UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

MARK ONE:

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

                  For the quarterly period ended June 30, 1998

                                       OR

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

                        For the transition period from to

                           Commission File No. 0-18204

                                AJAY SPORTS, INC.
             (Exact name of Registrant as specified in its charter)


              
         Delaware                                     39-1644025
-----------------------------              ----------------------------------- 
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 Incorporation or Organization)

1501 E. Wisconsin Street,
Delavan, Wisconsin   53115                          (414) 728-5521
------------------------------             -----------------------------------

(Address of principal executive offices    (Registrant's Telephone Number,
including Zip Code)                         including Area Code)


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  report),  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

            Yes  /x/                              No  / /

Number of shares of common stock outstanding at 6/30/98 is 23,274,039.

                  Transitional Small Business Disclosure Format
                             Yes             No X
                                

<PAGE>
PART  I.   FINANCIAL  INFORMATION

Item 1.      FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                  AJAY SPORTS, INC. AND SUBSIDIARIES
                                                                     CONSOLIDATED BALANCE SHEETS
                                                                                      (IN THOUSANDS)


                                                                                June 30, 1998                       December 31,
                                                                                (Unaudited)                                1997
<S>                                                                             <C>                                <C> 
ASSETS                                                                                    -                                -
Current assets:
     Cash and cash equivalents                                                 $         66                       $      234
     Trade accounts receivable, net                                                   6,249                            5,060
     Inventories                                                                      5,759                            6,398
     Prepaid expenses and other current assets                                          372                              304
     Deferred tax benefit                                                               363                              363
                                                                                    ----------                      ---------
                    Total current assets                                             12,809                           12,359

Fixed assets, net                                                                     1,627                            1,723
Other assets                                                                            290                              106
Deferred tax benefit                                                                    756                              756
Goodwill                                                                              1,643                            1,670
                                                                                    ----------                      ---------
                   Total assets                                                $     17,125                       $   16,614
                                                                                    ==========                      =========

LIABILITIES AND STOCKHOLDERS' EQUITY  (DEFICIT)

Current liabilities:
      Notes payable to affiliates                                              $        160                       $      160
      Notes payable to bank                                                               -                              107
      Current portion of capital lease                                                    4                                4
      Accounts payable                                                                2,528                            3,204
      Accrued expenses                                                                  572                              684
                                                                                    ----------                      ---------   
                   Total current liabilities                                          3,264                            4,159    

Notes payable to affiliates  -  long term                                               512                            4,212
Notes payable to banks  -  long  term                                                 8,961                            9,017

Stockholders' equity:
      Preferred stock, 10,000,000 shares authorized,
            Series B, $0.01 par value, 12,500 shares
            outstanding at liquidation value                                          1,250                            1,250
            Series C, $10.00 par value, 296,170 shares
            outstanding at stated value                                               2,962                            2,962
            Series D, $0.01 par value, 6,000,000 shares                                  60                                -
      Common stock, $.01 par value 100,000,000 shares authorized,
            23,274,039 shares outstanding                                               233                              233
Additional paid-in capital                                                           14,253                            9,313
Accumulated deficit                                                                 (14,370)                         (14,532)
                                                                                    ----------                      ---------    
            Total stockholders' equity  (deficit)                                     4,388                             (774)
                                                                                    ----------                      ---------
             Total liabilities and stockholders' equity                        $     17,125                       $   16,614
                                                                                    ==========                      =========

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                                             AJAY SPORTS, INC. AND SUBSIDIARIES
                                                                             CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                             (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                                     (UNAUDITED)


                                                                 Three   Months                            Six  Months
                                                                 Ended June 30,                            Ended June 30,
                                                          1998                  1997                1998                   1997
                                                    -------------          ------------        ------------            -----------
<S>                                                <C>                     <C>                 <C>                     <C> 

