.  No waivers  have been  obtained  and the  default  has not been
          cured,  and although a forebearance  agreement was reached in February
          2001 with the Bank,  all of the debt with the Bank of $13,598 has been
          classified as current  liabilities  in the  accompanying  Consolidated
          Balance Sheet at March 31, 2001.

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

          None

Item 5.   Other Information

          None


Item 6.   Exhibits and Reports on Form 8-K

(a)       Exhibits
               None

(b)       Reports on Form 8-K
               None


                                       12
<PAGE>


                             Williams Controls, Inc.

                                    Signature


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.




                             WILLIAMS CONTROLS, INC.






                                                By: /s/ Thomas K. Ziegler
                                                    ----------------------------
                                                    Thomas K. Ziegler
                                                    President and
                                                    Chief Executive Officer



                                                By: /s/ Dennis E. Bunday
                                                    ----------------------------
                                                    Dennis E. Bunday,
                                                    Chief Financial Officer








Date:  May 18, 2001








                                       13
<PAGE>






                             Williams Controls, Inc.

                                    Signature


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.



                             WILLIAMS CONTROLS, INC.






                                                    ----------------------------
                                                    Thomas K. Ziegler
                                                    Presidend and
                                                    Chief Executive Officer




                                                    ----------------------------
                                                    Dennis E. Bunday,
                                                    Chief Financial Officer






Date:  May 18, 2001





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