<PAGE>

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

                                    FORM 10-Q

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

                  For the quarterly period ended JUNE 30, 2003

                         Commission file number: 0-25620

                                  A.S.V., INC.
             (Exact name of registrant as specified in its charter)

              MINNESOTA                               41-1459569
              ---------                               ----------
    State or other jurisdiction of          I.R.S. Employer Identification No.
     incorporation of organization

             840 LILY LANE
        GRAND RAPIDS, MN 55744                       (218) 327-3434
        ----------------------                       ---------------
Address of principal executive offices         Registrant's telephone number

         Check whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities 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 [ ]

         Indicate by check mark if the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). [X] Yes    [ ] No

         As of July 31, 2003, 10,136,786 shares of registrant's $.01 par value
Common Stock were outstanding.

<PAGE>

                         PART I - FINANCIAL INFORMATION

                          ITEM 1 - FINANCIAL STATEMENTS

                                  A.S.V., INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                              JUNE 30,    December 31,
                                                                2003          2002
                                                            -----------   -----------
<S>                                                         <C>           <C>
         ASSETS

CURRENT ASSETS
   Cash and cash equivalents ............................   $ 8,516,443   $ 4,058,091
   Short-term investments ...............................       300,894       739,307
   Accounts receivable, net .............................    19,950,476    14,397,958
   Inventories ..........................................    29,234,051    31,834,620
   Prepaid expenses and other ...........................       681,650     1,099,685
                                                            -----------   -----------
              Total current assets                           58,683,514    52,129,661

Property and equipment, net .............................     5,362,083     5,080,536
                                                            -----------   -----------

              Total Assets                                  $64,045,597   $57,210,197
                                                            ===========   ===========

         LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
   Current portion of long-term liabilities .............       132,920       129,550
   Accounts payable .....................................     5,329,886     2,838,370
   Accrued liabilities
     Compensation .......................................       300,928       265,649
     Warranty reimbursements ............................       508,000       555,200
     Warranties .........................................       650,000       600,000
     Other ..............................................       524,823       374,707
   Income taxes payable .................................       569,231             -
                                                            -----------   -----------
              Total current liabilities                       8,015,788     4,763,476
                                                            -----------   -----------

LONG-TERM LIABILITIES, less current portion .............     1,913,285     1,979,798
                                                            -----------   -----------

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

SHAREHOLDERS' EQUITY
   Capital stock, $.01 par value:
     Preferred stock, 11,250,000 shares authorized;
       no shares outstanding ............................             -             -
     Common stock, 33,750,000 shares authorized;
       shares issued and outstanding - 10,119,036 in
       2003 10,063,901 in 2002 ..........................       101,190       100,639
   Additional paid-in capital ...........................    39,262,974    38,666,925
   Retained earnings ....................................    14,752,360    11,699,359
                                                            -----------   -----------
                                                             54,116,524    50,466,923
                                                            -----------   -----------

              Total Liabilities and Shareholders' Equity    $64,045,597   $57,210,197
                                                            ===========   ===========
</TABLE>

See notes to consolidated financial statements.

                                       2

<PAGE>

                                  A.S.V., INC.

                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                  JUNE 30,                       JUNE 30,
                                                       ----------------------------    ----------------------------
                                                           2003            2002            2003            2002
                                                       ------------    ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>             <C>
Net sales ..........................................   $ 26,414,478    $ 14,713,936    $ 41,026,708    $ 20,891,764

Cost of goods sold .................................     21,082,229      11,241,963      32,890,995      15,995,103
                                                       ------------    ------------    ------------    ------------

         Gross profit ..............................      5,332,249       3,471,973       8,135,713       4,896,661

Operating expenses:
     Selling, general and administrative ...........      1,591,223       1,252,804       3,044,183       2,584,836
     Research and development ......................        202,182         708,312         363,886       1,382,745
                                                       ------------    ------------    ------------    ------------

         Operating income ..........................      3,538,844       1,510,857       4,727,644         929,080

Other income (expense)
     Interest expense ..............................        (32,053)        (32,550)        (68,676)        (63,697)
     Other, net ....................................         49,627          46,196          87,033         112,539
                                                       ------------    ------------    ------------    ------------

         Income before income taxes ................      3,556,418       1,524,503       4,746,001         977,922

Provision for income taxes .........................      1,271,000         511,000       1,693,000         330,000
                                                       ------------    ------------    ------------    ------------