Net sales                                            $      8,991           $     9,584        $     16,589           $     17,185
Cost of sales                                               7,335                 7,965              13,665                 14,108
                                                    -------------          ------------        ------------           ------------
      Gross profit                                          1,656                 1,619               2,924                  3,077

Selling, general and                                        1,178                 1,294               2,206                  2,462
   administrative expenses                          -------------          ------------        ------------           ------------

      Operating income                                        478                   325                 718                    615

Non-operating expense:
      Interest expense, net                                   315                   438                 650                    716
      Other, net                                               38                    15                 (98)                    20
                                                    -------------          ------------        ------------           ------------ 
      Total non-operating expense                             353                   453                 552                    736 
                                                    -------------          ------------        ------------           ------------
Income (loss) before income taxes                             125                  (128)                166                   (121)
                                                    -------------          ------------        ------------           ------------
Net income (loss)                                    $        125           $      (126)       $        166           $       (121)
                                                    =============          =============       ============           =============
Basic and diluted earnings per share*                $       0.00           $     (0.01)       $       0.00           $      (0.01)
                                                    =============          =============       ============           =============
Weighted average common shares outstanding                 23,274                 23,274             23,274                  23,274
                                                    =============          =============       ============           =============


 



*  Computed by dividing net income or loss, after reduction for preferred stock dividends, by the weighted average
    number of common shares outstanding.


</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                  AJAY  SPORTS,  INC.  AND  SUBSIDIARIES
                                                CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS                                 
                                                       (IN THOUSANDS), (UNAUDITED)                           


                                                                                                            Six   Months       
                                                                                                          Ended  June  30,
                                                                                                 1998                      1997
                                                                                        -------------                  ------------
<S>                                                                                   <C>                           <C>

Cash flows from operating activities:
        Net income (loss)                                                              $          166                 $        (121)
        Adjustments to reconcile net cash flows from
        operating activities:
        Depreciation and amortization                                                             181                           188
        Change in assets [(increase)/decrease] and
        liabilities [increase/(decrease)]:
        Trade accounts receivable, net                                                         (1,189)                       (2,590)
        Inventories                                                                               639                           952
        Prepaid expenses and other current assets                                                 (68)                         (346)
        Other assets                                                                             (171)                           89
        Accounts payable                                                                         (676)                         (213)
        Accrued expenses                                                                         (112)                           97
                                                                                         -------------                  ------------
                    Net cash used in
                    operating activities                                                       (1,230)                       (1,944)
                                                                                         -------------                  ------------
Cash flows from investing activities:
        Acquisitions of property, plant, equipment                                                (75)                          (99)
                                                                                         -------------                  ------------
                     Net cash used in
                     investing activities                                                         (75)                          (99)
                                                                                         -------------                  ------------
Cash flows from financing activities:
        Net increase (decrease)  in bank loan                                                    (163)                        1,371
        Net increase in investment by affiliates                                                1,300                         1,105
        Dividends paid                                                                              -                           (82)
                                                                                         -------------                  ------------
                      Net cash provided by
                      financing activities                                                      1,137                         2,394
                                                                                         -------------                  ------------
Net increase (decrease) in cash                                                                  (168)                          351
Cash at beginning of period                                                                       234                            64
                                                                                         -------------                  ------------
Cash at end of period                                                                  $           66                  $        415
                                                                                         =============                  ============
Supplemental disclosures of cash flow information:
       Cash paid for interest                                                          $          633                  $        656
                                                                                         =============                  ===========
       Cash paid for income tax                                                                    --                            --
                                                                                         =============                  ===========


</TABLE>


<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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
has  acquired,  disposition  of any  current  business of the  Company,  and the
Company's  relationship with Williams Controls,  Inc., a related company.  These
forward-looking  statements are subject to the business and economic risks faced
by the Company.  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.


