UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

Mark One


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

                   For the Fiscal Year Ended December 31, 1999

                                       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 0-18204

                                AJAY SPORTS, INC.
              ----------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


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


       1501 E. Wisconsin Street
       Delavan, Wisconsin 53115                            (262 )728-5521
-------------------------------------             ------------------------------
(Address of Principal Executive Offices           (Registrant's Telephone
 including Zip Code)                               Number, including Area Code)


           Securities Registered Pursuant to Section 12(b) of the Act:
                                      NONE

           Securities Registered Pursuant to Section 12(g) of the Act:
                          Common Stock, $.01 par value
       Units (each consisting of 5 shares of Common Stock and 2 Warrants)
                         Common Stock Purchase Warrants
               Series C 10% Cumulative Convertible Preferred Stock

   Indicate by check mark whether the issuer (1) has filed all reports  required
to be filed by Section 13 or 15(d) of the  Exchange  Act of 1934 during the past
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    X   No
                                     ------     ------



<PAGE>


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

   The aggregate  market value of the voting stock held by  nonaffiliates  as of
April  20,  2000  was  $1,623,812.  The  number  of  shares  outstanding  of the
Registrant's $.01 par value common stock at April 20, 2000 was 4,091,091.

                       Documents Incorporated by Reference


                                      None


<PAGE>



Ajay Sports, Inc.
Index
December 31, 1999


PART I.                                                             Page

   Item 1.  Description of Business                                   4-9

   Item 2.  Description of Property                                   9

   Item 3.  Legal Proceedings                                         9

   Item 4   Submission of Matters to a Vote of Security Holders       9

PART II.

   Item 5.  Market for Registrant's Common Equity and Related
                 Stockholder Matters                                  10-11

   Item 6.  Selected Financial Data                                   12

   Item 7.  Management's Discussion and Analysis                      13-15

   Item 8.  Financial Statements                                      F-1 - F-18

   Item 9.  Changes in and Disagreements with Accountants on
                 Accounting and Financial Disclosure                  15

PART III.

   Item 10  Directors and Executive Officers of the Registrant        16-17

   Item 11. Executive Compensation                                    17-18

   Item 12. Security Ownership of Certain Beneficial Owners and
                 Management                                           19-21

   Item 13. Certain Relationships and Related Transactions            21-22

PART IV.

   Item 14. Exhibits, Financial Statement Schedules, and Reports on
                 Form 10-K                                            23-26

SIGNATURE PAGE                                                        27




<PAGE>


                                        PART I

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 in this report.

Item 1.     Description of Business
            -----------------------
General
-------
   Ajay Sports,  Inc. (the "Company")  markets and distributes golf clubs,  golf
bags, golf gloves,  golf  accessories,  hand-pulled golf carts and casual living
furniture. The Company is presently one of the larger United States distributors
of golf  products as well as one of the nation's  larger  manufacturers  of golf
bags. The Company also owns Pro Golf Discount(R) the world's largest  franchiser
of "golf only" retail stores, with over 165 stores in the United States, Canada,
and the Philippines.

   The Company  operates the  mass-market  golf segment of its business  through
Ajay Leisure Products,  Inc.  ("Ajay") a wholly owned subsidiary.  Leisure Life,
Inc. ("Leisure Life"),  another wholly owned operating subsidiary,  manufactures
and markets casual living  furniture.  Palm Springs Golf, Inc. ("Palm Springs"),
another wholly owned operating  subsidiary,  markets golf clubs, golf bags, golf
gloves,  accessories  and  carts for  distribution  to the  off-course  pro shop
markets.  Prestige Golf Corp.  ("Prestige"),  another  wholly owned  subsidiary,
purchases  current in-line and closeout golf equipment for  distribution  mainly
through Pro Golf Discount(R) stores and an Internet site, ProGolf.com.  Pro Golf
International, Inc. ("PGI"), a majority-owned subsidiary, was formed during 1999
and owns 100% of the outstanding stock of Pro Golf of America, Inc. ("PGOA") and
a majority of the stock of ProGolf.com,  Inc. ("PG.com"). PGOA is the franchiser
of Pro Golf Discount(R)  retail golf stores.  ProGolf.com is a development stage
company that  recently  began  selling  golf  equipment  and other  golf-related
products and services over the Internet.  All references to the Company  include
Ajay,  Leisure  Life,  Palm  Springs,  Prestige,  PGI,  PGOA,  and PG.com unless
otherwise specified.

   Ajay's  products  primarily are sold  nationwide to large  retailers  such as
discount stores, department stores, catalog showrooms and other mass merchandise
and sports specialty outlets.  The products  manufactured by Ajay are sold under
the Spalding(R),  Palm Springs(R), Pro Classic(R),  Leisure Life(R), Pro USA(R),
and private  label brand names.  As of March 1999 the Company added the licensed
name "Gary Player" for use in marketing its golf product  lines.  Leisure Life's
furniture  products  are sold  through  independent  retailers,  hardware  store
cooperatives and larger chains of home and garden stores. Palm Springs' products
are sold through  off-course golf specialty shops. PGOA provides services to its
franchisees in exchange for initial  franchise fees and ongoing  royalties based
on a percentage of retail sales. The Company enhances its traditional  sales and
distribution methods by its recently introduced Internet sites.

   The  Company  was  organized  under  Delaware  law on August  18,  1988.  Its
administrative  office is  located at 7001  Orchard  Lake  Road,  Suite 424,  W.
Bloomfield,  MI 48322,  where its telephone  number is (248)  851-5651,  and its
executive and principal manufacturing and distribution facilities are located at
1501 E. Wisconsin Street, Delavan,  Wisconsin 53115, (262) 728-5521. The Company
also  operates a sewing  facility in Mexicali,  Mexico and a  manufacturing  and
distribution  facility at 215 4th Avenue North,  Baxter, TN 38544,  headquarters
for its  Leisure  Life  subsidiary.  Headquarters  for Ajay,  Palm  Springs  and
Prestige are located at 1501 E. Wisconsin St., Delavan,  WI 53115.  Headquarters
for PGI, PGOA and PG.com are located at 32751 Middlebelt Road, Farmington Hills,
MI 48334.
<PAGE>

Business Strategies
-------------------
   The  Company's  strategies  are to maintain  and  improve  its  position as a
leading  supplier of golf clubs,  golf bags,  golf carts,  golf  accessories and
leisure  indoor and outdoor  furniture,  to improve  its  position as the global
leader in retail golf sales at its Pro Golf Discount  franchised  stores, and to
have a golf  category-killer  website for internet  sales of golf  equipment and
related  products  and  services.   The  Company  believes  that  the  following
competitive strengths contribute to its position as a market leader:

   Strong Brand Recognition.  Spalding(R), Palm Springs(R), Pro Classic(R), Gary
Player(R),  and Pro Golf  Discount(R)  are highly  recognized  names in the golf
industry and the Company  believes  that many of its products hold strong market
positions.  The Company believes that its brand  recognition and market position
enhance the ability to sell products  through various  channels,  including mass
merchandisers,  regional  retailers,  golf specialty and sporting good specialty
retailers.  From  1983  through  1998 a  significant  portion  of the  Company's
revenues resulted from the sale of products  manufactured and sold pursuant to a
license agreement with Spalding Sports Worldwide ("Spalding"). In March 1999 the
Company began an 18-month phase out of products  bearing the Spalding name. This
phasing  out  process has  resulted  in sharply  decreased  sales by the Company
during 1999 because  Spalding had been the Company's  primary brand sold to mass
merchants. As the phase-out is completed, in place of Spalding branded products,
the Company will be offering its newly licensed Gary Player branded products. As
a complement to the Gary Player license,  PGOA has contracted with international
golf legend Gary Player to be its corporate  spokesperson  for at least the next
two years The Company is in the  process of  determining  the primary  market it
will target with its Gary Player  branded  products.  Previous sales of Spalding
branded products traditionally sold to mass merchants have not been successfully
transitioned to new sales of Gary Player branded products;  however, in light of
the Company's acquisition of the Pro Golf businesses during 1999, the Company is
carefully  considering  the markets  available  for its new lines of Gary Player
branded products.

   Reputation  for Quality.  The Company  believes that the  performance  of its
products equals or exceeds the performance of its competitors'  products at each
price  point.  To assure the quality of its  products,  the Company  continually
invests in technical design and support,  and tests and monitors the performance
of its products.  At its own  facilities,  the Company relies on its skilled and
experienced  work force for quality  control.  To assure the quality of products
sourced from third-party manufacturers, the Company has established and works to
maintain  close,  long-term  relationships  that  emphasize  service,   quality,
reliability,  loyalty and  commitment.  In  addition,  the  Company  maintains a
sourcing  presence  in its largest  foreign  source  markets to assure  quality,
reliability, new product ideas and a constant commercial interface. Its Pro Golf
Discount(R) franchised stores have an international  reputation for quality name
brand and private label golf merchandise at the best prices.

   Tradition of  Innovation.  Throughout  its history,  the Company has tried to
maintain a tradition  of new  product  development.  In spite of this,  sales in
several product  categories have been declining in recent years. New bag styles,
new accessories, new gloves, new golf clubs, new furniture and other new product
designs for 2000 are meeting with good  response  from the  Company's  customers
although, in general, sales and orders have not yet increased.

   Breadth of Product  Lines.  The Company offers a wide selection of golf bags,
golf gloves, golf carts and golf accessories,  and a growing list of outdoor and
indoor  casual  living  furniture.  Through  its variety of product  lines,  the
Company  offers mass  merchants  and regional  retailers  the ability to fulfill
product  demands and needs from a single  source.  The  Company's  product lines
establish it as one of the  nation's  leading  manufacturers  of golf bags along
with being a leader in the golf related accessories  category.  Its line of golf
bags consists of approximately  25 models,  which vary by size,  color,  type of
material and related  features.  The line of golf related  accessories  consists
mainly of consumable items such as tees,  gloves,  head covers,  practice balls,
spikes, golf ball retrievers, umbrellas and golf training devices. The accessory
category  includes  approximately 100 individual items. The Company is trying to
improve its sourcing  channels  with the goal of having  broader  selections  of
golf-related merchandise at better wholesale and retail margins. However, during
1999 and into 2000 the Company  has lacked the cash  availability  necessary  to
expand its product lines.

   Golf carts, golf bags, golf gloves and related accessories  historically have
accounted for approximately  96% of Ajay's gross sales. Golf clubs  historically
through 1997 accounted for 65% of Palm Springs' sales.  Since 1998, Palm Springs
has emphasized bags,  accessories,  gloves and carts over clubs.  Leisure Life's
sales consist 100% of indoor and outdoor leisure furniture. With the acquisition
of PGOA,  franchise fees and royalties are expected to account for a significant
portion of future Ajay revenues.
<PAGE>

Growth Opportunities
--------------------
   The  Company  believes  that its strong  brand  recognition,  reputation  for
quality,  tradition of innovation  and breadth of product  lines  position it to
take advantage of opportunities for future growth including:

   Increased  Distribution.  Through 1995,  the Company's  products were sold to
customers  primarily  through mass  merchants and regional  retailers.  With its
acquisition  of the business of Palm Springs in October 1995, the Company gained
a new channel of  distribution  through  off-course  golf specialty  shops.  The
Company has been unsuccessful in exploiting this new channel during 1996 through
1999  particularly  in golf club sales.  The  Company is  focusing on  improving
results in this channel and is trying to regain its former sales position by the
year 2001,  largely through increased sales of products to the Pro Golf Discount
stores and to internet retailers, including PG.com.

   New  Product  Development.  The  Company  believes  that it is  important  to
increase its sales of products through design  improvements and modifications to
existing  products as well as the development and  introduction of new products.
The  Company has  continued  to  introduce  new and  redesigned  products to the
market.  In late 1999 the  Company  began  utilizing  the  expertise  of outside
representatives,  in particular those associated with PGOA, to help redesign its
golf bag line for the year 2000.

   The Company is seeking contract sewing of products that utilize the Company's
existing  manufacturing  capabilities,  specifically its cut and sew operations,
with the goal of increasing  sales and plant  utilization  during the summer and
fall to offset the excess capacity created by the historical  seasonality of the
golf lines.  Contracts  received during the first quarter of 2000 have potential
to meet or exceed the Company's  near-term  goals for cut and sew  manufacturing
utilization.

   Leisure Life introduced a new line of swing, rocker and stationary  furniture
for the 1999 sales year.  This line was less expensive than its previous line of
furniture  and  incorporated  improved  product  performance  features,   design
features, improved illustration based instructions, improved packaging, improved
quality and several cost reduction features and thus offered better value to the
end customer.  New products,  including a stained  furniture line, have met with
broad market acceptance through the first quarter of 2000.

     In spite of its increased distribution and new product development efforts,
the Company  experienced a contraction  of its sales base during 1999. The major
contributing  factors  to the  contraction  were  brought  on by  golf  industry
competitive   factors  and  the  Company's   poor  liquidity  and  inability  to
consistently  deliver product on a timely basis.  Other factors that the Company
believes  hurt its ability to increase its customer  base included the trend for
customers to increase  their  importing of Asian golf products  directly,  and a
relatively  flat  year in golf  retail  sales,  which  also  resulted  in excess
manufacturers  inventories of golf bags and additional close outs on these bags.


Sports Business
---------------
   Golf,  which is the primary  market for the Company's  businesses  other than
Leisure  Life,  continues to be a popular form of  recreation.  According to the
National Golf  Foundation  ("NGF"),  a trade  association,  there were 3.4% less
rounds of golf  played in 1998 than 1997 which was up 14.6% from 1996.  The pace
of golf course  development also continues  steadily.  NGF reports that 448 golf
courses were opened for play in 1998  compared to 429 in 1997 marking the fourth
consecutive year where openings exceeded 400.  According to NGF market research,
the number of U. S. golfers is approximately  26.4 million.  This group consists
of 78% male  and 22%  female  and 74% are  between  the  ages of 17 and 60.  The
Company  believes there is a great  opportunity for increased  participation  by
females and golfers under 18 and over 60, and that there is a great  opportunity
for increased  participation by minorities.  These beliefs are based on expected
increased  interest by younger players,  increased  emphasis on women's golf and
improvements in health,  leisure time,  increasing numbers of people moving into
the over 60 group, and the success and increased  visibility of minority golfers
such as Tiger Woods and Notah Begay.

   Licensing.  A significant  portion of Ajay's revenues result from the sale of
products manufactured and sold pursuant to various license agreements,  the loss
of which could have a material adverse effect on the Company's business.
<PAGE>

     Since 1983, Ajay has sold golf bags,  hand-pulled golf carts and a range of
general  sports   accessories   through  a  license   agreement  with  Spalding.
Approximately  75% of Ajay's  total  sales  related to  products  sold under the
Spalding  license  agreement  during the years ended December 31, 1998 and 1997,
respectively.  The  changing  golf  market  combined  with the high cost of Ajay
maintaining  the Spalding  license  prompted  Ajay to implement a new  licensing
strategy.  In March 1999, Ajay reached an agreement with Spalding  Worldwide and
began an 18-month  phase out period of its Spalding  licensed  products and will
discontinue  offering  Spalding  branded products after September 30, 2000. As a
result of this phase out,  during 1999  approximately  46% of Ajay's total sales
related to products sold under the Spalding license  agreement.  This percentage
is expected to continue its decline through  September 2000.  Another  strategic
change was for Ajay to obtain rights to a new brand name focused specifically on
the golf niche. In early 1999, Ajay entered into a 5-year license agreement with
the Gary Player Group,  Inc. to use the Gary Player name on Ajay's golf products
throughout the United States.