         NET EARNINGS ..............................   $  2,285,418    $  1,013,503    $  3,053,001    $    647,922
                                                       ============    ============    ============    ============

Net earnings per common share

     Basic .........................................   $        .23    $        .10    $        .30    $        .06
                                                       ============    ============    ============    ============

     Diluted .......................................   $        .22    $        .10    $        .30    $        .06
                                                       ============    ============    ============    ============

Weighted average number of common shares outstanding

     Basic .........................................     10,089,161      10,180,519      10,076,531      10,187,591
                                                       ============    ============    ============    ============

     Diluted .......................................     10,432,661      10,296,860      10,273,147      10,245,762
                                                       ============    ============    ============    ============
</TABLE>

See notes to consolidated financial statements.

                                       3

<PAGE>

                                  A.S.V., INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  SIX MONTHS ENDED JUNE 30,
                                                                    2003            2002
                                                                 -----------    -----------
<S>                                                              <C>            <C>
Cash flows from operating activities:
   Net earnings ............................................     $ 3,053,001    $   647,922
   Adjustments to reconcile net earnings to net
     cash provided by (used in) operating activities:
       Depreciation ........................................         316,693        201,509
       Tax benefit from stock option exercises .............          50,000              -
       Deferred income taxes ...............................         100,000        600,000
       Changes in assets and liabilities:
         Accounts receivable ...............................      (5,552,518)    (4,421,153)
         Inventories .......................................       2,600,569     (3,241,400)
         Prepaid expenses and other ........................         318,035        226,404
         Accounts payable ..................................       2,491,516      2,054,658
         Accrued liabilities ...............................         188,195       (197,985)
         Income taxes payable ..............................         569,231       (149,993)
                                                                 -----------    -----------

Net cash provided by (used in) operating activities ........       4,134,722     (4,280,038)
                                                                 -----------    -----------

Cash flows from investing activities:
   Purchase of property and equipment ......................        (598,240)       (92,467)
   Purchase of short-term investments ......................        (300,894)      (935,141)
   Redemption of short-term investments ....................         739,307        725,249
                                                                 -----------    -----------

Net cash used in investing activities ......................        (159,827)      (302,359)
                                                                 -----------    -----------

Cash flows from financing activities:
   Advances on line of credit, net .........................               -        455,000
   Principal payments on long-term liabilities .............         (63,143)       (51,855)
   Proceeds from exercise of stock options, net of costs....         581,600         18,750
   Retirements of common stock .............................         (35,000)      (335,663)
                                                                 -----------    -----------

Net cash provided by financing activities ..................         483,457         86,232
                                                                 -----------    -----------

Net increase (decrease) in cash and cash equivalents .......       4,458,352     (4,496,165)

Cash and cash equivalents at beginning of period ...........       4,058,091      5,221,591
                                                                 -----------    -----------

Cash and cash equivalents at end of period .................     $ 8,516,443    $   725,426
                                                                 ===========    ===========

Supplemental disclosure of cash flow information:
   Cash paid for interest ..................................     $    65,118    $   122,701
   Cash paid for income taxes ..............................         730,547        479,993
</TABLE>

See notes to consolidated financial statements.

                                       4

<PAGE>

                                  A.S.V., INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  JUNE 30, 2003

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A summary of the significant accounting policies consistently applied
in the preparation of the accompanying unaudited, consolidated financial
statements follows:

REVENUE RECOGNITION

         The Company generally recognizes revenue on its product sales when
persuasive evidence of an arrangement exists, delivery has occurred, the price
is fixed or determinable and collectibility is reasonable assured. The Company
considers delivery to have occurred at the time of shipment.

RESEARCH AND DEVELOPMENT

         All research and development costs are expensed as incurred.

INTERIM FINANCIAL INFORMATION

         The accompanying unaudited, consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America (US GAAP) for interim financial information.
Accordingly, they do not include all of the footnotes required by US GAAP for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal, recurring adjustments) considered necessary for a fair
presentation have been included. Results for the interim periods are not
necessarily indicative of the results for an entire year.

         Preparation of the Company's consolidated financial statements requires
management to make estimates and assumptions that affect reported amounts of
assets and liabilities and related revenues and expenses. Actual results could
differ from these estimates.

WARRANTIES

         The Company provides a limited warranty to its customers. Provision for
estimated warranty costs are recorded when revenue is recognized based on the
Company's estimate of product failure rates, material usage and service delivery
costs incurred in correcting a product failure. Should actual failure rates,
material usage or service delivery costs differ from the Company's estimates,
revisions to the accrued warranty liability may be required.