Note 1.       BASIS OF PRESENTATION

The  condensed  consolidated  financial  statements  included  herein  have been
prepared by Ajay Sports,  Inc. (the "Company") without audit and pursuant to the
rules and regulations of the Securities and Exchange Commission.  In the opinion
of the Company, the financial statements reflect all adjustments,  which consist
only of normal recurring adjustments,  necessary to present fairly the financial
position of the Company at June 30, 1998 and the results of  operations  for the
three and six-month  periods ended June 30, 1998 and 1997 and the cash flows for
the same six-month periods.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted pursuant to the SEC rules and regulations dealing
with  interim  financial  statements.  However,  the Company  believes  that the
disclosures  made in the  condensed  financial  statements  included  herein are
adequate to make the  information  presented  not  misleading.  These  condensed
financial statements should be read in conjunction with the financial statements
and notes thereto  included in the Company's  Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.

The year-end  condensed  balance  sheet data was derived from audited  financial
statements,  but does not include all disclosures required by generally accepted
accounting principles.

The interim period results are not  necessarily  indicative of results which may
be expected for any other interim period or for the full year. 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.







                                        4

<PAGE>



Note 2.       INVENTORIES

The major classes of inventories (rounded to thousands) are as follows:


                                        June 30,               December 31,
                                           1998                      1997
                                        ---------              ------------   
Raw Materials                              $1,312                    $1,499
Work in Process                             1,112                     1,026
Finished Goods                              3,335                     3,873
                                            -----                     -----
                                          $5,759                    $ 6,398
                                           =====                      =====


Note 3.       DEBT

On June 30, 1998, the Company  restructured its credit facility with Wells Fargo
Bank, National  Association  ("Wells") to separate its credit facility from that
of  Williams  Controls,  Inc.  and its  subsidiaries  ("Williams").  The  credit
facility as restructured provides for maximum borrowing capacity of $10,025,000,
consisting of a revolving credit facility of up to $9,500,000 and a term loan of
$525,000. As a result of this transaction, the Company will no longer have joint
and several liability,  cross collateral  agreements or guarantees with Williams
with  respect to  Williams'  Wells Fargo credit  facility.  The new  asset-based
credit facility from Wells provides the Company with  approximately  $700,000 of
increased loan  availabilities  and borrowing  capability  against inventory and
accounts  receivable.  The  interest  rate on the  revolver is prime plus 1% and
prime plus 1.5% on the term loan.

In connection with the  restructuring  of the Wells Fargo Bank credit  facility,
the Company  entered into an agreement  with Williams  under which  Williams has
agreed to make certain additional  advances to the Company. As a result of these
additional  investments  plus  assumption of certain  liabilities  and potential
additional  payments to the bank,  the debt and equity  investments  could reach
$8,650,000  with an initial 3-year  effective  annual cost of 8.75% inclusive of
interest, dividends and fees. On June 30, 1998, Williams converted $5,000,000 of
this debt into 6,000,000  shares of a newly created series of preferred stock of
the Company, the Series D Cumulative Convertible Non-Voting Preferred Stock. The
Company  delivered a promissory note to Williams for the unconverted  portion of
the debt. This note is secured by a lien on the Company's assets which is junior
to the liens held by the  Company's  bank  lenders.  Williams  continues  to own
approximately  17.7% of the  outstanding  common  stock of the Company and holds
options to purchase an additional  11,110,000  shares of common stock.  Williams
also  continues to have rights,  which were  negotiated  in 1994, to utilize the
Company's manufacturing facilities in Wisconsin and Mexico.

The Company believes that the combination of the Wells and Williams  refinancing
agreements will result in an improved working capital  position,  with increased
liquidity and a stronger capital structure for the Company.