Gary Player is one of the best-known golfers of all time. He is one of only four
golfers to achieve golf's "Grand Slam" (The Masters, U. S. Open, PGA and British
Open  championships).  In addition to his  playing  career,  Gary Player and the
organization  bearing his name are involved in golf course design and other golf
and   charitable   activities.   Gary  Player  Design  has  developed  over  100
championship  courses  throughout  the world.  Gary  Player is  regarded  as the
International  Ambassador  of Golf.  His courteous  demeanor and integrity  have
earned high  respect as one of golf's  greatest  sportsmen  and  gentlemen.  The
combination of Gary Player's success in golf tournaments worldwide, his personal
integrity and the universal feeling that he represents everything good about the
game of golf has caused  the Gary  Player  name to become  one of the  strongest
brands in golf.  The Company plans to capitalize on this brand  awareness in its
future  product  development  and is working  toward  developing the Gary Player
brand for marketing products.  In October 1999, PGOA contracted with Gary Player
for him to be Pro Golf's  international  spokesman through at least December 31,
2001.  Gary now wears the "Pro Golf" name on his golf  outerwear  and appears in
much of the Pro Golf advertising.

     During 1999, Ajay not only began shifting its primary branded products away
from  Spalding  and toward the Gary Player  name,  it also sought to move toward
less  dependence  on the mass  merchant  markets  and  more on off  golf  course
specialty  stores,  including the Pro Golf  Discount  franchised  stores.  Sales
decreased for 1999,  reflecting not only the transition in product  branding but
also the Company's  tight cash flow position  which  affected  Ajay's ability to
source and manufacture products at a level which would ease the transition.

   Manufacturing  and  Design.  While the Company is now  importing  much of the
product it sells, some preliminary  production of Ajay's golf bags is undertaken
at its Delavan,  Wisconsin  facility,  where raw  materials  are  fabricated  in
preparation  for  sewing and  assembly  at its  Mexicali,  Mexico  facility.  In
addition,   Ajay  supplements   in-house   production  through   utilization  of
subcontractors  to  produce  products  according  to its  specifications.  Final
manufacturing,  assembly and  distribution  for Ajay and Palm  Springs  products
occur at facilities  located in Delavan,  Wisconsin.  Prestige products are also
warehoused in and shipped from Delavan.

   Design features, such as color, decals, specialized components and decorative
accessories often determine whether a golf product model is successful. In order
to attract and retain  consumers  the Company  updates and refines  these design
features on a  continuous  basis,  both  in-house  and in  conjunction  with its
foreign  suppliers.  The Company has also introduced a program for its customers
whereby it designs  packaging to fit with its customer's image and private label
names.  This new program has received  favorable  response so far,  although new
sales have been slow.

   The Company's  lines of various  accessory  products are purchased  primarily
from foreign  sources,  principally from the Pacific Rim, and are prepackaged or
repackaged for domestic  distribution.  The packaging  designed by Ajay and Palm
Springs  highlights  the  various  features  of  the  products.   The  Company's
hand-pulled  golf carts are manufactured  in-house and overseas.  The Company is
not dependent upon any single source for any of its significant products.

   Marketing and  Distribution.  Ajay's  product lines  traditionally  have been
distributed primarily through discount stores, department stores, catalog stores
and other mass  merchandise  outlets.  The Company also sells through most major
chain  retailers and off-course  golf  specialty  shops.  The Company's  largest
customer is Wal-Mart,  which  accounted for  approximately  25% of the Company's
sales in 1999.  The second  largest  customer  accounted for 7% of the Company's
sales.  The loss of these accounts  would have a material  adverse effect on the
Company's results. The Company believes its relationship with these customers is
good.
<PAGE>

   Except for certain major accounts,  manufacturers' representatives working on
a commission  basis  service many of Ajay's  accounts.  Ajay  services its major
accounts  through a combination of  manufacturers'  representatives  and its own
in-house sales force.  Palm Springs and Prestige service their customers through
their  in-house and regional sales  representatives.  As a result of the reduced
sales and poor  liquidity at the Company  during 1999,  its sales force has been
scaled  back both  in-house  and with  outside  representatives.  Management  is
currently  reviewing  its needs in these  areas and  devising  a plan for moving
forward during 2000 and 2001 to increase sales and broaden the Company  customer
base.  The  Company's  management  regularly  consults  with major  customers to
discuss  merchandising  plans  and  programs,   anticipated  needs  and  product
development.  PGOA services its franchisees  through its in-house support staff,
and its staff is  constantly  attending  trade shows and  speaking  with outside
vendors to keep in the forefront of golf and retail innovation and technology.

   The Company believes that Ajay, Palm Springs, Leisure Life and PGOA have good
name recognition in the industry and attempts to expand that recognition through
participation  in trade shows,  advertising in trade  publications and supplying
literature  and catalogs to the retail trade and consumers.  PGOA's  franchisees
spend  approximately  $10,000,000  annually on local and  national  advertising,
which helps expand  recognition  of the Pro Golf brand name.  PG.com  intends to
supplement this advertising with substantial advertising of its own beginning in
the latter half of 2000.

Leisure Furniture Business
--------------------------
   Demographic  changes  have  driven a shift  for the last ten  years  toward a
casual  living  lifestyle.  This is  evidenced  by the  proliferation  of decks,
patios,  and  sunrooms.  Americans  are spending more of their leisure time in a
relaxed casual manner. This has led to a need for more leisure time furniture.

   Leisure furniture, used on porches, decks, patios, in sun rooms and yards has
traditionally  consisted  of  aluminum,  resin,  wrought  iron and low to medium
priced wood  products.  The designs of wood  products  have not been  stylish or
particularly  comfortable  for  seating.  Leisure  Life's "In Motion"  furniture
products,  which feature contoured slings,  adjustability and comfort, have been
received favorably in the leisure furniture market.

   Leisure  Life's  furniture  is  constructed  of a high-grade  pine,  which is
pressure-treated and kiln-dried to prevent  deterioration,  warping, and bending
and to withstand  varying climate  conditions.  The seating  products  utilize a
patented suspension seating system that permits simple adjustment to accommodate
users of  different  heights  and  weights.  This system  also  incorporates  an
ergonomically  designed  sling and deep  cushion  seating to provide  lower back
support.  Management  believes that its seating products are superior in comfort
to any other leisure furniture seating. A patented  suspension system is used on
swings, rocking chairs, stationary chairs, love seats, and couches.

   In addition to the seating products,  Leisure Life also manufactures cocktail
and end tables,  a bench,  canopies,  A-frames,  potting  tables,  shelving  and
bookcases as a coordinated line of leisure furniture. Management believes that a
coordinated  casual wood  furniture  line can be marketed  for indoor as well as
outdoor use.

   Manufacturing. The pressure treated pine purchased by Leisure Life is planed,
cut,  drilled,  and sanded in the Baxter,  Tennessee  facility  to form  product
components.  Small  portions of the wood pieces are purchased  pre-manufactured.
Fabric for pillows,  cushions, slings and canopies are cut and sewn in-house and
by third  party  subcontractors  for final  assembly  in the  Baxter,  Tennessee
facility. Furniture items are packaged in kits containing the wood frame pieces,
slings, pillows, and necessary hardware,  requiring the customer to assemble the
final product.

   Marketing and  Distribution.  Currently,  Leisure life supplies  nearly 3,500
storefronts  worldwide  and  supplies to 20  distributors  in various  countries
around the world. Large chains such as Wal-Mart, Sam's, Lowes, Meijers and Price
Costco  represent 29% of Leisure Life's customer  storefront base and 50% of its
sales.  Independent  nurseries,  hardware  stores,  pool and patio  shops,  home
centers,  department  stores,  mail order catalogs and casual furniture  stores,
along with their  respective  co-op's and specialty  distributors  carry Leisure
Life swings, swing sets, seating and rockers. Export distribution also continues
to grow. Wood furniture, as an outdoor category, represents a greater portion of
sales in Great Britain, Europe, Japan, Korea, and the Far East than in the U. S.
market.  Pressure  treated  Southern Yellow Pine is very  competitive with Teak,
Mahogany, or any other solid wood outdoor furniture.
<PAGE>

Inventories and Backlog
-----------------------
   Due to the  relatively  short lapse of time  between  placement of orders for
products and  shipments,  the Company  normally does not consider its backlog of
orders to be significant to its business. Because of rapid delivery requirements
of its customers, the Company maintains significant quantities of finished goods
inventories to provide  acceptable  service  levels to its customers.  Inventory
turnover  in  mass-market  products  is lower than for  furniture  and  reflects
maintenance of high service standards for its mass-market  customer base and the
shorter manufacturing time cycle for furniture products.

   The Company's  products tend to be very  seasonal in nature.  Shipments  from
February to May,  historically have been  significantly  higher than the rest of
the year,  due to the nature of the golf and  furniture  businesses.  Management
expects  that  the  indoor  leisure  furniture  line  including  shelving  being
developed will have higher  shipments in the fall. To reflect the seasonality of
the business, inventories will tend to be higher from November to May.

Competition
-----------
   The market in which the Company  does  business,  while very  fragmented,  is
highly  competitive,   and  is  served  by  a  number  of  well-established  and
well-financed  companies with  recognized  brand names, as well as new companies
with popular  products.  New product  introductions  and/or price  reductions by
competitors continue to generate increased market competition. While the Company
believes that its products,  its marketing  efforts,  and its franchised  stores
will  continue to be  competitive,  there can be no  assurance  that  successful
marketing efforts by competitors will not negatively impact the Company's future
revenues.  Additionally,  the Company faces much competition from other internet
companies which sell golf equipment and services similar to those PG.com will be
offering, and at the present time the Company believes that online sales of golf
equipment is not a material percentage of total golf sales.

   Ajay competes in the golf bag, cart and accessory business with several other
domestic companies  including Wilson,  Gold Eagle,  Dunlop,  Palmer, Pro Select,
Highlander,  Knight  and  others.  Increased  imports  of low  cost  competitive
products, primarily from Asia, continue to subject domestic producers to intense
price  competition  and have  created  extreme  price  sensitivity,  while  also
providing a source of competitive products for the Company to offer.

   Palm  Springs  competes  for  specialty  golf store retail space with over 50
competitors.  Retail golf specialty  stores carry many lines. The premium brands
are represented by names such as Callaway, Ping, Taylor - Made, Cleveland, Tommy
Armour,  and  Orlimar.  Other  competitors  are  Datrek,  Belding,  Burton,  Sun
Mountain, Ogio, Izzo, Miller, and Gold Eagle. Palm Springs offers a line of high
quality and feature  filled  products  which sell at moderate  price  levels and
offer  consumers  high  value to  price  ratios.  Palm  Springs  also has  begun
distributing  bags under Pro Golf's  trademark  names of Excalibur and Unique to
the Pro Golf Discount franchised stores.

   Leisure Life has had limited but growing  operations.  At this time,  Leisure
Life,  as compared to the large  number of  manufacturers  of indoor and outdoor
furniture, is not a significant competitor. In Leisure Life's niche market there
are  no  dominant  furniture  manufacturers  supplying,  on  a  national  basis,
comparable  cushioned,   suspended  sling  back  comfort  products  specifically
targeted for porches,  decks,  patios,  and sun rooms.  There are several  small
firms supplying on a regional  basis.  Competition  includes Richie  Industries,
Palmetto Mfg., Lakeland Mills, Rivenwood and Atwood. Management does not believe
that there are any other similar wood  furniture  products that are  adjustable.
However,   there  is  competition  for  display  space  in  stores,  along  with
competition from other wood,  resin,  aluminum,  cushion,  and plastic furniture
products.
<PAGE>

Raw Materials and Components
----------------------------
   Basic materials such as vinyl, nylon, steel and aluminum tubing, plastics and
paint used in the golf product  manufacturing and assembly process are purchased
primarily from domestic  sources.  Many of the component parts such as golf club
head covers,  graphite shafts, club heads, golf gloves,  light weight carry golf
bags and various other golf  accessories are obtainable  economically  only from
foreign suppliers and, therefore, are subject to changes in price as a result of
fluctuations in foreign currencies against the U.S. dollar.  Alternative sources
for  raw  materials  and  component  supplies  are  available  and  the  Company
anticipates no significant  difficulty in obtaining raw materials or components,
although some such purchases may be at increased prices.

   Leisure Life purchases pressure treated pine, fabric,  cushion stuffing,  and
miscellaneous  hardware  used in the  manufacturing  and  assembly  process from
domestic  sources.  Alternative  sources for raw  materials  are  available  and
Leisure Life has not experienced difficulty in obtaining raw materials.

Patents and Trademarks
----------------------
   Ajay, Leisure Life, Palm Springs, and PGOA own several patents and trademarks
and have proprietary knowledge relating to their product lines.  Management does
not believe  that the loss of any of its patents  would have a material  adverse
effect on its businesses.

Employees
---------
   As of March 28, 2000, the Company had a total of 198 employees:  50 employees
at the  Delavan,  Wisconsin  facility,  98  employees  at the  Mexicali,  Mexico
facility,  30 employees at the Baxter,  Tennessee facility,  and 20 employees at
its  Farmington  Hills,  Michigan  office.  The  Company  considers  its current
relations with its employees to be good.

Item 2.     Description of Property
            -----------------------
   The  Company's  executive,  and Ajay's  primary  manufacturing,  assembly and
warehouse facility,  is located in Delavan,  Wisconsin,  and consists of 186,300
square feet of office, manufacturing and warehousing space. This space is leased
from an unaffiliated  third party under a long-term lease  arrangement  expiring
June  2001,  with an option  to renew for an  additional  ten-year  period.  The
Company has an option to purchase  the  property at its fair market value at the
end of either the initial or renewal lease term.

   Through its wholly-owned  subsidiary,  Ajay Leisure de Mexico,  S.A. de C.V.,
Ajay leases an additional  manufacturing  facility  consisting of  approximately
30,000 square feet in Mexicali, Mexico. The lease expires on January 14, 2005.

   Leisure Life owns its  manufacturing,  assembly,  and  warehouse  facility in
Baxter,  Tennessee,  which  consists  of  approximately  40,000  square  feet of
manufacturing and warehousing space,  located on 2.8 acres. The property carries
a mortgage in the amount of $172,800.

   PGOA leases  approximately  8,000 square feet of office  space in  Farmington
Hills,  Michigan under an operating lease with its former owners. The lease is a
36-month  operating  lease that  expires on March 31,  2002,  with one option to
renew for an  additional  five years.  In March 2000,  PGOA leased an additional
3,150  square  feet of  adjacent  space,  which it  intends  to  sublease  to an
affiliated  company.  PGOA has an option,  exercisable between April 2, 2000 and
March 31, 2002, to purchase the building at fair market value.

   These   facilities   adequately  meet  the  Company's   production   capacity
requirements.  The  Company,  on  average,  utilizes  approximately  60%  of its
facility square footage.  In order to avoid periodic total plant shutdowns,  the
Company  adjusts  its  product  production   schedules  to  maintain  sufficient
inventory levels and to maintain a full work force. The Company also attempts to
enter  into  short-term  leases  for  unused  space  in its  Delavan,  Wisconsin
facility.