         Changes in the Company's accrued warranty liability are as follows:

<TABLE>
<CAPTION>
                                           June 30,
                                    ----------------------
                                      2003          2002
                                    ---------    ---------
<S>                                 <C>          <C>
Balance, beginning of period        $ 600,000    $ 500,000
Expense for new warranties issued     237,430      421,775
Warranty claims                      (187,430)    (321,775)
                                    ---------    ---------

Balance, end of period              $ 650,000    $ 600,000
                                    =========    =========
</TABLE>

                                       5

<PAGE>

STOCK-BASED COMPENSATION

         At June 30, 2003, the Company has three stock-based compensation plans.
The Company accounts for those plans under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. No stock-based employee compensation cost is reflected
in net earnings, as all options granted under those plans had an exercise price
equal to the market value of the underlying common stock on the date of grant.

         The following table illustrates the effect on net earnings and earnings
per share if the Company had applied the fair value recognition provisions of
FASB Statement No. 123.

<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                  JUNE 30,                           JUNE 30,
                                      --------------------------------   --------------------------------
                                           2003             2002              2003             2002
                                      ---------------  ---------------   ---------------  ---------------
<S>                                   <C>              <C>               <C>              <C>
Net earnings, as reported             $     2,285,418  $     1,013,503   $     3,053,001  $       647,922

Less total stock-based employee
  compensation determined under
  fair value methods for all awards          (202,364)        (136,596)         (379,292)        (273,191)
                                      ---------------  ---------------   ---------------  ---------------

Pro forma net earnings                $     2,083,054  $       876,907   $     2,673,709  $       374,731
                                      ===============  ===============   ===============  ===============

Earnings per share:

  Basic - as reported                 $           .23  $           .10   $           .30  $           .06
                                      ===============  ===============   ===============  ===============

  Basic - pro forma                   $           .21  $           .09   $           .27  $           .04
                                      ===============  ===============   ===============  ===============

  Diluted - as reported               $           .22  $           .10   $           .30  $           .06
                                      ===============  ===============   ===============  ===============

  Diluted - pro forma                 $           .20  $           .09   $           .26  $           .04
                                      ===============  ===============   ===============  ===============
</TABLE>

ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS

         In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. The changes in this statement will result
in a more complete depiction of an entity's liabilities and equity and will,
thereby, assist investors and creditors in assessing the amount, timing, and
likelihood of potential future cash outflows and equity share issuances.
Reliability of accounting information will be improved by providing a portrayal
of an entity's capital structure that is unbiased, verifiable, and more
representationally faithful than information reported prior to issuance of this
statement. This statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. Management does not believe
the adoption of this statement will have any immediate material impact on the
Company.

         In April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This statement amends SFAS 133,
Accounting for Derivative Instruments and Hedging Activities, to clarify
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. The changes in this statement improve
financial reporting by requiring that contracts with comparable characteristics
be accounted for similarly, resulting in more consistent reporting of contracts
as either derivatives or hybrid instruments. This statement is effective for
contracts entered into or modified after June 30, 2003. Because the Company does
not currently utilize derivative instruments or engage in hedging activities,
management does not believe the adoption of this statement will have any
immediate material impact on the Company.

                                       6

<PAGE>

NOTE 2.  INVENTORIES

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                    JUNE 30,     December 31,
                                      2003          2002
                                   -----------   -----------
<S>                                <C>           <C>
Raw materials, semi-finished and
  work in process inventory        $17,404,741   $16,502,994
Finished goods                       9,019,955    10,779,010
Used equipment held for resale       2,809,355     4,552,616
                                   -----------   -----------

                                   $29,234,051   $31,834,620
                                   ===========   ===========
</TABLE>

NOTE 3.  LINE OF CREDIT

         In July of 2003, the Company amended its $10 million line of credit
agreement with its primary bank. The amended line of credit provides for an
expiration date of the earlier of demand or July 1, 2004. The amended line of
credit requires, among other items, certain levels of tangible net worth be
maintained at the end of each calendar quarter. All other major terms and
conditions remained the same. As of June 30, 2003, the Company was in compliance
with all requirements of the amended line of credit agreement.

                                       7

<PAGE>

                                     ITEM 2.