                                        5

<PAGE>




Note 4.       BUSINESS SEGMENT REPORTING

The  relative  contributions  to net sales,  operating  profit and  identifiable
assets of the Company's  industry  segments for the quarter and six months ended
June 30, 1998 and 1997 (unaudited) are as follows (in thousands):


<TABLE>
<CAPTION>

                           Quarter Ended June 30, 1998
                                                          Mass         Specialty
                                    Furniture             Merchant    Golf Stores      Corporate            Consolidated
                                    ---------             --------    -----------      ---------            ------------         
<S>                                 <C>                  <C>           <C>             <C>                    <C>               

Net Sales                           $   1,190            $    7,329     $     472     $        -             $     8,991
Operating Profit/(Loss)                    39                   745          (130)          (176)                    478
Total Assets                            2,350                12,463         2,312              -                  17,125
Depreciation/Amortization                  23                    55             2              -                      80
Capital Expenditures                       39                    13             -              -                      52

                           Quarter Ended June 30, 1997
                                                          Mass         Specialty
                                    Furniture             Merchant    Golf Stores      Corporate            Consolidated
                                    ---------             --------    -----------      ---------            ------------         
Net Sales                          $    1,471            $    6,619      $  1,494   $          -    $              9,584
Operating Profit/(Loss)                    49                   492          (170)           (46)                    325
Total Assets                            2,941                12,320         5,523              -                  20,784
Depreciation/Amortization                  20                    63            24              -                     107
Capital Expenditures                       45                     2             8              -                      55




                         Six Months Ended June 30, 1998
                                                          Mass         Specialty
                                    Furniture             Merchant    Golf Stores      Corporate            Consolidated
                                    ---------             --------    -----------      ---------            ------------         
Net Sales                            $  2,950             $  12,647           992     $        -            $     16,589
Operating Profit/(Loss)                   259                 1,018          (240)          (319)                    718
Total Assets                            2,350                12,463         2,312              -                  17,125
Depreciation/Amortization                  49                   110            22              -                     181
Capital Expenditures                       62                    13             -              -                      75

                         Six Months Ended June 30, 1997
                                                          Mass         Specialty
                                    Furniture             Merchant    Golf Stores      Corporate            Consolidated
                                    ---------             --------    -----------      ---------            ------------         
Net Sales                            $  3,361             $  11,331     $   2,493     $        -         $        17,185
Operating Profit/(Loss)                   443                   633          (352)          (109)                    615
Total Assets                            2,941                12,320         5,523              -                  20,784
Depreciation/Amortization                  36                   113            39              -                     188
Capital Expenditures                       55                    33            11              -                      99
</TABLE>

The  year-to-date  $3.2 million  reduction in total assets in the specialty golf
store segment results from the Company closing its California golf manufacturing
and office  facility  and reducing its golf club  receivables  and  inventories.
Year-to-date  six-months  sales are off by $1.5  million in the  specialty  golf
store channel due to de-emphasizing golf club sales.

                                        6

<PAGE>




Note 5.       DIVIDENDS

Dividends on Series B and C Convertible  Preferred  Stock have not been declared
for 1997 or 1998 due to  unavailability  of funds.  Dividends  are in arrears on
Series B in the amount of  $956,500  and on Series C in the amount of  $444,000.
Dividends  are  permitted  to be  paid  under  the  new  credit  agreement  when
sufficient funds become available.


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

See  "Cautionary  Statement"  at the  beginning  of the  "Notes to  Consolidated
Financial Statements".

FINANCIAL  CONDITION  AND  LIQUIDITY  - At June 30, 1998 the Company had working
capital of  $9,545,000 as compared  with  $8,011,000  at December 31, 1997.  The
ratio of current assets to current liabilities at June 30, 1998 was 3.9 to 1, as
compared to 2.8 as of December 31, 1997. The Company's borrowings decreased $3.9
million since December 31, 1997. This was a result of a restructuring  agreement
between the Company and Williams  Controls,  Inc. wherein $5 million of debt was
converted  on June 30,  1998 into  preferred  stock  and  Williams  advanced  an
additional $1 million during the current quarter.  Additionally, the Company and
Wells Fargo Bank  concluded a new credit  agreement as of June 30, 1998. The new
credit agreement provides for more favorable asset based lending availabilities.
The  financial  restructuring  and the new  credit  agreement  has  added to the
liquidity  of the  Company  and has  allowed  the  Company to bring its  vendors
current and to begin to operate more  efficiently  through  improved  production
scheduling, consistent material flows and improved vendor relations.