Item 3.     Legal Proceedings
            -----------------
   The Company is involved in various legal  proceedings  that are normal to its
businesses,  including product liability and workers'  compensation claims. As a
result of its tight cash flow, the Company is late on payments due to several of
its vendors and is involved  in various  collection  actions  against it and may
face  additional  actions of this type.  The Company  believes that none of this
litigation  is  likely  to  have a  material  adverse  effect  on its  financial
condition  or  operations.  The  Company  faces the risk of  exposure to product
liability  claims if  consumers  using the  Company's  products  are  injured in
connection  with their use.  While the Company will  continue to attempt to take
appropriate  precautions,   there  can  be  no  assurance  that  it  will  avoid
significant product liability exposure.  Based on historical  experience,  Ajay,
Leisure Life,  Palm Springs,  Prestige,  PGOA and PG.com have product  liability
insurance coverage, which the Company believes is adequate.
<PAGE>

Item 4.     Submission of Matters to a Vote of Security Holders
            ---------------------------------------------------
   There were no matters  submitted  to a vote of  security  holders  during the
fourth quarter.

                                     PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters
           ---------------------------------------------------------------------
Market Information
------------------
   The  Company's  Common  Stock and Units were  traded on the Nasdaq  Small Cap
Market until September 4, 1998 at which time these  securities were delisted and
began to trade on the OTC Bulletin Board (the "OTCBB").  The Company's  Series C
10% cumulative convertible preferred stock also trades on the OTCBB. At the same
time the Company's common stock and units were delisted from the Nasdaq Smallcap
Market, the company's warrants were also delisted. No trading information exists
for the warrants. The following table sets forth the range of high and low trade
prices for the last two  years.  Historic  prices  have been  converted  to give
effect to a reverse 1:6 common stock split effective August 14, 1998.

                                   TRADE PRICES
COMMON STOCK
1998                            HIGH         LOW
----                            ----         ----
First Quarter                 $ 1.50       $  .78
Second Quarter                $ 2.28       $  .78
Third Quarter                 $ 3.78       $  .75
Fourth Quarter                $ 1.03       $  .34

1999
First Quarter                 $ 1.06       $  .69
Second Quarter                $ 2.63       $  .69
Third Quarter                 $ 2.06       $  .81
Fourth Quarter                $  .94       $  .47

UNITS
1998
First Quarter                    N/A          N/A
Second Quarter                $ 3.78       $  3.78
Third Quarter                 $18.78       $  8.28
Fourth Quarter                   N/A          N/A

1999
First Quarter                    N/A          N/A
Second Quarter                   N/A          N/A
Third Quarter                    N/A          N/A
Fourth Quarter                   N/A          N/A


SERIES C PREFERRED STOCK
1998
First Quarter                 $ 4.00       $ 2.38
Second Quarter                $ 4.75       $ 3.25
Third Quarter                 $ 6.13       $ 2.75
Fourth Quarter                $ 3.00       $ 2.25

1999
First Quarter                 $ 3.00       $ 2.00
Second Quarter                $ 5.88       $ 2.00
Third Quarter                 $ 5.00       $ 2.50
Fourth Quarter                $ 3.13       $ 1.50
<PAGE>

Holders
-------
   The number of record holders of the Company's common stock,  units,  warrants
and Series C preferred  stock  according to the Company's  transfer agent, as of
December 31, 1999 are as follows:

                                    Common Stock        369
                                    Preferred C           9
                                    Warrant A            66

   Based on a street name  shareholder  listing,  the Company  believes that its
round lot common shareholders total approximately 900.

Dividends
---------
   Holders of shares of Common  Stock are entitled to  dividends  when,  and if,
declared by the Board of Directors out of funds legally  available.  The Company
has not paid any  dividends  on its Common  Stock and  intends to retain  future
earnings to finance the development and expansion of its business. The Company's
future  dividend  policy is subject to the  discretion of the Board of Directors
and will depend upon a number of factors,  including  future  earnings,  capital
requirements,  bank credit agreement restrictions and the financial condition of
the Company.

     Holders of the Company's  Series B Cumulative  Convertible  Preferred Stock
are entitled to  cumulative  dividends at an annual rate of 8% based on a stated
value of $100 per Series B share, or $8 per Series B share per year.


   Holders of the Company's Series C Cumulative  Convertible Preferred Stock are
entitled to cumulative  dividends at an annual rate of $1.00 per share. Due to a
shortage of operating  funds to run the business,  dividends  have not been paid
since January 1997. Until the Company has cash available for dividends,  it does
not anticipate declaring or paying dividends on its Series C preferred stock.
<PAGE>

Item 6.          Selected Financial Data
                 ------------------------


                The following  table presents  summary  historical  consolidated
financial  data  derived from audited  financial  statements  of the Company (in
thousands, except per share amounts).


                                          Year   Ended     December    31,
Statement of Operations:            1999      1998      1997     1996     1995
                                  -------- ---------  --------  ------- --------
Net sales                        $14,340  $22,925    $30,330   $24,341  $18,728
Cost of sales                     12,790   19,477     26,585    20,759   15,291
                                 -------- ---------  --------  ------- --------
Gross profit                       1,550    3,448      3,745     3,582    3,437

Selling, general and
   administrative expenses         4,866    3,868      5,837     5,067    3,247
                                 -------- ---------  --------  -------- -------

Operating income (loss)           (3,316)    (420)    (2,092)   (1,485)     190

Nonoperating income (expense):
   Interest expense - net         (1,625)  (1,139)    (1,280)   (1,103)    (801)
   Other, net                        638       84       (144)      (38)    ( 41)
Minority interest in (loss)
of subsidiary                          6        -          -         -        -

Income (loss) from operations before
   income taxes                   (4,297)  (1,475)    (3,516)   (2,626)    (652)

   Income tax expense (benefit)   (1,833)       -          -      (893)
                                 -------- ---------  ---------  -------- -------
Net (loss)                       $(2,464) $(1,475)   $(3,516)  $(1,733)  $ (444)
                                 ======== =========  =========  ======== =======


Net (loss) per common share @    $  (.70) $ (0.47)   $ (1.01)  $(0.55)   $(0.18)
                                 ======== =========  =========  ======== =======


Weighted average common and common
   stock equivalent shares
outstanding @                      4,013    3,909      3,879      3,874   3,787
                                 ======== =========  =========  ======== =======
Cash dividends per common share        -        -          -          -       -

                                                 December 31,
Balance sheet data:                 1999     1998     1997      1996      1995
                                 -----------------------------------------------
Working capital                  $ 1,707   $ 5,652   $ 8,200   $ 3,348  $ 6,323
Total assets                     $25,733   $13,083   $16,614   $18,495  $ 8,486
Long term debt                   $18,043   $ 7,538   $ 3,229   $ 5,196  $ 5,111



@ Current and prior years  restated to reflect  result of reverse 1 for 6 common
stock split effective August 14, 1998.


<PAGE>

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

     Net sales in 1999 were $14.3  million,  a decrease of $8.6 million,  or 38%
when  compared to 1998 sales.  The sales  decrease in the golf  product line was
$9.5 million or a 50% decrease.  Mass market golf sales  declined  $11.6 million
and sales to specialty golf stores decreased by $0.6 million.  Revenues of PGOA,
which  include  franchise  fees,  royalties,  and other income for the six month
period from the date of acquisition through December 31, 1999 accounted for $1.7
million of the $14.3 million total,  or 11.8%.  Furniture  sales  increased $0.9
million or 25.9%. Lower sales in the mass-merchant channel represent fewer sales
to existing  customers  as a result of a weak  market  during the second half of
1999 and the  mass-merchants  continuing  to increase the amount of product they
were  importing  directly  from Asia.  The Company  believes  sales were further
decreased  because it is phasing out sales of Spalding branded products and will
discontinue  these products  after  September 30, 2000.  These sales  reductions
caused  negative cash flow,  which delayed the start up of new  commitments  for
2000 and  reduced  the volume of sales of new  lines.  Sales to  specialty  golf
stores  were off due to  excesses  of golf bag  inventories  resulting  in large
volumes of closeouts and  contraction  of the Company's  sales force.  Furniture
sales  increased  due to expansion of Leisure  Life's  product line and customer
base. Historically, mass-market sales have been Ajay's core business.

   Sales in 1998 were $22.9 million,  a decrease of $7.4 million or 24% compared
to 1997.  The sales  decrease in the golf product line was $6.8 million or a 26%
decrease.  Mass-market  golf sales  declined $3.7 million and sales to specialty
golf stores  decreased by $3.1 million.  Furniture  sales  decreased due to weak
economic conditions in Asia and competition from foreign imports.

Gross Margin

   The  Company's  1999 gross margin  decreased  56% to  $1,550,000  compared to
$3,448,000  for the 1998 year.  Gross margin as a percent of sales  decreased to
10.8% as compared to 15.0% of sales for 1998.  The gross profit amount  decrease
of  56%  was  a  result  of  a  sales  volume  decrease  of  38%,  which  caused
manufacturing overhead allocated to inventory to rise on a percentage basis. The
Company's  poor liquidity  also caused higher  product costs  including  product
substitutions and additional freight charges for rush deliveries.

   The  Company's  1998 gross  margin  decreased  8% to  $3,448,000  compared to
$3,582,000  for the 1997 year.  Gross  margin as a percent of sales  declined to
12.3% as compared to 14.7% of sales for 1997.  Contributing to this decline were
three factors.  The first was the lack of sufficient  operating liquidity during
1998, which resulted in increased costs in manufacturing,  logistics and product
substitutions.  The second factor was the poor performance of Palm Springs' golf
club  product line in the  marketplace.  The final factor was the closing of the
Palm  Springs  facility  in  California  and   consolidating  it  into  Delavan,
Wisconsin. These factors reduced gross profit margin by approximately 2.0%, 1.6%
and 0.7% respectively.

Selling, General and Administrative Expenses

   SG&A for 1999 was $4.9  million and 33.9% of sales  compared to $3.9  million
and 16.9% of sales for 1998. The large percentage increase was caused by reduced
sales.  During the  second  half of 1999,  the  Company  began a cost  reduction
program  designed  to bring  costs in line with the reduced  sales  levels.  The
Company is still working to reduce certain expenses, including rent for parts of
its  Delavan WI  facility  which are not fully  utilized,  insurance,  and labor
costs.

   During 1998, consolidating Palm Springs into the Delavan operation saved $1.2
million. A further reduction of $570,000 in mass-market golf resulted from sales
volume decreases, a reduction in the work force and efficiency improvements.
<PAGE>

   As a percent of sales,  SG&A was 19.2% for 1997,  an  increase of $770,000 or
15.2%  compared to 1996. The largest  contributor to increased  expenses was the
legal, accounting and other costs associated with refinancing the Company, which
contributed nearly one percent to SG&A.

Interest Expense

     Interest expense for 1999 was $1,625,000, an increase of $486,000 from 1998
total of  $1,139,000 . The  increase  resulted  from lower sales and  additional
borrowings to meet working  capital needs.  Interest  expense was $1,280,000 for
1997.

Income Taxes

   The Company had no income tax liability  during the years ended  December 31,
1999, 1998 and 1997.

Financial Condition
-------------------
   At December 31, 1999, the Company had working capital of $1,707,000, compared
with  $5,652,000 at December 31, 1998. This  $3,945,000  decrease  resulted from
lower  inventories  and increased  receivables and payables as a result of lower
sales levels during 1999,  the Prestige Golf billing  activities  for major golf
suppliers  of Pro Golf  Discount  franchised  stores,  and poor cash flow  which
caused the Company to be past due with some of its vendors. The ratio of current
assets to current  liabilities  at December 31, 1999 was 1.24 compared to 3.0 at
December 31, 1998.

   Inventories  at December 31, 1999 were $4.0 million  compared to $5.7 million
at December 31, 1998.  Trade accounts  receivable  were $3.2 million at December
31, 1999 compared to $1.9 million at December 31, 1998.

   At  December  31,  1999 and  1998,  net  fixed  assets  were  $1,693,000  and
$1,708,000,  respectively.  The  decrease  reflects  depreciation  in  excess of
capital expenditures.

Capital Resources
-----------------
   The Company expended $281,000 in 1999 for capital expenditures,  with $57,000
of that  total  used for golf bag and  accessory  operations  and the  remainder
allocated to the Pro Golf group of companies  for office  equipment and start-up
equipment and software development costs of ProGolf.com.

Liquidity
---------
     Cash flow from  operations for 1999 was negative by $725,000.  The negative
operating  cash flow was primarily  caused by  reductions in sales.  The Company
expects that cash flow from  operations  will continue to be poor throughout the
first half of 2000.

   The Company's  liquidity varies with the seasonality of its business,  which,
in turn,  influences  its  financing  requirements.  The seasonal  nature of the
Company's sales creates  fluctuating cash flow, due to the temporary build-up of
inventories in anticipation of, and receivables during, the peak seasonal period
that  historically  has been from February through May of each year. The Company
has relied on Williams  and bank  revolving  credit  facilities  in the past and
continues to rely heavily on revolving credit  facilities and loans from related
parties and affiliated companies for its working capital requirements.
<PAGE>

   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 no longer has joint and
several  liabilities,  cross  collateral  agreements or guarantees with Williams
with respect to Williams' Wells Fargo facility.  The interest rate is prime plus
1% on the  revolver  and prime plus 1.5% on the term  loan.  The  Company  has a
temporary  credit line in the amount of  $750,000,  which may became a permanent
loan as of May 15, 2000 with  availability  subject to a percentage  of the fair
market  value  of  the  underlying  collateral.   The  Company  presently  needs
additional capital, and is in the process of raising it through private sales of
securities  of PGI and PG.com;  with the goal of effecting a public  offering of
PG.com  stock  in late  2000 or at the  earliest  possible  time  it  obtains  a
commitment from an underwriter to take ProGolf.com public.

     In  connection  with the  restructuring  of the  Wells  Fargo  Bank  credit
facility, the Company entered into an agreement in June 1998 with Williams under
which Williams advanced $2,000,000 in cash and securities.  As a result of these
additional  investments  plus Williams'  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.
Series D is convertible  into 3,333,333 shares of the Company's common stock. No
dividends  are accrued or payable on the Series D preferred  stock  through July
31,  2001.  Beginning  August 1, 2001,  he dividend on this series of  preferred
stock will be 17% and will  increase  to 24% on August 1, 2002.  Rather than pay
these significant  dividends,  the Company's plan is to raise additional capital
and redeem the Series D 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.  This note accrues  interest at the rate of 16% per annum,  which
interest  will become due and payable on  December  31, 2000 with all  remaining
principal  and interest due at maturity on August 1, 2001.  The Company has also
committed  to pay  Williams an annual  administrative  fee of $90,000 and annual
management fees of $80,000 for sourcing products overseas. Williams continues to
own 686,274 shares of the Company's common stock, representing approximately 16%
of the outstanding  common stock of the Company.  Williams also holds options to
purchase an additional  1,851,813  shares of common stock, and continues to have
rights,  which were negotiated in 1994, to utilize for a fair market fee, excess
floor space and related resources in the Company's  manufacturing  facilities in
Wisconsin and Mexico.

   The combination of the Wells and Williams refinancing  agreements resulted in
a short-term improved working capital position, which enabled the Company to pay
down past due accounts payable and temporarily  increased  liquidity,  providing
the  Company  with  additional  availability  under  its bank  credit  facility.
However,  continued operating losses negatively affected the Company's liquidity
during 1999 and the Company has experienced  severe cash shortfalls,  which have
caused it to miss delivery  dates and  subsequently  lose sales in 1999 and into
2000. This trend is expected to continue in the short-term.