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

CRITICAL ACCOUNTING POLICIES

         The following discussion and analysis of the Company's financial
condition and results of operations is based upon its financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires management to make estimates and judgments that affect the reported
amounts of assets, liabilities and expenses, and related disclosures. On an
on-going basis, management evaluates its estimates and judgments, including
those related to accounts receivable, inventories and warranty obligations. By
their nature, these estimates and judgments are subject to an inherent degree of
uncertainty. Management bases its estimates and judgments on historical
experience, observance of trends in the industry, information provided by
customers and other outside sources and on various other factors that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the amount of expenses and the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or
conditions.

         Management believes the following critical accounting policies affect
its more significant judgments and estimates used in the preparation of its
consolidated financial statements.

         Revenue Recognition and Accounts Receivable. Revenue is recognized when
persuasive evidence of an arrangement exists, delivery has occurred, the price
is fixed or determinable and collectibility is reasonably assured. The Company
generally obtains oral or written purchase authorizations from customers for a
specified amount of product at a specified price and considers delivery to have
occurred at the time of shipment. ASV maintains an allowance for doubtful
accounts for estimated losses resulting from the inability of its customers to
make required payments. If the financial condition of ASV's customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required.

         Inventories. Inventories are stated at the lower of cost or market,
cost being determined on the first-in, first-out method. Adjustments to slow
moving and obsolete inventories to the lower of cost or market are provided
based on historical experience and current product demand. The Company evaluates
the adequacy of the inventories carrying value quarterly.

         Warranties. ASV provides for the estimated cost of product warranties
at the time revenue is recognized. While ASV engages in extensive product
quality programs and processes, including actively monitoring and evaluating the
quality of its component suppliers, ASV's warranty obligation is affected by
product failure rates, material usage and service delivery costs incurred in
correcting a product failure. Should actual product failure rates, material
usage or service delivery costs differ from ASV's estimates, revisions to the
estimated warranty liability may be required.

RESULTS OF OPERATIONS

         The following table sets forth certain Statement of Earnings data as a
percentage of net sales:

<TABLE>
<CAPTION>
                                           Three Months Ended June 30,  Six Months Ended June 30,
                                                2003          2002          2003          2002
                                               -----         -----         -----         -----
<S>                                        <C>               <C>        <C>              <C>
Net sales ..............................       100.0%        100.0%        100.0%        100.0%
Gross profit ...........................        20.2          23.6          19.8          23.4
Selling, general and administrative ....         6.0           8.5           7.4          12.4
Research and development ...............         0.8           4.8           0.9           6.6
Operating income .......................        13.4          10.3          11.5           4.4
Net earnings ...........................         8.7           6.9           7.4           3.1
</TABLE>

                                       8

<PAGE>

FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002.

         Net Sales. Net sales for the three months ended June 30, 2003 increased
80.0% to approximately $26.4 million, compared with approximately $14.7 million
for the same period in 2002. The increase in sales was due primarily to an
increase in the number of products available for sale and an increase in the
general market acceptance of rubber track loaders. The second quarter of 2003
was the first full quarter of sales of the Company's RC-100 Posi-Track, which
was introduced in January 2003 and has generated significant orders since its
introduction. In addition, the Company's RC-50 Posi-Track experienced strong
sales during the second quarter of 2003. This product competes with the
mid-sized traditional wheeled skid-steer. The RC-100 and the RC-50 Posi-Tracks
accounted for approximately 41% of the Company's sales in the second quarter of
2003. The second quarter of 2003 marked the first full quarter of sales of all
three undercarriages to Caterpillar Inc. for use in their five models of
Multi-Terrain Loaders (MTL). During the second quarter of 2002, ASV only shipped
one model of undercarriage to Caterpillar for use on the two MTL models that
were in production at that time. The second quarter of 2003 also included
approximately $1.0 million of sales from ASV's first ever public auction of used
equipment. In addition, the Company experienced increased parts sales during the
second quarter of 2003 as the number of machines and undercarriages in the field
continues to increase. Offsetting these increases were decreases in the sale of
the Company's model 4810 Posi-Track and 2800 series Posi-Tracks. The Company
believes these decreases were due to the introduction of the RC-100 Posi-Track
in January of 2003 and the introduction of additional MTL models in 2002 and
2003.