During the first six months of the year,  the  operating  cash flow was negative
$1.2 million due to seasonal increases in trade receivables of $1.2 million. The
$600,000  decline in  inventories  assisted in paying down payables by $700,000.
Liquidity  has  significantly  improved  during the current  quarter with excess
borrowing  capacity under the bank loan of $770,000 at June 30, 1998. As part of
the  overall  restructuring  agreement  between the  Company  and  Williams,  an
additional  $500,000 is to be advanced to the Company during the 3rd quarter and
again in the 4th quarter of 1998, thus concluding the restructuring.

RESULTS OF OPERATIONS - During the quarter ended June 30, 1998,  the Company had
net sales of $8,991,000, compared to $9,584,000 for the same period in 1997. The
6% sales decrease was a result of closing the California golf  manufacturing and
office facility and integrating it into Delavan,  Wisconsin while de-emphasizing
golf club sales. This resulted in a decrease of $1,020,000 of golf club products
during the quarter which would have  accounted for an 11% sales  decrease if not
offset by  increases  in mass  market  golf  sales of  $710,000.  Due to adverse
weather  conditions  and the strong  dollar,  outdoor  furniture  sales were off
$281,000.  For the six months period ended June 30, 1998, overall sales were off
$596,000  or 3% below  the same  period of the prior  year.  This  again was the
result of closing the California golf production facility and de-emphasizing the
sale of golf clubs.

                                        7

<PAGE>



Item 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS (Cont'd)


Gross  profit  for the  three  months  ended  June 30,  1998 was 18.4% of sales,
compared to 16.9% for the same period of the prior year.  This  improvement is a
result of reducing golf club sales and better  efficiencies  in  production  and
reduced expediting costs as a result of improved liquidity. Gross profit for the
six months ended June 30, 1998 was 17.6% of sales compared to 17.9% for the same
period of the prior year.

Selling,  general and  administrative  expenses were  $1,178,000 for the current
quarter as compared to  $1,294,000  for the same quarter of the prior year. On a
year to date six months basis, SG&A was $2,206,000 for the current year compared
to $2,462,000 in the prior year. As a percent of sales, SG&A declined from 13.5%
for the current  quarter of the prior year to 13.1% for the  current  quarter of
the  current  year and it declined  by one  percentage  point for the six months
period to 13.3% for the current year from 14.3% for the prior year.

Operating  income  for the  second  quarter  of the  current  year was  $478,000
compared to $325,000 for the same  quarter of the prior year.  On a year to date
basis, operating income is $718,000 compared to $615,000 in the prior year.

Interest  expense  declined by $123,000 during the quarter and on a year to date
basis by $66,000  for the six months as compared to the prior year due to better
utilization of assets.


Net income for the quarter ended June 30, 1998 was $125,000  which compares to a
$126,000  loss for the same quarter of the prior year.  On a year to date basis,
the Company  earned  $166,000 net which compares to a $121,000 year to date loss
for the comparable prior year 6-month period.




                                        8

<PAGE>




PART II.  OTHER INFORMATION


Item 2.       CHANGES IN SECURITIES.

              The Company  established  a new "Series D  Cumulative  Convertible
              non-voting preferred stock" consisting of 6,000,000 shares.

              These  shares  were  issued  as of  June  30,  1998  as  part of a
              restructuring  agreement  between Williams and the Company wherein
              $5,000,000 of loans by Williams were converted to 6,000,000 shares
              of "Series D Preferred"  with a stated value of $5,000,000.  These
              shares are convertible into common stock of the Company based on a
              stated  value of $0.8333 per Series D share and $0.25 per share of
              common stock.