   During late 1999 and into 2000,  the Company began selling equity in PGI in a
private  placement  offering and entered into an agreement to acquire  developed
and undeveloped  real estate for existing and planned  golf-related  activities,
including  golf domes with  retail  stores  inside.  As of April 14,  2000,  the
Company had  committed  to issue  138,750  shares of PGI stock at $60 per share,
which  represents  12.18% of the total shares of PGI stock  outstanding  at that
date.  Of the new shares  committed  to,  $375,000  cash had been  received with
signed  subscription  documents,  $870,000 was a conversion of subordinated debt
into  common  stock,  and the  remaining  $7,080,000  a  combination  of  equity
securities and golf-related real property.
<PAGE>

     The Company  anticipates  significant  additional cash flows resulting from
the  debt  conversions  and the  rents  and  fees to be  received  from the golf
properties during the initial  twelve-month period beginning July 1, 2000. These
revenues are  expected to increase in the future  after the  start-up  period is
over. Additionally,  the dome and retail store combination is planned as the new
PGOA franchise of the future and could substantially  increase revenues and cash
flow of the Company's PGOA operations.

     The  Company  also began an offering  of PG.com  common  stock at $2.50 per
share  in  during  April  2000 to  raise up to  $12,500,000  in  gross  offering
proceeds. If the maximum offering is sold, the shares sold in this offering will
represent  approximately 33% of the total PG.com common shares outstanding after
the offering.  Proceeds from these private  placements  will be used for working
capital, acquisitions, and growth.

Year 2000 Compliance
--------------------
   State of  Readiness.  During the past two years,  the  Company  was  actively
involved  in  finding  and  correcting  Y2K  problems   within  its  information
technology  structure.  The Company's main computing  system,  an IBM AS/400, is
certified by IBM to be Y2K compliant.  The Company's  proprietary  software that
runs on the AS/400 is Y2K compliant.

     Personal  computers were  evaluated  using a software tool provided by IBM.
This evaluation phase was completed during 1999.  Internal systems and equipment
that depend upon embedded microchips were certified to be Y2K compliant.

   The Company  contacted all of its suppliers to determine their Y2K status.  A
majority  responded  positively,  and alternate sources were found where needed.
The Company  experienced no significant  problems with the Y2K year change issue
and  does  not  anticipate  any  major  problems  internally  or with any of its
suppliers going forward.

   Costs.The Company hired a full-time  programmer/analyst  in February 1998, to
help with the Y2K conversion.  The Company upgraded its EDI translation software
to  accommodate  the EDI Y2K  solution,  Version  4010.  The Company's Y2K costs
related  to  information  technology  that  were  beyond  the  scope  of  normal
operations were not significant.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
         ----------------------------------------------------------
   The  Company  holds only one market  risk  instrument.  This is common  stock
classified as marketable securities and carried as a current asset in the amount
of $348,000 as of December 31, 1999. This stock is subject to equity price risk.
The full  carrying  value  represents  the  market  value of  166,719  shares of
Williams  Controls,  Inc.  common stock valued at $2.08 per share,  which is the
last trade for 1999.  This stock is traded on the Nasdaq  national  market.  The
shares were received as part of the restructuring  agreement with Williams dated
June 30, 1998.  These shares have been pledged to Wells Fargo as collateral  for
the Company's  loans.  High and low closing prices per share for 1999 were $3.25
and $2.00  respectively.  Between  January 1, 2000 and March 31, 2000 the lowest
closing price for these shares has been $2.00 per share.
<PAGE>


Item 8.     Financial Statements
            --------------------
   Financial statements are attached hereto following Item 14.

Item 9.     Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure
            ----------------------------------------------------------------
   Not applicable.

                                    PART III

Item 10. Directors and Executive Officers of the registrant
         --------------------------------------------------

   The Registrant's directors and executive officers as of April 13, 2000 are as
follows:



                             Positions and
Name                   Age   Offices with                        Date first
                             Company                             Elected
-------------------    ---   ------------------------------      -----------
Anthony B. Cashen      64    Director                               1993

Robert R. Hebard       47    Director & Corporate Secretary         1989

Thomas W. Itin         65    Chairman, CEO & President              1993

Ronald N.              43    Chief Financial Officer and            1999
Silberstein                  Chief Administrative Officer



Anthony B.  Cashen.  Mr.  Cashen has served as a director of the  Company  since
1993.  For more than the past five years until his  retirement in December 1999,
Mr.  Cashen  has  served as a  managing  partner  or senior  partner of LAI Ward
Howell,  a publicly held  management  consulting and executive  recruiting  firm
located in New York City. He has served as Secretary,  Treasurer and Director of
LBO Capital  Corp., a publicly held company,  since its inception.  He currently
serves as a Director  of Immucell  Corp.,  and  Williams  Controls,  Inc.,  both
publicly  held  companies.  Previously,  Mr.  Cashen  had  been an  officer  and
principal of the investment firms A. G. Becker,  Inc. and Donaldson,  Lufkin and
Jenrette, Inc. He received an MBA from the Johnson Graduate School of Management
at Cornell University, and a Bachelor of Science degree from Cornell University.

Robert R. Hebard.  Mr. Hebard has served as a director of the Company since 1989
and  Secretary  of the  Company  since  September  1990.  From  June 1993 to the
present,  he has been Chairman of the Board and  President of Enercorp,  Inc., a
publicly traded business development company under the Investment Company Act of
1940,  as amended.  From June 1986 to January  1992,  Mr.  Hebard was First Vice
President  and  Director  of Product  Management  for  Comerica  Bank,  and from
February 1992 to October 1992 he was Director of Retail Marketing for the merged
Comerica/Manufacturers  Bank. Mr. Hebard also currently serves as Vice President
of  Woodward  Partners,   Inc.,  a  real  estate  development  company  in  West
Bloomfield,  Michigan.  From 1993 to the present, Mr. Hebard has served as Chief
Executive  Officer of  CompuSonics  Video Corp.,  a publicly  held  company.  He
received an MBA from  Canisius  College  and a Bachelor  of Science  degree from
Cornell University.
<PAGE>

Thomas W. Itin. Mr. Itin was elected  Chairman of the Board and President of the
Company in June of 1993, and is the Company's  largest single  stockholder.  Mr.
Itin has been a director of Williams  Controls,  Inc.,  a publicly  held company
since its  inception  in  November  1988.  He has also served as Chairman of the
Board and Chief  Executive  Officer  of  Williams  since  March 1989 and also as
President  and  Treasurer  since  June  1993.  Mr.  itin  serves on the  Cornell
University Council and is Chariman of the Technology Transfer Committee.  He has
served as Chairman of the Board,  Chief  Executive  Officer and Chief  Operating
Officer of LBO Capital Corp.  since its  inception.  Mr. Itin has been Chairman,
President  and Owner of TWI  International,  Inc.  since he founded  the firm in
1967.  TWI  International  acts  as  a  consultant  for  mergers,  acquisitions,
financial structuring,  new ventures and asset management. Mr Itin also has been
Owner and Principal  Officer of Acrodyne  Corporation  since 1962. He received a
Bachelor of Science  degree  from  Cornell  University  and an MBA from New York
University.

Ronald N.  Silberstein  has been Chief  Financial  Officer of the Company  since
August 1999. Mr.  Silberstein  is a Certified  Public  Accountant  and, prior to
joining  the  Company,  was a partner  in the CPA firm of Hirsch  Silberstein  &
Subelsky,  P.C., a firm that he  co-founded  in 1993,  where he  consulted  with
public and private  companies on accounting,  tax, and operational  issues.  Mr.
Silberstein  was the  partner in charge of the audit when Hirsch  Silberstein  &
Subelsky,  P.C. acted as the Company's independent auditors.  Prior to 1993, Mr.
Silberstein  was a partner in a local  Michigan CPA firm.  From 1979 to 1988, he
was a staff accountant with various CPA firms in Southeast  Michigan,  including
the  Detroit  office  of Ernst & Young.  He  received  a  Bachelor  of  Business
Administration degree from the University of Michigan in 1979.

There are no family relationships between any director or executive officer.

Item 11. Executive Compensation
         ----------------------
Summary of Cash and Certain Other Compensation
----------------------------------------------
The  following  table shows,  for the years ending  December 31, 1999,  1998 and
1997, the cash compensation paid by the Company and its subsidiaries, as well as
certain  other  compensation  paid or accrued  for those  years,  to each of the
executive officers of the Company who received  compensation from all capacities
in which they serve:

                               Summary Compensation Table

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

                                               Annual            Long-Term
                                            Compensation        Compensation
                                                                 Securities
Name and Principal Position       Year         Salary            Underlying
                                                             Options (# Shares)
--------------------------------------------------------------------------------
Thomas W. Itin                    1999         $ 1 (1)                -
Director and Principal            1998         $ 1 (1)                -
Executive Officer of the          1997         $ 1 (1)                -
Company, and Director and
Principal Executive Officer of
Ajay Leisure Products, Inc.
--------------------------------------------------------------------------------

Ronald N. Silberstein
Chief Financial Officer and     1999     $50,884 (2)             50,000
Chief Administrative Officer
of the Company                  1998     N/A

                                1997     N/A
--------------------------------------------------------------------------------

Clarence H. Yahn                  1999        $ 76,154 (3)           -
Director of the Company and       1998        $120,000               -
President of Ajay Leisure         1997        $117,502               -
Products
--------------------------------------------------------------------------------
<PAGE>

(1) See "Employment contracts" below.

(2) Mr. Silberstein joined the Company on August 1, 1999. His annual base salary
is $126,000.

(3) Mr. Yahn left  employment  with the Company and his position on the Board of
Directors effective July 31, 1999.


Options/SAR Grants
------------------
During 1999, no options or SARs were granted to the executive  officers named in
the Summary Compensation Table other than Mr. Silberstein's.

Aggregated Option Exercises and Fiscal Year End Option Value

The  table  below  summarizes  options,  the  number  of  securities  underlying
unexercised  stock  options at December 31, 1999 which are held by the executive
officers  listed in the Summary  Compensation  Table.  No options were exercised
during the year and at year-end none were in-the-money.


         Aggregated Option Exercises in 1999 and December 31, 1999 Option Values

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

                                  Number of Securities Underlying
                                  Unexercised Options / FY - End (#)
                                  ------------------------------------
                     Name              Exercisable       Unexercisable
                     ------------------------------------------------
                     Thomas  W.  Itin      0                   0
                     CEO
                     ------------------------------------------------
                     Ronald N.             0              50,000
                     Silberstein
                     CFO/CAO
                     ------------------------------------------------

The Company does not have any restricted  stock,  long-term  incentive,  defined
benefit or pension plans.
<PAGE>

Compensation of Directors
-------------------------
Directors are not paid a fee for attending regular Board of Directors  meetings.
However,  they are  reimbursed  for expenses  incurred in  attending  such board
meetings.

Under the 1994 Stock Option Plan, the non-employee  directors who are members of
the  Compensation  Committee are to receive  grants of 834  non-statutory  stock
options under the plan at each Annual Meeting.  There were no grants during 1999
to members of the Compensation Committee because an Annual Meeting was not held.

Employment Contracts
--------------------
The Company has an employment arrangement with Mr. Itin under which he served as
the President and Chief  Executive  Officer of the Company at a salary of $1 per
year from 1994  through  1999.  Mr.  Itin has no  obligation  to  continue  this
arrangement although he has not given the Company any notice of intent to change
the arrangement in the near term.


Item 12          Security Ownership of Certain Beneficial Owners and Management
-------          --------------------------------------------------------------

The table below sets forth, as of March 29, 2000, the number of shares of Common
Stock  beneficially  owned by each director and executive  officer (named in the
Summary  Compensation  Table) of the Company  individually,  all such  executive
officers and directors as a group,  and each beneficial  owner of more than five
percent of the Common  Stock.  The following  stockholders  have sole voting and
investment power with respect to their holdings unless otherwise footnoted.


<PAGE>
<TABLE>
<CAPTION>

<S>                            <C>                              <C>
Name and Address               Number of Shares Beneficially    Percentage of Class
                               Owned                            (1)
----------------               ------------------------------   --------------------
Thomas W. Itin                          2,758,197 (2)(3)(5)            50.8%
7001 Orchard Lake Road,                            (6)(9)
Suite 424
West Bloomfield, MI 48322

Williams Controls Industries,           5,871,420 (4)                  64.2%
Inc.
14100 SW 72nd Avenue
Portland, OR 97224

TICO                                    1,990,747 (5)                  38.9%
7001 Orchard Lake Road,
Suite 424
West Bloomfield, MI 48322

Acrodyne Profit Sharing Trust            462,246 (6)                   10.9%
7001 Orchard Lake Road,
Suite 424
West Bloomfield, MI 48322

Robert R. Hebard                           6,666 (7)                    0.2%
7001 Orchard Lake Road,
Suite 424
West Bloomfield, MI 48322

Enercorp, Inc.                           315,634 (8)                    8.0%
7001 Orchard Lake Road,
Suite 424
West Bloomfield, MI 48322

LBO Capital Corp.                        280,001 (9)                    7.0%
7001 Orchard Lake Road,
Suite 424
West Bloomfield, MI 48322


Ronald N. Silberstein                    53,350 (10)                    0.7%
7001 Orchard Lake Road,
Suite 424
West Bloomfield, MI  48322

Anthony B. Cashen                         4,778 (11)                    0.1%
101  Old Ox Rd.
Ghent, NY 12075


All executive officers and            2,822,587 (2)(3)(7)              54.2%
directors                                       (10)(11)
as a group
(5 persons)
</TABLE>

<PAGE>

1)    Where  persons  listed on this table have the right to acquire  additional
      shares of Common  Stock  through the  exercise of  outstanding  options or
      warrants or the conversion of convertible  securities  within 60 days from
      March 31, 2000, these  additional  shares are deemed to be outstanding for
      the purpose of  computing  the  percentage  of Common  Stock owned by such
      persons, but are not deemed to be outstanding for the purpose of computing
      the  percentage  owned  by any  other  person.  Percentages  are  based on
      4,091,091 shares outstanding.

(2)   Mr. Itin may be deemed to be a "control  person" of the Company.  Includes
      Common  Stock and shares of Common  Stock  issuable  upon the  exercise of
      presently exercisable warrants and the conversion of presently convertible
      Preferred Stock  beneficially owned by Mr. Itin's spouse and affiliates of
      Mr. Itin as follows:



Entity                                       Shares   Description
------                                       ------   ------------
TICO                                          833,340 Common Stock
First Equity Corporation                       25,203 Common Stock
Acrodyne Profit Sharing Trust                 462,246 Common Stock and warrants
LBO Capital Corp.                             280,001 Common Stock and warrants
                                              -------
                                            1,600,790

TICO (12,500 shares of Series
B preferred stock convertible                         Series "B" Preferred
at one share for 92.5926                    1,157,407 Stock conversion
shares of Common Stock)                     ---------
                                            2,758,197


     Mr. Itin  disclaims  beneficial  ownership in the  securities  owned by LBO
     Capital  Corp.  and First  Equity  Corporation  in excess of his  pecuniary
     interest.  Mr.  Itin's  spouse owns an 80% equity  interest in First Equity
     Corp., and Mr. Itin owns 57% of the outstanding common stock of LBO Capital
     Corp.,  a company with its common stock  registered  under Section 12(g) of
     the Securities  Exchange Act of 1934 (the "Exchange Act"). Mr. Itin is also
     Chairman of the Board and President of LBO Capital.

(3)   Does not include  686,274 Common Shares,  1,851,813  options and 3,333,333
      shares  available from series D preferred on conversion  owned by Williams
      Controls,  Inc.  Mr.  Itin is  Chairman  of the  Board,  President,  Chief
      Executive Officer, Chief Operating Officer, Treasurer and 30.5% beneficial
      owner of  Williams  Controls,  Inc.  Even though Mr. Itin is a Director of
      Williams  Controls,  he abstains from voting on matters  pertaining to the
      Company in meetings of the Directors of Williams Controls.

(4)   Includes  1,851,813  shares of Common Stock  issuable upon the exercise of
      outstanding  stock options and 3,333,333  shares  available  from Series D
      preferred on conversion.
      See "Certain Relationships and Related Transactions."

(5)   Includes  1,157,407  shares of Common Stock  issuable  upon  conversion of
      12,500 shares of presently convertible Series B Preferred Stock, at a rate
      of 92.5926 shares of Common Stock for every one share of preferred  stock.
      TICO is a Michigan partnership of which Mr. Itin is the Managing Partner.

(6)   Includes 266,167 shares of Common Stock issuable upon exercise of options.
      Mr. Itin is trustee and beneficiary of Acrodyne Profit Sharing Trust.
<PAGE>

(7) Does not include ownership of Enercorp,  Inc. Mr. Hebard is the Chairman and
President of Enercorp.
      Includes 278 vested  shares  issuable  upon the exercise of stock  options
      granted under the 1994 stock option plan.

(8)   Includes the  following  Common Stock and shares of Common Stock  issuable
      upon the  conversion  of presently  convertible  Preferred  Stock owned by
      Enercorp,  Inc., a Colorado corporation,  with its Common Stock registered
      under Section 12(g) of the Exchange Act:


          Common Stock                                                  310,785

          2,000 shares of Series C preferred stock,
          convertible at one preferred share for 2.4242
          shares of Common Stock                                          4,849
                                                                       ---------
                                                                        315,634


(9)   Includes 33,334 shares of Common Stock issuable upon exercise of warrants.
      LBO Capital  Corporation is a Colorado  corporation of which Mr. Itin is a
      56% shareholder, Chairman of the Board of Directors, and President.

(10)  Includes  50,000  shares of Common  Stock  issuable  upon the  exercise of
      outstanding stock options.

(11)  Includes 2,778 vested shares of Common Stock issuable upon the exercise of
      outstanding stock options granted under the 1994 Stock Option Plan.


                      Compliance with Section 16(a) of the
                         Securities Exchange Act of 1934


Section  16(a) of the  Securities  and  Exchange  Act of 1934,  as amended  (the
"Exchange  Act")  requires  executive  officers,   directors,  and  persons  who
beneficially  own more than 10% of the Company's  Common Stock to file, with the
SEC,  initial  reports of beneficial  ownership on Form 3, reports of changes in
beneficial  ownership on Form 4, and annual  statements of changes in beneficial
ownership  on Form 5.  Persons  filing  such  reports  are  required  under  the
regulations promulgated by the SEC pursuant to Section 16 to furnish the Company
with  copies of such  reports.  Based  solely upon a review of the copies of the
reports  received by the Company during the fiscal year ended December 31, 1999,
the Company believes that all reports were timely filed.

Item 13      Certain Relationships and Related Transactions
             ----------------------------------------------
Since 1994,  Williams Controls,  Inc. has made loans and provided capital to the
Company to assist the Company in meeting its  financing  requirements.  Williams
owns 686,274 shares of the Company's  common stock and holds options to purchase
an additional  1,851,813  shares of common stock  exercisable at $1.08 per share
through August 1, 2000. Thomas W. Itin, the Company's Chairman, President, Chief
Executive Officer,  Treasurer and beneficial owner of approximately 50.8% of the
Company's  common  stock,  is also  the  Chairman,  President,  Chief  Executive
Officer,  Treasurer and  beneficial  owner of  approximately  29.4%of the common
stock of Williams.  Another director of the Company, Anthony B. Cashen serves as
a member of the Board of Directors of Williams.

From July 1997 to July 1998,  the Company  and its  subsidiaries  (the  "Company
parties")  were  parties  with  Williams  and its  subsidiaries  (the  "Williams
parties") to a joint credit facility from Wells Fargo Bank, National Association
(the "Joint  Wells  Loan").  The proceeds of this joint  financing  were used to
repay the loans of the Williams parties and partially repay loans of the Company
parties from a previous bank lender, United States National Bank ("U. S. Bank").
In connection with the Joint Wells Loan, Williams provided the Company a loan in
the amount of $2,268,000  (the  "Williams  Bridge Loan") and U. S. Bank provided
the Company a bridge loan in the amount of $2,340,000  (the "USB Bridge  Loan").
The Company is the primary obligor on the USB Bridge Loan promissory note and it
is guaranteed in full by the Williams  parties,  and by the Company's  Chairman,
personally, up to $1,000,000.
<PAGE>

As of June 30, 1998, the Joint Wells Loan was restructured to separate the loans
to the Company parties and the Williams parties.  This restructuring  eliminated
joint and several  liability to Wells, as well as cross collateral and guarantee
agreements, between the Company parties and the Williams parties as they related
to the Joint Wells Loan. The Company's new credit facility with Wells allows the
Company  parties to borrow up to the lesser of $9,500,000 or the Borrowing  Base
(as defined in the credit agreement) and matures on June 30, 2001. The Borrowing
Base is calculated  periodically  based on a formula including eligible accounts
receivable,  eligible  inventory and certain  letters of credit as determined by
Wells.

In  connection  with the  transaction  with Wells to  separate  the loans of the
Company parties and the Williams  parties  effected June 30, 1998,  Williams (a)
advanced an additional $2,000,000 in the form of cash and marketable securities,
(b) purchased  notes payable of  approximately  $948,000 by the Company to other
affiliated parties, Enercorp, Inc. and First Equity Corporation, which evidenced
loans provided by those parties during 1997 when the Company required additional
capital,  (c) and agreed to convert $5,000,000 of the amount owed by the Company
to Williams into 6,000,000 shares of a newly created class of preferred stock of
the Company, its Series D cumulative  convertible preferred stock. In connection
with these  transactions with Williams,  the Company delivered a promissory note
to Williams for the full amount owed to Williams after  conversion of $5,000,000
into the Series D preferred  stock (the "Williams  Note").  The Williams Note is
secured by a lien on  substantially  all of the assets of the  Company  parties,
which lien is subordinate to the liens of U. S. Bank and Wells.

The Williams  note accrues  interest at the rate of 16% per annum.  As currently
structured, the interest first will become payable on December 31, 2000, and all
remaining  principal  and interest will be due at maturity on August 1, 2001. At
December  31, 1999,  the Company owed  $2,087,000  under the Williams  Note.  In
addition,  it owed  $1,365,000  to U. S. Bank under the USB Bridge Loan.  If the
Company is unable to meet its  repayment  obligations  under the USB Bridge Loan
and  Williams  agrees  to and  makes  payments  on the  USB  Bridge  Loan on the
Company's  behalf,  any payments made by Williams would result in an increase in
the amount the Company owes to Williams.

The Series D  preferred  stock is  convertible  at the option of  Williams  into
3,333,333  shares of the  Company's  common  stock.  No dividends  accrue on the
Series D preferred  stock until after July 31, 2001.  The  dividend  rate on the
Series D  preferred  stock will be 17% per annum  commencing  August 1, 2001 and
will increase to 24% in 2002. The Series D preferred  stock is redeemable by the
Company and the Company will attempt to raise  capital from new sources in order
to redeem the Series D preferred stock in lieu of paying these premium  dividend
rates.

The Company has also entered into  agreements  with Williams that require annual
payments of $90,000 for administrative  fees and $80,000 for management fees for
sourcing  products overseas on the Company's  behalf.  These annual  obligations
continue for two more years.

During  1999,  Williams  reimbursed  the  Company  approximately   $114,000  for
management  services provided to Williams by an officer of the Company from 1997
through early 1999.
<PAGE>


                                     PART IV

Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 10-K
            -----------------------------------------------------------------
(a)   1.   Financial Statements:

      Ajay Sports, Inc. and Subsidiaries
      Consolidated Financial Statements of Ajay
      Sports, Inc. and Subsidiaries:

      Reports of Independent Accountants

      Consolidated Balance Sheets - December 31, 1999
      and 1998

      Consolidated Statements of Operations - Years
      ended December 31, 1999, 1998 and 1997

      Consolidated  Statements of Stockholders'  Equity Years ended December 31,
      1999, 1998 and 1997

      Consolidated  Statements  of Cash Flows - Years ended  December  31, 1999,
      1998 and 1997

      Notes to Financial Statements

   2. Financial Statement Schedules:

      Ajay Sports, Inc. and Subsidiaries:

      Schedule II - Valuation and Qualifying Accounts - Years ended December 31,
      1999, 1998 and 1997

   3. Exhibits required by Item 601 of Regulation S-K

      The  following  exhibits  designated  with  a  "+"  symbol  represent  the
      Company's Management Contracts or Compensatory Plans or arrangements
      for executive officers:

      Exhibit 3.1 (a)  Articles  of  Incorporation  and  amendments  thereto.
      (1)

      Exhibit 3.1 (b)     Certificate of Designations of Rights
        and Preferences of the Series B 8% Cumulative
        Convertible Preferred Stock of Ajay Sports, Inc.   (6)

      Exhibit 3.1 (c)           Certificate of Designations of Rights and
        Preferences of the Series C 10% Cumulative Preferred
        Stock of Ajay Sports, Inc.   (7)

      Exhibit 3.1 (d)           Certificate of Designations of Rights and
        Preferences of the Registrant's Series D Cumulative
        Convertible Non-Voting Preferred Stock   (11)

      Exhibit 3.1 (e)           Certificate of Amendment to Restated Certificate
        of Incorporation Dated August 11, 1998 for common stock split
        effective August 14, 1998.   (12)
<PAGE>

      Exhibit 3.2         Bylaws   (1)

      Exhibit 10.1 (a)    License Agreement dated April 14,
        1992 between Spalding Sports Worldwide and Ajay
        Leisure Products, Inc.   (2)

      Exhibit 10.1 (b) First  Amendment to the April 14, 1992  Spalding  License
        Agreement dated April 2, 1993 (3)

      Exhibit 10.1 (c) Second  Amendment to the April 14, 1992 Spalding  License
        Agreement dated July 1, 1994 (6)

      Exhibit 10.1 (d) Third  Amendment to the April 14, 1992  Spalding  License
        Agreement dated June 5, 1995 (7)

      Exhibit 10.1 (e)    License Agreement dated March 8, 1999 between
        Spalding Sports Worldwide, Inc. and Ajay Leisure Products, Inc.  (12)

      Exhibit 10.2 Williams/Ajay Loan and Joint Venture Implementation Agreement
        dated May 6, 1994 as amended by Letter Agreement dated April 3, 1995 (6)

      Exhibit 10.3        1994 Stock Option Plan   (5)

      Exhibit 10.4        1995 Stock Bonus Plan   (5)

      Exhibit 10.5 (a)    Revolving Loan Agreement dated July 25, 1995
        Between Ajay Sports, Inc. and United States National Bank of
        Oregon, including Guaranties, Security Agreements, and Other
        Loan Documents   (7)

      Exhibit  10.5 (b) First  Amendment  to the July 25,  1995  Revolving  Loan
        Agreement dated October 2, 1995, including amendment to Bulge Loan Note,
        Supplement to Guaranty and Amendment to Revolving Loan Note (8)

      Exhibit 10.6        Consent Reaffirmation and Release Agreement
        with U. S. Bank and Promissory Note of the Registrant   (9)

      Exhibit 10.7 Security  Agreement dated July 14, 1997, among Registrant and
        its subsidiaries, as debtors, and Williams Controls and its subsidiaries
        as secured parties (10)
<PAGE>

      Exhibit 10.8(a)  Credit  Agreement,  dated June 30, 1998, by and among the
        Registrant  and its  subsidiaries  and Wells  Fargo Bank,  NA  including
        Promissory  Notes,  Security  Agreements  and other Loan  Documents (the
        "1998 Wells Fargo Credit Agreement") (11)

      Exhibit 10.8(b)       Amendment No. 1, dated February 2, 1999, to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.8(c)           Amendment No. 2, dated June 2, 1999 to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.8(d)           Amendment No. 3, dated July 8, 1999, to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.8(e)           Amendment No. 4, dated July 14, 1999 to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.8(f)         Amendment No. 5, dated August 5, 1999, to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.8(g)         Amendment No. 6, dated August 16, 1999 to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.8(h)       Amendment No. 7, dated December 1, 1999, to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.8(i)       Amendment No. 8, dated January 16, 2000, to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.8(j)       Amendment No. 9, dated February 1, 2000, to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.8(k)          Amendment No. 10, dated March 1, 2000 to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.8(l)     Amendment No. 11, dated April 1, 2000, to the 1998
        Wells Fargo Credit Agreement.  Filed Herewith

      Exhibit 10.9        Restructuring agreement, dated June 30, 1998, by
        and among Registrant and its subsidiaries and Williams Controls,
        Inc. including promissory note   (11)
<PAGE>

      Exhibit 10.10       License Agreement dated March 8, 1999 between
        Gary Player Group, Inc. and Ajay Leisure Products, Inc.  (12)

      Exhibit  10.11(a)  Master  Revolving  Note  dated  June 22,  1999,  in the
        principal amount of $8.5 million between Pro Golf International, Inc. as
        borrower and Comerica Bank as lender (the "Comerica Note")
         Filed Herewith

      Exhibit 10.11(b)    Amendment No. 1 to Comerica Note.  Filed Herewith

      Exhibit 10.11(c)    Amendment No. 2 to Comerica Note.  Filed Herewith

      Exhibit 10.11(d)    Amendment  No. 3 to  Comerica  Note Filed  Herewith

      Exhibit 10.11(e)    Form of Guaranty for the Comerica Note, as signed by
        the Registrant  Filed Herewith

     Exhibit  10.11(f) Form of Guaranty for the Comerica Note, as signed by each
        of Thomas  W. and  Shirley  B.  Itin,  Colorado  Ridge  Corporation,
        Tico, Acrodyne Corporation, Sico, Pro Golf of America, Inc. and Woodward
        Partners     Filed Herewith

      Exhibit 10.11(g)    Form of Security Agreement under the Comerica Note
        as signed by Pro Golf of America, Inc. and Pro Golf International, Inc.
        Filed Herewith

      Exhibit 10.12(a)    Form of Subordinated Promissory Note (Maker Pro Golf
        International, Inc.)  Filed Herewith

      Exhibit 10.12(b)    Form of Comerica Subordination Agreement
        Filed Herewith

      Exhibit 10.13    Stock Purchase  Agreement and Amendments  related to the
        Registrant's purchase of Pro Golf of America, Inc. (13)

      Exhibit 10.14     Sale of Assets and Assignments related to the
        Registrant's purchase of assets from State of the Art Golf Company, Inc.
        (13)

      Exhibit  10.15  Warrants  issued  to  former  shareholders  of Pro Golf of
        America, Inc.  (13)

      Exhibit 21.0      List of Subsidiaries      Filed Herewith

      Exhibit 23.1      Consent of Hirsch Silberstein & Subelsky, PC
        Filed Herewith

      Exhibit 23.2      Consent of J L Stephan Co., PC     Filed Herewith

      Exhibit 27.0      Financial Data Schedule      Filed Herewith
<PAGE>

               Notes Related to Exhibits Incorporated by Reference

(1)  Incorporated by reference from the Registrant's  Registration  Statement on
     Form S-18 No. 33-30760.