              These shares were issued in reliance on an  exemption  provided in
              Rule 506 of Regulation D and/or Section 4(2) of the Securities Act
              of 1933 based on Williams' extensive knowledge of the Registrant's
              business  and  financial  condition  as a  creditor  and holder of
              approximately 17.7% of the Company's outstanding common stock.

Item 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

              On  May  29,  1998,   the  Company  held  its  annual  meeting  of
              shareholders.  On the two voting proposals,  shareholders  elected
              all of the incumbent directors,  to serve for the ensuing year and
              approved a 1-for-6 or 1-for-8  share  reverse  common  stock split
              with the exact ratio being  determined  in the  discretion  of the
              Board of  Directors.  As of the date of this report,  no split had
              been effected.

Item 5.       OTHER INFORMATION.

              On June 30, 1998,  the Company  restructured  its credit  facility
              with Wells Fargo Bank, National Association  ("Wells") to separate
              its credit facility from that of Williams  Controls,  Inc. and its
              subsidiaries  ("Williams").  The credit  facility as  restructured
              provides for maximum borrowing capacity of $10,025,000, consisting
              of a revolving credit facility of up to $9,500,000 and a term loan
              of $525,000. As a result of this transaction,  the Company will no
              longer  have  joint  and  several   liability,   cross  collateral
              agreements or  guarantees  with Williams with respect to Williams'
              Wells Fargo credit facility.  The new asset-based  credit facility
              from Wells  provides  the Company with  approximately  $700,000 of
              increased loan  availabilities  and borrowing  capability  against
              inventory  and  accounts  receivable.  The  interest  rate  on the
              revolver is prime plus 1% and prime plus 1.5% on the term loan.

              In  connection  with the  restructuring  of the Wells  Fargo  Bank
              credit  facility,  the  Company  entered  into an  agreement  with
              Williams   under  which   Williams  has  agreed  to  make  certain
              additional advances to the Company. As a result of

                                        9

<PAGE>



Item 5.       OTHER INFORMATION (Cont'd)


              these   additional   investments   plus   assumption   of  certain
              liabilities  and potential  additional  payments to the bank,  the
              debt and equity investments could reach $8,650,000 with an initial
              3-year  effective  annual  cost of 8.75%  inclusive  of  interest,
              dividends  and  fees.  On  June  30,  1998,   Williams   converted
              $5,000,000 of this debt into  6,000,000  shares of a newly created
              series of preferred stock of the Company,  the Series D Cumulative
              Convertible  Non-Voting  Preferred Stock. The Company  delivered a
              promissory  note to Williams  for the  unconverted  portion of the
              debt. This note is secured by a lien on the Company's assets which
              is  junior  to the  liens  held  by the  Company's  bank  lenders.
              Williams  continues to own approximately  17.7% of the outstanding
              common  stock of the  Company  and holds  options to  purchase  an
              additional  11,110,000  shares  of  common  stock.  Williams  also
              continues  to have  rights,  which  were  negotiated  in 1994,  to
              utilize the  Company's  manufacturing  facilities in Wisconsin and
              Mexico.

              The  Company  believes  that  the  combination  of the  Wells  and
              Williams refinancing agreements will result in an improved working
              capital position,  with increased liquidity and a stronger capital
              structure for the Company.

              On  February  23,  1998  new,  increasingly  stringent  rules  for
              continued  listing of shares on the NASDAQ  Small Cap market  went
              into effect.  At that time, under  Marketplace Rule 4310 (c) (02),
              the  Company  was  not  in   compliance   with  the  Net  Tangible
              Assets/Market  Capitalization/Net  Income  requirement  and  under
              Marketplace  Rule 4310 (c) (04) the Company was not in  compliance
              with the new minimum bid price standard of $1.00.

              In its effort to meet the new NASDAQ standards for continued small
              cap market  listing,  it has addressed its deficiency in these two
              rules by obtaining  stockholder  approval of a reverse stock split
              and  restructuring  its bank debt and debt to  Williams  Controls,
              Inc.  which  included  conversion  of  $5  million  to  non-voting
              preferred stock.