(2)  Incorporated  by reference  from the  Registrant's  Form 10-K filed for the
     year ended December 31, 1991. (SEC File No. 0-18204)

(3)  Incorporated  by  reference  from the  Registrant's  Form  10-K  filed  for
     December 31, 1992. (SEC File No. 0-18204)

(4)  Incorporated  by  reference  from the  Registrant's  Form  10-K  filed  for
     December 31, 1993. (SEC File No. 0-18204)

(5)  Incorporated by reference from the Registrant's  Registration  Statement on
     Form S-8, No. 33-89,650.

(6)  Incorporated  by  reference  from the  Registrant's  form  10-K  filed  for
     December 31, 1994. (SEC File No. 0-18204)

(7)  Incorporated by reference from the Registrant's  Registration  Statement on
     Form S-2, File No. 33-58753.

(8)  Incorporated by reference from the Registrant's Form 10-Q for the Quarterly
     period ended September 30, 1995. (SEC file No. 0-18204)

(9)  Incorporated by reference from the Registrant's Form 10-Q for the Quarterly
     period ended June 30, 1997. (SEC file No. 0-18204)

(10) Incorporated by reference from the Registrant's 10-K filed for December 31,
     1997. (SEC file No. 0-18204)

(11) Incorporated by reference from the Registrant's Form 10-Q for the Quarterly
     period ended June 30, 1998. (SEC file No. 0-18204)

(12) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
     for the year ended December 31, 1998 (SEC file No. 0-18204)

(13) Incorporated by reference from the Registrant's Current Report on Form 8-K,
     Date of  Report  June 23,  1999 as filed  with the SEC on July 8, 1999 (SEC
     File No. 0-18204)
<PAGE>

                                   SIGNATURES

      Pursuant to the  requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, Ajay Sports, Inc. has duly caused this Report on Form 10-K
to be signed on its behalf by the  undersigned,  thereunto duly  authorized,  in
West Bloomfield, Michigan on the 13th day of April, 2000.

                                AJAY SPORTS, INC.



                                                    By:  \s\Thomas W. Itin
                                                       -------------------------
                                                       Thomas W. Itin, President

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
Report  on Form  10-K has been  signed  below by the  following  persons  in the
capacities indicated and on the dates indicated.

SIGNATURES                    TITLE                                       DATE
-----------                   -----                                       ----


\s\Thomas W. Itin             Director                            April 28, 2000
-----------------             and Principal                       --------------
Thomas W. Itin                Executive Officer




\s\Ronald N. Silberstein      Chief Financial                     April 28, 2000
-------------------------     Officer and Principal               --------------
Ronald N. Silberstein         Accounting Officer



\s\Robert R. Hebard           Director                            April 28, 2000
--------------------                                              --------------
Robert R. Hebard



\s\Anthony B. Cashen          Director                            April 28, 2000
--------------------                                              --------------
Anthony B. Cashen








<PAGE>



                           INDEPENDENT AUDITORS REPORT


To the Board of Directors and Stockholders
of Ajay Sports, Inc.

We have  audited the  accompanying  balance  sheet of Ajay Sports,  Inc.,  as of
December  31,  1999,  and the  related  statements  of  operations,  changes  in
stockholders'  equity, and cash flows for the year then ended December 31, 1999.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audit. The financial  statements of Ajay Sports,  Inc. as of December 31,
1998 and 1997 were audited by other  auditors whose reports dated March 12, 1999
and March 13, 1998 expressed an unqualified opinion on those statements.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of Ajay  Sports,  Inc. as of
December 31, 1999,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements  taken as a whole.  The  information  on Schedule II is presented for
purposes of complying with rules of the  Securities and Exchange  Commission and
is not a required part of the basic financial  statements.  This information has
been  subjected  to the  auditing  procedures  applied in our audit of the basic
financial statements and, in our opinion, fairly states in all material respects
the 1999  financial  data  required  to be set forth  therein in relation to the
basic financial statements taken as whole.





J L Stephan Co, PC
------------------------
Traverse City, Michigan
April 7, 2000


<PAGE>

                           INDEPENDENT AUDITORS REPORT



To the Board of Directors and Stockholders
of Ajay Sports, Inc. and Subsidiaries


We have audited the  accompanying  consolidated  balance  sheets of Ajay Sports,
Inc.  and  subsidiaries  as of  December  31,  1998 and  1997,  and the  related
consolidated statements of operations,  stockholder's equity, and cash flows for
each of the three years in the period  ended  December  31,  1998.  We have also
audited the related  consolidated  financial  statement  schedules listed in the
index in Item 14 of this  Form 10-K for each of the  three  years in the  period
ended December 31, 1998. Theses consolidated  financial statements and financial
statemnt  schedules  are the  responsibility  of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements and financial statement schedules based on our audits.

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

In our opinion, the consolidated financial statement schedules referred to above
present fairly, in all material respects, the financial position of Ajay Sports,
Inc. and subsidiaries as of December 31, 1998 and 1997, and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.



\s\Hirsch Silberstein & Subelsky, P.C.
---------------------------------------
Hirsch Silberstein & Subelsky, P.C.

Farmington Hills, Michigan
March 12, 1999


<PAGE>


<TABLE>
<CAPTION>



                           AJAY SPORTS, INC. AND SUBSIDIARIES
                              Consolidated Balance Sheets
                            as of December 31, 1999 and 1998
                          (in thousands, except share amounts)


                                                           December 31,          December 31,
ASSETS                                                        1999                  1998
<S>                                                       <C>                   <C>
                                                           -----------           -----------
Current assets:
    Cash                                                 $        101          $          6
    Marketable  securities - available for sale                   348                   396
    Accounts receivable, net of allowance of $558 and $95,
       respectively                                             3,247                 1,889
    Inventories                                                 3,969                 5,680
    Prepaid expenses and other                                  1,179                   485
                                                           -----------           -----------
          Total current assets                                  8,844                 8,456

Fixed assets, net                                               1,693                 1,708
Other assets                                                    7,037                   179
Deferred tax benefit                                            6,582                 1,119
Goodwill                                                        1,577                 1,621
                                                           -----------           -----------
          Total assets                                   $     25,733          $     13,083
                                                           ===========           ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current portion of long term debt                    $        995          $        199
    Accounts payable                                            5,043                 2,225
    Accrued expenses                                            1,099                   380
                                                           -----------           -----------
          Total current liabilities                             7,137                 2,804

Notes payable to affiliates  -  long term                       2,087                 1,587
Notes payable to banks - long term                             13,886                 5,951
Notes payable - long term                                       2,070                     -
Commitments and contingencies                                       -                     -
                                                           -----------           -----------
                                                               25,180                10,342
                                                           -----------           -----------

Minority interest in subsidiary                                    24                     -
                                                           -----------           -----------

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, $0.01 par value, 217,939 and
          264,177 shares outstanding, respectively,
           at stated value                                      2,179                 2,642
       Series D, $0.01 par value, 6,000,000 shares                 60                    60
    Common stock, $0.01 par value, 100,000,000 shares
       authorized, 4,091,091 and 3,956,815 shares
        outstanding, respectively                                  41                    40
    Additional paid-in capital                                 15,500                14,762
    Accumulated deficit                                       (18,470)              (16,006)
    Accumulated other comprehensive income                        (31)                   (7)
                                                           -----------           -----------
          Total stockholders' equity                              529                 2,741
                                                           -----------           -----------

          Total liabilities and stockholders' equity     $     25,733          $     13,083
                                                           ===========           ===========

                           The  accompanying  notes are an integral  part of the
                                  consolidated financial statements.

                                                  F-2

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                        AJAY SPORTS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
              for the years ended December 31, 1999, 1998 and 1997
                    (in thousands, except per share amounts)

                                                            Year Ended
                                            --------------------------------------------
                                            December 31,     December 31,     December 31,
                                              1999             1998             1997
<S>                                         <C>              <C>              <C>
                                            ----------       ----------       ----------
Operating data:
    Net sales                             $    14,340      $    22,925      $    30,330
    Cost of sales                              12,790           19,477           26,585
                                            ----------       ----------       ----------
       Gross profit                             1,550            3,448            3,745
    Selling, general and administrative
    expenses                                    4,866            3,868            5,837
                                            ----------       ----------       ----------

    Operating (loss)                           (3,316)            (420)          (2,092)
                                            ----------       ----------       ----------

Nonoperating income (expense):
    Interest expense                           (1,625)          (1,139)          (1,280)
    Other, net                                    638               84             (144)
                                            ----------       ----------       ----------

    Total non operating expense                  (987)          (1,055)          (1,424)
                                            ----------       ----------       ----------

(Loss) before minority interest and
income taxes                                   (4,303)          (1,475)          (3,516)

Minority interest in (loss) of subsidiary           6                -                -
                                            ----------       ----------       ----------

(Loss) before income taxes                     (4,297)          (1,475)          (3,516)

Income tax (benefit)                           (1,833)               -                -
                                            ----------       ----------       ----------

Net (loss)                                $    (2,464)      $   (1,475)      $   (3,516)
                                            ==========       ==========       ==========

Basic and diluted earnings per share  (a) $     (0.70)     $     (0.47)      $    (1.01)
                                            ==========       ==========       ==========

Weighted average common shares
    outstanding  (b)                            4,013            3,909            3,879
                                            ==========       ==========       ==========


     Net loss as reported above                (2,464)          (1,475)          (3,516)
     Undeclared cumulative preferred dividends   (341)            (380)            (396)
                                            ----------       ----------       ----------

     Loss applicable to common stock      $    (2,805)     $    (1,855)     $    (3,912)
                                            ==========       ==========       ==========

     (a)     Computed  by  dividing   net  loss  after   deducting   undeclared,
             cumulative  preferred  stock  dividends,  by the  weighted  average
             number of common shares outstanding.

     (b)     Current and prior years  restated to reflect  result of reverse 1:6
             common stock split effective August 14, 1998.





                          The accompanying notes are an integral part of the
                                  consolidated  financial statements.

                                                 F-3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                         AJAY SPORTS, INC. AND SUBSIDIARIES
                                 Consolidated Statements of Stockholders' Equity
                              for the years ended December 31, 1999, 1998 and 1997
                                            (in thousands, except shares)
<S>                                 <C>       <C>     <C>         <C>      <C>          <C>        <C>             <C>
                                    Preferred Stock   Common Stock          Add'l                   Accum          Total
                                    ---------------   ------------          Paid-in     Accum       Comprehensive  Stockholders'
                                    Shares     Amount  Shares     Amount    Capital     (Deficit)   Income (Loss)  Equity
                                    --------   ------  --------   -------   --------   ----------   ------------   -----------
Balances at December 31,1996       3,086,706   $4,212  3,879,007  $ 233     $9,313     $ (11,015)   $     -        $  2,743

Net loss                                   -        -          -      -          -        (3,516)         -          (3,516)
                                    --------   ------  ---------  -------   --------   ----------   ------------   ------------
Balances at December 31, 1997      3,086,707    4,212  3,879,007    233      9,313       (14,531)         -            (773)

Common stock reverse 1:6 split             -        -        250   (194)       194             -          -               -

Other adjustments                          -        -          -     (4)         -             -          -              (4)

Preferred stock converted  into
common stock                         (31,993)    (320)    77,558      1        319             -          -               -

Debt  converted  into
preferred  stock                   6,000,000       60          -      -      4,940             -          -           5,000

COMPREHENSIVE INCOME
Net loss                                   -        -          -      -          -        (1,475)         -          (1,475)

Other Comprehesive Income (Loss)           -        -          -      -          -             -         (7)             (7)
                                   ---------   ------   --------  -------   --------    ---------  ------------    ------------
Balances at December 31, 1998      6,276,677    3,952  3,956,815     40     14,762       (16,006)        (7)          2,741

Preferred stock converted into
common stock                         (46,238)    (463)   134,276      1        738             -          -             276

COMPREHENSIVE INCOME
Net Loss                                                                                   (2,464)                   (2,464)

Other Comprehesive Income (Loss)                                                                        (24)            (24)
                                   --------    ------   --------  -------  ---------    ---------   -----------     -------------

Balances at December 31, 1999     6,230,439   $3,489    4,091,09  $  41    $15,500      $ (18,470)      (31)        $   529
                                   ========   ========  ========  =======  =========    ==========  ===========     =============



                                     The  accompanying notes are an integral part of the
                                             consolidated financial statements.

                                                          F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                            AJAY SPORTS, INC. AND SUBSIDIARIES
                          Consolidated Statements of Cash Flows
                      for the years ended December 31, 1999, 1998 and 1997
                                      (in thousands)
<S>                                                <C>         <C>         <C>
                                                               December 31,
                                                       ------------------------------
                                                       1999        1998       1997
                                                      --------   ---------   --------
Cash flows from operating activities:

    Net (loss)                                      $  (2,464) $   (1,475) $  (3,516)
    Adjustments to reconcile to net cash flows
       from operating activities:
    (Gain) loss on sale of assets                          (7)          -         42
    Depreciation and amortization                         335         381        358
    Income tax provision                               (1,833)          -          -
    (Increase) decrease in marketable securities           48        (396)         -
    (Increase) decrease in accounts receivable, net    (1,358)      3,171        214
    Decrease in inventories                             1,711         718      1,559
    (Increase) decrease in prepaid expenses              (694)       (181)        58
    (Increase) decrease in other assets                     -         (75)       202
    Increase(decrease) in accounts payable              2,818        (979)        97
    Increase (decrease) in accrued expenses               719        (303)       186
                                                      --------   ---------   --------

       Net cash provided by (used in) operating
       activities                                        (725)        861       (800)
                                                      --------   ---------   --------

Cash flows from investing activities:

    Acquisitions of property plant and equipment         (281)       (319)      (250)
    Disposal of equipment                                  19           -          -
                                                      --------   ---------   --------

       Net cash (used in) investing activities           (262)       (319)      (250)
                                                      --------   ---------   --------

Cash flows from financing activities:

    Net increase in advances from affiliates              500       2,215      3,487
    Net increase (decrease) in bank notes payable         306      (2,978)    (2,193)
    Dividends paid                                          -           -        (74)
    Minority interest in subsidiary                       300
    Unrealized losses from securities                     (24)         (7)         -
                                                      --------   ---------   --------

       Net cash provided by (used in) financing
       activities                                       1,082        (770)     1,220
                                                      --------   ---------   --------

Net increase (decrease) in cash                            95        (228)       170

Cash at beginning of period                                 6         234         64
                                                      --------   ---------   --------

Cash at end of period                               $     101  $        6  $     234
                                                      ========   =========   ========



                        The accompanying notes are an integral part of the
                              consolidated financial statements.

                                            F-5


</TABLE>
<PAGE>



                       AJAY SPORTS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





   1.    SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION - The consolidated  financial  statements include the
     accounts of Ajay Sports,  Inc.  ("Sports") and its  wholly-owned  operating
     company subsidiaries,  Ajay Leisure Products, Inc. ("Ajay"),  Leisure Life,
     Inc. ("Leisure"),  Palm Springs Golf, Inc. ("Palm Springs"),  Prestige Golf
     Corp.   ("Prestige"), and   majority-owned   subsidiaries,   Pro   Golf
     International,  Inc.  ("PGI"),  Pro Golf of  America,  Inc.  ("PGOA"),  and
     ProGolf.com,  Inc.  ("PG.com")  collectively  referred  to  herein  as  the
     "Company". All significant intercompany balances and transactions have been
     eliminated.

     INVENTORIES  -  Inventories  are stated at the lower of cost or market with
     cost determined using the first-in, first-out method.

     FIXED  ASSETS  -  Fixed  assets  are  stated  at  cost,  less   accumulated
     depreciation  of $1,834,000 and $1,329,000 as of December 31, 1999 and 1998
     respectively.  Fixed assets of the Company  consist  primarily of machinery
     and equipment,  office equipment, and a building.  Depreciation is computed
     using the  straight-line  method  over the  estimated  useful  lives of the
     assets, which range from three to thirty-nine years.

     GOODWILL  - The  Company  has  recorded  goodwill  as a result  of the 1995
     acquisitions  of Palm Springs and Korex.  The  goodwill is being  amortized
     over forty years.  Amortization expense related to the goodwill was $43,900
     for the year ended  December 31,  1999.  As of each annual  year-end  date,
     management  assesses  whether  there has been an impairment in the carrying
     value of goodwill.  This  assessment  involves  comparing  the  unamortized
     goodwill carrying value with undiscounted  cumulative estimated future cash
     flows expected to be derived from utilization of the intangibles underlying
     the related goodwill. To the extent that undiscounted  cumulative cash flow
     is  expected  to  exceed  the  carrying  value of  goodwill,  the  asset is
     considered to be unimpaired.

     OTHER  ASSETS - Other  assets at  December  31,  1999 and 1998  consist  of
     trademarks  and  brand  names  held by PGI  (1999  only)  and  patents  and
     trademarks held and applied for by Leisure,  and additionally,  at December
     31, 1998 a lawsuit judgment. Amortization expense related to trademarks and
     patents is being deducted  straight-line over the estimated useful lives of
     these assets. Amortization expense related to the other assets was $193,000
     for the year ended December 31, 1999.

     PRODUCT  LIABILITY  AND  WARRANTY  COSTS - Product  liability  exposure  is
     insured with insurance  premiums provided during the year. Product warranty
     costs are based on  experience  and  attempt  to match  such costs with the
     related product sales.

     REVENUE  RECOGNITION -The Company  recognizes revenue from sales of product
     when title to the  product  has  passed,  which is  generally  the date the
     product is shipped.  PGOA recognizes Initial Franchise Fee revenue when all
     material   services   or   conditions   relating  to  the  sale  have  been
     substantially performed or satisfied by the franchiser.
<PAGE>

     INCOME TAXES - Effective  January 1, 1992, the Company adopted Statement of
     Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes.
     Under  SFAS No.  109,  deferred  income  taxes are  recognized  for the tax
     consequences  of  temporary  differences  between the  financial  statement
     carrying  amounts  and the tax bases of  existing  assets and  liabilities,
     using enacted statutory rates applicable to future years.

     USE OF ESTIMATES - The  preparation  of financial  statements in conformity
     with generally accepted  accounting  principles requires management to make
     estimates and  assumptions  that affect the reported  amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the  financial  statements  and the  reported  amounts of  revenues  and
     expenses  during the  reporting  period.  Actual  results could differ from
     those estimates.

     COMMON  STOCK - The  Company  reverse  split its common  stock in a 1-for-6
     ratio  effective  with  commencement  of trading on August 14,  1998.  As a
     result of this transaction,  all historic data in the financial  statements
     that  reference  common  shares,  options,  earnings per share or preferred
     conversion  ratios  have  been  restated  to  reflect  this  split as if it
     preceded all prior reporting.  Historic actual common shares outstanding at
     December 31, 1997 were  23,274,039  and were  restated to 3,879,007 in this
     report.

   2.    RELATED PARTY TRANSACTIONS
         --------------------------
         The Company's related parties include the following:

     First  Equity  Corporation  ("First  Equity") - First  Equity is owned by a
     family member of the president,  chief executive  officer,  and chairman of
     the Company.  First Equity held, at December 31, 1997,  demand notes in the
     amount of  $748,000  as a result of loans  made to the  company in 1996 and
     1997. Williams assumed these notes in the financial  restructuring in 1998.
     First Equity made  short-term  working  capital  loans to Ajay during 1999,
     with interest at various  market  rates.  The balance due on these loans at
     December 31, 1999 was $445,647, including accrued interest of $5,647.

     Enercorp,  Inc. ("Enercorp") - is a business development company engaged in
     the  business  of  investing  in and  providing  managerial  assistance  to
     developing  companies.  The Company's  president,  chief executive officer,
     chairman  and  principal  shareholder  is  a  significant   shareholder  in
     Enercorp.  Enercorp holds 310,787  common shares  acquired in 1994 and 1995
     and 2,000 shares of series C preferred stock. Enercorp held at December 31,
     1997,  demand  notes in the amount of $200,000 as a result of loans made to
     the Company. Williams assumed these notes in the financial restructuring in
     1998.  During  1999,  Enercorp  loaned PGI $420,000  under a 13 month,  10%
     subordinated  note.  In  February,  2000  Enercorp  converted  the note and
     accrued interest of $27,000 into 7,450 shares of PGI at $60 each.

     Williams  Controls,  Inc.  ("Williams") - Williams has the same chairman as
     the Company,  which  individual  is a major  shareholder  of each  company.
     Williams  owns 686,274  shares of the  Company's  common  stock,  1,851,813
     common  stock  options  and   6,000,000   shares  of  Series  D  cumulative
     convertible  preferred  stock as of December  31,  1999,  convertible  into
     3,333,333 shares of the Company's common stock.

     During  1996 and 1997 the  Company  paid  Williams  0.50%  per annum of the
     outstanding  revolving  loan  balances in  consideration  for providing its
     guarantee of a revolving  loan from U. S. Bank.  Fees  totaled  $39,750 and
     $60,411 for the years ended December 31, 1997 and 1996  respectively.  From
     July 11, 1997 through June 30, 1998 the Company and Williams shared a joint
     and several loan obligation. On June 30, 1998, the Company restructured its
     credit  facility  with Wells Fargo Bank,  N.A.  ("Wells")  to separate  its
     credit facility from that of Williams. As a result of this transaction, the
     Company will no longer have joint and several  liability,  cross collateral
     agreements or guarantees with Williams.
<PAGE>

     In connection  with the  restructuring  of the Wells credit  facility,  the
     Company was advanced $2,000,000 additional funds by Williams in the form of
     a  long  term  note  and  marketable   securities  and  Williams  converted
     $5,000,000  of  Company  debt  into a newly  created  series  D  cumulative
     convertible preferred stock.

     The  Company's  interest  expense paid to Williams was $62,900 and $346,000
     for the years ended December 31, 1999 and 1998 respectively. (See Note 4).

     The  Company   received   166,719   shares  of  Williams  as  part  of  the
     restructuring  agreement  with Williams  dated June 30, 1998.  These shares
     have been pledged to Wells Fargo as collateral for the Company's loans. The
     common stock is classified  as  marketable  securities available for sale
     and are valued at $2.08 per share, which is the last trade for 1999.

     During  1999,  the Company  had  borrowings  from  affiliated  parties,  in
     addition to those  mentioned  above, to finance its acquisition of PGOA and
     PG.com. These borrowings totalled $450,000, with interest at an annual rate
     of 10%. In February, 2000, these borrowings (and accrued interest totalling
     $30,000)  were  converted  into 8,000 shares of PGI common stock at $60 per
     share.  During  1997  and  1996  the  Company  borrowed  from  related  and
     affiliated  parties  until it obtained  bank  financing in mid 1997.  As of
     December 31, 1997,  the Company owed  $4,372,000 to related and  affiliated
     parties at  interest  rates  ranging  from 9.0% to 9.5%.  These  notes were
     converted to preferred stock in 1998. (See Note 4).

3.    INVENTORIES
      -----------
      Inventories consist of the following (in thousands):

                                                   December 31
                                                  1999       1998
                                               --------    --------
         Raw materials                         $   827     $  1,493
         Work-in-progress                          903        1,052
         Finished goods                          2,239        3,135
                                               --------    --------

         Total                                 $ 3,969      $ 5,680
                                               ========    ========


4.    DEBT
      ----
     On  December  31, 1999 the  Company's  total debt was  $19,038,000  owed to
     banks,  Williams,  and other  affiliates.  This compares to $7,724,000  for
     December  31,  1998.  The  increase  from 1998 is  principally  due to debt
     incurred to purchase the Pro Golf companies.  From July 11, 1997 until June
     30, 1998 the Company  shared in a combined  credit  agreement with Williams
     (the "Joint Loan"). As of June 30, 1998 the Company restructured its credit
     facility with Wells to separate from the joint and several credit  facility
     with Williams.  This new credit facility  eliminates  cross  collateral and
     guarantee agreements involving the Company and Williams. The revolving loan
     facility allows the Company to borrow up to the lesser of $9,500,000 or the
     Borrowing Base. The Borrowing Base consists of a formula  including certain
     eligible   receivables,   inventories   and  letters  of  credit  at  rates
     established by Wells. The present credit agreement matures June 30, 2001.

     The  proceeds  from the Joint  Loan were  used to repay the  Company's  and
     Williams  then  outstanding  loans from the  previous  lender,  U. S. Bank,
     except for a bridge loan in the total amount of  $2,140,000  to the Company
     by U. S. Bank.  This  bridge  loan is to be repaid  from the sale of assets
     and/or excess cash flows of Williams and/or the Company,  and is guaranteed
     up to  $1,000,000  by the  Company's  president.  The balance  owed on this
     bridge loan at December 31, 1999 is $1,365,000. In connection with the 1998
     credit  facility  restructuring,  the Company was  advanced  $2,000,000  of
     additional funds by Williams and Williams  converted  $5,000,000 of company
     debt into preferred stock.
<PAGE>

     The  Company's  Bank  borrowings  consisted  of the  following  (dollars in
     thousands):

                                                   December 31,
      Revolving credit facility:              1999             1998
                                            --------         --------
        Balance                             $  3,862         $  3,467
        Interest rate                            8.5%            8.75%
        Unused amount of facility           $     -0-        $    350
        Average amount outstanding
        during the period                   $  4,258         $  4,997
      Weighted average interest rate             8.2%             9.1%
        Maximum amount outstanding
        during the period                   $  5,295         $  6,771

      Master revolving note:
       Balance                              $  8,425         $      -
       Weighted average interest rate            9.0%               -
       Average amount outstanding
       during the period                    $  8,479         $      -

     Outstanding commercial letters of credit totaled approximately $309,000 and
     $60,000 at December 31, 1999 and 1998 respectively.

     Other  December  31, 1999 debt  consisted  of  $2,087,900  from related and
     affiliated parties, a $412,500 machinery and equipment term loan with Wells
     Fargo,  the $1,364,538  (bridge) term loan with U. S. Bank, a $173,000 real
     estate loan, a $8,425,000  bridge loan with Comerica  Bank,  and $1,200,000
     with private individuals.

     At December 31, 1999 the Company was liable to Comerica  Bank in the amount
     of  $8,425,000  on a master  revolving  note  entered  into to  effect  the
     acquisition of Pro Golf of America, Inc. and ProGolf.com, Inc. The note has
     been extended through April 30, 2000. The Company  anticipates  refinancing
     this loan into an amortizing long-term loan during the second quarter 2000.
     (See Note 16).

      Debt payments are as scheduled (dollars in thousands):

                 2000                                   995
                 2001                                 6,354
                 2002                                 1,000
                 2003                                10,689
                 2004  and thereafter                    -0-

      The seasonal nature of the Company's sales creates  fluctuating demands on
      its  cash  flow,   due  to  the  temporary   build-up  of  inventories  in
      anticipation  of, and receivables  subsequent to, the peak seasonal period
      which  historically  has been from February  through May of each year. The
      Company has relied and continues to rely heavily on its  revolving  credit
      facility and loans from related  parties and affiliated  companies for its
      working capital requirements. (See Note 16).
<PAGE>

5.    INCOME TAXES
      ------------
      As discussed in Note 2, the Company  adopted SFAS No. 109 at the beginning
      of 1992. There was no cumulative  effect of this accounting change and its
      adoption had no impact on 1992 net income.

      The actual income tax expense  (benefit) differs from the statutory income
      tax expense (benefit) as follows (in thousands):

                                   Year Ended December 31,
                                   -----------------------
                                  1999      1998       1997
                                ------    ------      -----
      Statutory tax expense
        (benefit)               $(1,833)  $( 502)   $(1,195)
      Utilization of net
        operating loss
        carry forward                 -        -          -
      Loss producing no current
        tax benefit                   -      502      1,195
                                --------  -------   ---------
                                $(1,833)  $    -    $     -
                                ========  =======   =========

      The components of the net deferred tax asset/liability were as follows (in
thousands):

                                               December 31,
                                               ------------
                                            1999        1998
                                            ----        ----
      Deferred tax assets:
        Accrued expenses                 $    45     $    45
        Reserves                              78         151
        NOL carry forwards                 6,473       4,766
                                           ------      ------

        Sub total                        $ 6,596     $ 4,962

      Deferred tax liability,
        principally depreciation and
        amortization                         (13)        (99)
        Valuation allowance                    -      (3,744)

         Net                             $ 6,583     $ 1,119
                                         =======     =======


     At December 31, 1999,  the Company  assessed its past earnings  history and
     trends,  sales  backlog,  budgeted  sales,  and  expiration  dates of carry
     forwards  and has  determined  that it is more likely than not that 100% of
     deferred  tax  assets  will  be  realized.   This  change  versus  1998  is
     principally  due to the profits to be realized from  operations of PGOA and
     PG.com. The valuation  allowance  of  $3,744,000  at December  31, 1998 was
     maintained  on deferred tax assets which the Company had  determined  to be
     more likely than not unrealizable at that time.
<PAGE>

     The Company had net operating  loss carry forwards for Federal tax purposes
     of approximately  $18,567,000 at December 31, 1999, which expire in varying
     amounts in the years 2006 through 2019.  Substantial  operating  loss carry
     forwards  are  available  to  offset  future  state  taxable  income of the
     Company,  which expire in varying  amounts in the years 2006 through  2019.
     Future  changes in  ownership,  as defined by section  382 of the  Internal
     Revenue Code,  could limit the amount of net operating  loss carry forwards
     used in any one year.

6.    STOCKHOLDERS' EQUITY
      --------------------
      (a)   Preferred Stock

     In October 1994 the Company created its Series B 8% cumulative  convertible
     preferred stock and allowed for its exchange,  on a share-for-share  basis,
     with the Company's  Series A preferred  stock.  The holder exchanged 29,500
     shares of Series A preferred  stock for 29,500  shares of the newly  issued
     Series B preferred  stock and  immediately  converted  17,000 shares of its
     Series B preferred  stock for 5,040,000  (840,000 post split) shares of the
     common stock of the Company,  as the Series B preferred stock allowed for a
     conversion rate of 1 share of Series B preferred stock for 294.12 shares of
     the Company's  common stock.  In November 1997, the conversion  rate on the
     remaining  12,500  Series B shares was  revised to 555.56 and after the 1:6
     reverse  common  stock split of August 14, 1998 the  conversion  rate as of
     December 31, 1998 is 92.5926.

     In July 1995 the Company  sold  325,000  shares of Series C 10%  cumulative
     convertible  preferred  stock and 325,000  warrants in a registered  public
     offering.  The Series C preferred  stock is convertible  into shares of the
     Company's  common stock at a conversion  rate of 2.42424  common shares for
     each share of  preferred  stock.  Cumulative  dividends  are payable on the
     Series C preferred stock at an annual rate of $1.00 per share. The warrants
     are   redeemable  by  the  Company  at  $0.05  per  warrant  under  certain
     conditions.  The terms of these  warrants are  identical  to the  Company's
     publicly held warrants to purchase  common stock.  In 1995 the Company used
     the $2.8  million of net  proceeds for  inventory  and accounts  receivable
     financing and to acquire certain assets of Korex and Palm Springs.