              The Company has taken other measures to improve  operations  which
              will  better  enable it to  maintain  compliance  with the  NASDAQ
              continued listing standards.
              Some of these are:

              1)  Closing the California  golf facility and curtailing golf club
                  sales to reduce expenses,  increase efficiency and improve the
                  use of capital and improve the bottom line.

              2)  Introduce  additional  products targeted to increase sales and
                  profit in present off-peak periods such as July - December.

              3) Discontinued products which proved unprofitable and reallocated
                 those resources which were freed up.

                                       10

<PAGE>



Item 5.       OTHER INFORMATION (Cont'd)


              4)  Embarked  on  cost  reduction   through  sourcing  lower  cost
                  materials   from   China  and   curtailing   its   alternative
                  production.

              5) Improved product design and cost efficiency to improve earnings
                 performance and volume.

              There  is  no  assurance  that  the  Company's   efforts  will  be
              successful  and that  NASDAQ will permit  continued  listing.  The
              Company will attend a NASDAQ Listing  Qualifications panel hearing
              scheduled for August 14, 1998 in Washington, D.C. At this hearing,
              the Company will present its case for continued listing.


Item 6.       EXHIBITS AND REPORTS ON FORM 8-K.

              A)  Exhibits:

                3.1  Amendment to the Registrant's Restated Certificate of
                     Incorporation - Certificate of Designations of Rights and
                     Preferences of the Registrant's Series D Cumulative
                     Convertible Non-Voting Preferred Stock.

                4.1 Certificate of Designations of Rights and Preferences of
                    the Registrant's Series D Cumulative Convertible Non-Voting
                    Preferred Stock.   (See Exhibit 3.1 to this report)

             10.1(a) Credit Agreement, dated June 30, 1998, by and among the
                     Registrant and its operating subsidiaries, Leisure Life,
                     Inc., Palm Springs Golf, Inc. and Ajay Leisure Products, as
                     borrowers, and Wells Fargo Bank, National Association, as
                     lender.

             10.1(b) Revolving Loans  Promissory  Note, dated June 30, 1998,
                     made by the  Registrant  payable  to Wells Fargo Bank.

             10.1(c) Term Loan Promissory  Note,  dated June 30, 1998, made by
                     the  Registrant  payable  to Wells  Fargo Bank.

             10.1(d) First Amendment to Patent Assignment and Security Agreement
                     for Ajay Leisure Products, Inc.

             10.1(e) First Amendment to Trademark Security Agreement for Palm
                     Springs Golf, Inc.




                                       11

<PAGE>



Item 6.       EXHIBITS AND REPORTS ON FORM 8-K (Cont'd).


            10.1(f)  First Amendment to Patent Assignment and Security 
                     Agreement for Leisure Life, Inc.

            10.2     Agreement, dated June 30, 1998, by and among the
                     Registrant and its subsidiaries and Williams Controls, Inc.

            10.3     Promissory  Note dated June 30,  1998 made by the
                     Registrant payable to Williams Controls, Inc.

            27       Financial Data Schedule.


              B)  Forms 8-K:

              1)  The Company  filed a Form 8-K,  dated June 17, 1998  reporting
                  the  extension  of the  expiration  date of its  common  stock
                  purchase warrants to 12/31/98.

              2)  The Company  filed a Form 8-K,  dated June 22, 1998  reporting
                  its status  regarding  continued  listing on the NASDAQ  Stock
                  Market and the exercise of its right to an oral hearing on the
                  matter.

                                       12

<PAGE>






                                   SIGNATURES


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.


AJAY SPORTS, INC.




By:    /s/Robert R. Hebard
   -------------------------
Its:     Corporate Secretary





By:    /s/Duane R. Stiverson
    -------------------------
Its:    Chief Financial Officer



Date:      July  16,  1998

















                                       13