     At  December  31,  1999,  1998 and 1997,  dividends  in  arrears  on the 8%
     cumulative convertible preferred Series B stock were $1,106,575, $1,006,575
     and $906,575 respectively. Dividends on the Series C cumulative convertible
     preferred  stock were  declared  and paid through  December  31,  1996.  No
     dividends  were  declared or paid for 1999,  1998 or 1997.  At December 31,
     1999, 1998 and 1997, dividends in arrears on the 10% cumulative convertible
     preferred Series C stock were $817,232,  $576,174 and $296,000. The Company
     has dedicated all available funds to support  continuing  operations of the
     Company until sufficient cash availability  allows  declaration and payment
     of dividends.

     (b) Stock issued to officers

     The Company has a stock  incentive plan for officers of the Company,  under
     which up to 150,000 shares of the Company's stock may be granted  annually.
     No stock was issued to officers under this plan in 1999, 1998 or 1997.
<PAGE>

     (c) Stock Issued for Acquisitions

     In 1994 the Company acquired the outstanding  common stock of Leisure Life,
     Inc. for 1,500,000  (post split 250,000)  shares of its common stock to the
     owner of Leisure Life.  During the periods 1995,  1996 and 1997 one half of
     the  originally  issued  shares  were  returned to the Company due to unmet
     performance requirements.

     (d) Warrants and Options

          A summary of  activity  related to  warrants  and  options to purchase
          Company common stock is as follows:

                                            Warrants and     Price
               Options                      (i)              Per  Share(i)
               -------                      ------------     -------------

            Balance, December 31, 1996         2,767,935     $ 2.04 - 6.00

            Issued to Employees                    8,334       2.40         (ii)
            Expired                              (27,500)      2.40 - 3.75
            Repriced options                  (2,151,313)      2.04 - 3.00 (iii)
            Repriced options                   2,151,313       1.08        (iii)
                                               ---------
            Balance, December 31, 1997         2,748,769     $ 1.08 - 6.00

            Expired                             (122,287)      2.40 - 4.125
            Issued to Directors                    1,668       1.50         (iv)
                                            ------------

            Balance, December 31, 1998         2,628,150     $ 1.08 - 6.00
            Issued to Employees                   50,000       1.00
            Expired                               83,334       2.40 - 4.125
                                                  ------

            Balance, December 31, 1999         2,594,816     $ 1.00 - 6.00
<PAGE>

    (i)   All options were adjusted for the effect of a 1:6 reverse common stock
          split effective August 14, 1998.

   (ii)  Employee stock options of which none were vested.

   (iii) All non-public,  non-employee,  non-board member options were repriced
           to $.18 market in November 1997.

   (iv)  Director options - 67% vested.


7.    MAJOR CUSTOMERS
      ---------------

     The Company  operates  in three  lines of  business,  the  manufacture  and
     distribution  of  sports   equipment,   outdoor  leisure   furniture,   and
     franchising.  The Company's  customers are  principally in the retail sales
     market.  The Company performs ongoing credit  evaluations of its customers'
     financial conditions and does not generally require collateral.

     Sales to customers  which represent over 10% of the Company's net sales are
     as follows:

                      Year  ended   December 31,
                      --------------------------
      Customer         1999       1998      1997
         A               25%        28%        30%
         B                *         26%        15%
         C                *          *         11%

                    * Amounts are less than 10% of net sales.
<PAGE>

8.    BUSINESS SEGMENT REPORTING
      --------------------------
     The relative  contributions to net sales, operating profit and identifiable
     assets of the Company's two industry  segments for the years ended December
     31, 1999 and 1998 are as follows (in thousands):
<TABLE>
<CAPTION>

<S>                     <C>          <C>       <C>            <C>          <C>          <C>
                                                              GOLF
                                     -------------------------------------------
                                     Mass       Specialty
    1999                Furniture    Merchant   Golf Stores    Franchise    Corporate    Consolidated
  --------------        ---------   ---------   -----------    ---------    ---------    ------------
   Sales                $  4,766    $  6,751    $  1,080       $  1,743     $      -     $  14,340
  Oper profit/(loss)        (398)     (2,370)       (191)           469         (704)       (3,194)
  Assets                   2,487       2,345       6,338         14,563            -        25,733
  Depn/Amort                 151         223          51            318            -           425
  Capital Exp.                 -          57           -            224            -           281


                                                              GOLF
                                     -------------------------------------------
                                     Mass       Specialty
    1998                Furniture    Merchant   Golf Stores    Franchise     Corporate    Consolidated
  --------------        ---------   ---------   -----------    ---------     ---------    -------------
  Sales                  $  3,785    $ 17,916    $  1,224              -    $     -      $  22,925
 Operating profit/(loss)     (241)        863        (494)             -       (548)          (420)
 Assets                     2,673       8,564       1,846              -          -         13,083
 Depreciation/Amortization     92         229          60              -          -            381
 Capital Expenditures         175         144           -              -          -            319

</TABLE>


9 .   GARY PLAYER AND SPALDING LICENSE AGREEMENTS
      -------------------------------------------
     On March 8, 1999 the Company entered into a new license agreement with Gary
     Player Group,  Inc. The Company will work toward developing the Gary Player
     brand for marketing its  products.  The Gary Player  agreement has a 5-year
     term and covers golf bags, gloves, carts and certain other golf accessories
     sold into the U. S.  market.  This  agreement  requires  an annual  $25,000
     rights fee and a minimum  annual  royalty of $5,000 for the sixteen  months
     commencing on March 8, 1999 through June 30, 2000 and increases annually by
     $5,000 for each of the remaining 4 years of the contract.

     Ajay had operated since 1983 under a license from Spalding Sports Worldwide
     to  utilize  the  Spalding  trademark  in  conjunction  with  the  sale and
     distribution of golf bags, golf gloves,  hand pulled golf carts and certain
     other golf accessories in the United States.  On March 8, 1999, the Company
     announced  a limited  extension  of its  existing  agreement  to  provide a
     phaseout period of up to 18 months for its Spalding labeled  products.  The
     Company agreed to pay Spalding  $240,000  during the phase out period.  The
     prior  agreement  contained a minimum  annual  royalty of $550,000  plus 2%
     advertising of which 1% was paid direct.

     Earned royalty expense due Spalding was $160,000, $448,000 and $553,000 for
     the years ended December 31, 1999, 1998 and 1997, respectively.
<PAGE>

10.   LEASES
      ------
     Future  aggregate  minimum lease  payments  under  noncancelable  operating
     leases with initial or remaining terms in excess of one year are as follows
     (dollars in thousands):


                  2000                             719
                  2001                             507
                  2002                             213
                  2003                             175
                  2004 and thereafter              149
                                               -------
                                                $1,763
                                               =======

     Total rental expense ($000) under operating  leases was $652, $605 and $701
     for the years ended December 31, 1999, 1999 and 1997, respectively.

11.   NET  (LOSS) PER COMMON SHARE
      ----------------------------
     Earnings  or loss per share has been  computed  by  dividing  net income or
     loss,  after reduction for preferred  stock  dividends in 1999  ($341,000),
     1998  ($380,000),  and 1997  ($396,000) by the weighted  average  number of
     common shares outstanding.  No exercise of outstanding warrants was assumed
     in  1999,   1998  or  1997,   since  any  exercise  of  warrants  would  be
     antidilutive.

     SFAS No. 128,  "Earnings  Per Share",  became  effective  for fiscal  years
     ending after December 15, 1997. This statement replaces the presentation of
     primary  earnings per share  ("EPS") with a  presentation  of basic EPS. It
     also requires dual presentation of basic and diluted EPS on the face of the
     income  statement  for all entities  with complex  capital  structures  and
     requires  reconciliation  of the numerator and denominator of the basic EPS
     computations   to  the  numerator  and   denominator  of  the  diluted  EPS
     computation.   Basic  EPS  excludes  dilution.  Diluted  EPS  reflects  the
     potential  dilution that could occur if  securities  or other  contracts to
     issue  common  stock were  exercised  or  converted  into  common  stock or
     resulted in the  issuance of common  stock that then shared the earnings of
     the entity.

12.   SUPPLEMENTAL CASH FLOW INFORMATION
      ----------------------------------
     Cash paid for  interest  was  $1,124,526,  $1,209,693  and $776,077 for the
     years ended December 31, 1999, 1998 and 1997, respectively.

      Non cash financing and investing transactions were as follows:

          In exchange  for  acquiring in 1994 all of the common stock of Leisure
          Life, Inc. the Company issued 1,500,000 (post split 250,000) shares of
          its common  stock to the owner of  Leisure  Life.  During the  periods
          1995,  1996 and 1997 one half of the  originally  issued  shares  were
          returned to the Company due to unmet performance requirements.
<PAGE>

          In 1997 there were no stock transactions.

          During 1998  preferred  stock in the  quantity  of 31,993  shares were
          converted into 77,558 shares of common stock.

          During 1998  long-term debt of $5,000,000 was converted into 6,000,000
          shares of Series D preferred stock.

          The Company added new leases during 1998 and 1997 that represent asset
          values  respectively,  if  purchased,  of  approximately  $103,000 and
          $57,000  and result in annual  lease  payments  of $27,000 and $18,732
          with terms expiring up to the year 2003.

          During 1999 Series C preferred  stock in the quantity of 46,238 shares
          were converted into 112,085 shares of common stock.

          The  Company  borrowed  $10,750,000  from a bank and others to acquire
          PGOA and acquired PGD Online, LLC during 1999.

13.   COMMITMENTS AND CONTINGENCIES
      -----------------------------

     The accompanying  financial statements have been prepared assuming that the
     Company  will  continue  as a going  concern.  As  shown  in the  financial
     statements,  the  Company  has  net  losses  before  taxes  of  $4,297,000,
     $1,475,000 and  $3,516,000 for the years ended December 31, 1999,  1998 and
     1997. A bank loan to one of the Companies subsidiaries has been extended to
     April 30,  2000.  The Company has is seeking a long-term  extension of this
     loan, and to raise equity capital.  The Company's  ability to continue as a
     going   concern  is  partially   dependent  on  ability  of  management  to
     successfully implement these plans. The financial statements do not include
     any adjustments that might result from the outcome of this uncertainty.

     The Company is subject to certain  claims in the normal  course of business
     which  management  intends to  vigorously  contest.  The  outcomes of these
     claims are not expected to have a material  adverse affect on the Company's
     consolidated financial position or results of operations. (See Notes 4
     and 9).


14.  ACQUISITIONS
     ------------

     In June 1999, Ajay,  through a newly formed majority owned subsidiary (PGI)
     acquired 100% of the  outstanding  ownership  interests of PGOA and PG.com.
     This acquisition was accounted for using the purchase method of accounting.
     The results of operations of the acquired  companies  have been included in
     Ajay's  consolidated  financial  statements  from the date of  acquisition.
     Intercompany  accounts and transactions  between the acquired companies and
     Ajay, as applicable, have been eliminated.

     The acquisition  price of $10,500,000 was paid in cash and financed through
     borrowings with a bank  ($8,500,000)  affiliated  companies  ($870,000) and
     private  individuals  ($1,200,000).  The portion of the  purchase  price in
     excess of net book value was  allocated  to  "Trademarks"  and,  net of the
     related income tax benefit and related trademark amortization,  is shown in
     the consolidated balance sheet with "Other assets".



15.   NEW ACCOUNTING PRONOUNCEMENTS
      -----------------------------
     In March 1998, the Accounting Standards Committee of the American Institute
     of Certified Public  Accountants issued Statement of Position ("SOP") 98-1,
     "Accounting  for Costs of  Computer  Software  Developed  or  Obtained  for
     Internal  Use." SOP 98-1 provides  guidance for an enterprise on accounting
     for the costs of computer software  developed or obtained for internal use.
     The Company adopted this statement  during the year ended December 31, 1999
     and has  capitalized  software  costs  according to the  provisions  of the
     standard.  These  costs are  amortized  on a  straight-line  basis over the
     useful life of the software once it is placed into service.
<PAGE>

     In June 1998,  the FASB  issued  SFAS No. 133  "Accounting  for  Derivative
     Instruments and Hedging Activities".  This statement establishes accounting
     and reporting standards for derivative  instruments and hedging activities.
     The  statement  was  amended  by SFAS  No.  137 and will be  effective  for
     financial  statements for fiscal years  beginning  after June 15, 2000. The
     Company  believes  SFAS No.  133 will not  have a  material  impact  on its
     financial  statements  or accounting  policies.  The Company will adopt the
     provisions of SFAS No. 133 in the first quarter of 2001.

16.   SUBSEQUENT EVENTS
      -----------------
     During late 1999 and into 2000,  the Company began selling equity in PGI in
     a private  placement  offering  and entered  into an  agreement  to acquire
     developed and undeveloped real estate for existing and planned golf-related
     activities, including golf domes with retail stores inside. As of April 14,
     2000, the Company had committed to issue 138,750 shares of PGI stock at $60
     per  share,  which  represents  12.18%  of the  total  shares  of PGI stock
     outstanding at that date. Of the new shares committed to, $375,000 cash had
     been received with signed subscription documents, $870,000 was a conversion
     of  subordinated  debt into common stock,  and the  remaining  $7,080,000 a
     combination of equity securities and golf-related real property.

     The Company  anticipates  substantial  additional cash flows resulting from
     the debt  conversions  and the rents and fees to be received  from the golf
     properties during the initial  twelve-month  period beginning July 1, 2000.
     These  revenues  are  expected to increase in the future after the start-up
     period is over.  Additionally,  the dome and retail  store  combination  is
     planned as the new PGOA  franchise  of the  future and could  substantially
     increase revenues and cash flow of the Company's PGOA operations.

     The Company  began an offering of PG.com common stock in late April 2000 to
     raise up to $12,500,000 in gross offering proceeds. If the maximum offering
     is sold, the shares sold in this offering will represent  approximately 33%
     of the total PG.com common shares outstanding after the offering.  Proceeds
     from  these  private   placements   will  be  used  for  working   capital,
     acquisitions, and growth.

     Effective  March 15, 2000 PGI obtained an extension  through April 30, 2000
     on  its  master   revolving  note  with  Comerica  Bank.  PGI   anticipates
     refinancing  this loan into a long-term  amortizing  loan during the second
     quarter of 200.

<PAGE>

Schedule II
<TABLE>
<CAPTION>


                        AJAY SPORTS, INC. AND SUBSIDIARIES
                         Valuation and Qualifying Accounts
                   Years ended December 31, 1999, 1998, and 1997
                              (Amounts in Thousands)



<S>                               <C>         <C>         <C>               <C>
                                                                             Balance
                                  Beginning   Charged to   Deducted from      at end
                                   Balance     expense     Reserve           of period
                                  ---------   ----------   -------------     ----------
Reserve for Product Warranty:

   Year ended:

     December 31, 1999               $103        $271         $295 (1)      $  79
     December 31, 1998                152          70          119            103
     December 31, 1997                 85         309          242            152


Reserve for Doubtful Receivables:

   Year ended:

     December 31, 1999               $318 (3)    $263          $23  (2)      $558
     December 31, 1998                243          50          198             95
     December 31, 1997                140         355          252            243


Reserve for Inventory Obsolescence:

   Year ended:

     December 31, 1999               $300        $350         $257           $393
     December 31, 1998                425         292          417            300
     December 31, 1997                491         398          464            425




Notes:

(1) Represents amounts paid for product warranty claims.

(2) Represents amounts charged off as uncollectible.

(3) Includes $223 balance on books of company which was acquired in June, 1999

</TABLE>