         Gross Profit. Gross profit for the three months ended June 30, 2003
increased to approximately $5,332,000, or 20.2% of net sales, from approximately
$3,472,000, or 23.6% of net sales, for the same period in 2002. The increase in
gross profit for the second quarter of 2003 was due to the increased sales as
discussed above. The decrease in gross profit percentage for the second quarter
of 2003 was due primarily to a change in the mix of products sold. For the
second quarter of 2002, ASV shipped only the Beta model MTL undercarriage to
Caterpillar, which is a larger undercarriage and has a higher gross profit
percentage. In contrast, during the second quarter of 2003, slightly over half
of the MTL undercarriages sold were the Alpha model undercarriage, which is a
smaller undercarriage and has a lower comparative gross profit percentage. Also
contributing to the decrease in gross profit percentage for the second quarter
of 2003 was the reduced sales of the Company's higher margin 4810 Posi-Track
machine as discussed above. In addition, sales of used equipment from the
Company's auction caused a reduction in the overall gross profit as the total
sales price of the items sold was approximately $150,000 less than their
carrying value.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from approximately $1,253,000, or 8.5% of net
sales, in the second quarter of 2002, to approximately $1,591,000, or 6.0% of
net sales, in the second quarter of 2003. The level of expenses in 2003 was a
return to more historical levels, compared to an atypically low level of
expenses in the second quarter of 2002. In the second quarter of 2002, selling,
general and administrative expenses were lower than historical levels due
primarily to the reversal of a portion of a remarketing reserve during the
second quarter of 2002. The Company had previously established a remarketing
reserve of $250,000 for any expected costs associated with remarketing existing
machines at one customer's locations, some of which were ultimately returned to
Company. ASV had originally anticipated these machines would be remarketed to
other dealers, but instead chose to have certain of these machines returned to
ASV for use in its new rental program which began in the second quarter of 2002.
As these machines were returned to ASV and reflected as sales returns with a
corresponding decrease in gross profit of approximately $148,000, a portion of
the remarketing reserve was no longer needed. The Company reversed the portion
of the remarketing reserve that related to the returned machines, which
decreased selling, general and administrative expenses by approximately
$148,000. The remaining increase in selling, general and administrative expenses
in 2003 was primarily due to increased marketing costs related to the
introduction of new products and the Company's marketing efforts to rental
facilities.

         Research and Development Expenses. Research and development expenses
decreased from approximately $708,000 in the second quarter of 2002 to
approximately $202,000 in the second quarter of 2003. The decrease was due to
the Company completing the development of undercarriages for Caterpillar's MTL
product line in 2002. The Company anticipates its investment in research and
development will be approximately 1% of its anticipated net sales for 2003.

         Net Earnings. Net earnings for the second quarter of 2003 were
approximately $2,285,000, compared with approximately $1,014,000 for the second
quarter of 2002. The increase was primarily a result of significantly increased
sales and decreased operating expenses, offset in part by a decreased gross
profit percentage and a higher effective income tax rate.

                                       9

<PAGE>

FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002.

         Net Sales. Net sales for the six months ended June 30, 2003 increased
96.4%, to approximately $41.0 million compared with approximately $20.9 million
for the same period in 2002. This increase was due primarily to the increase in
sales of MTL undercarriages to Caterpillar in 2003. The Company is selling three
models of MTL undercarriages to Caterpillar for use on five models of MTLs in
2003. In contrast, the Company was only selling one model undercarriage for use
on two MTL models in 2002. In addition, during 2002, ASV only supplied MTL
undercarriages to Caterpillar during the second quarter, as Caterpillar had
placed its MTLs on production hold for the first quarter, thereby preventing ASV
from shipping undercarriages in the first quarter. Also contributing to the
sales increase in 2003 was increased sales of the Company's RC-50 and RC-100
products due to increased popularity. Offsetting these increases were decreases
in the sales of ASV's model 4810 Posi-Track and 2800 series Posi-Tracks in 2003.
The Company believes these decreases were due to the introduction of the RC-100
Posi-Track in January of 2003 and the introduction of additional MTL models in
2002 and 2003.

         Gross Profit. Gross profit for the six months ended June 30, 2003 was
approximately $8,136,000, or 19.8% of net sales, compared with approximately
$4,897,000, or 23.4% of net sales, for the six months ended June 30, 2002. The
reasons for the increased gross profit and decreased gross profit percentage for
the six month period ended June 30, 2003 were due to the change in mix of
machines sold as described more fully above.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from approximately $2,585,000, or 12.4% of net
sales, for the six months ended June 30, 2002, to approximately $3,044,000, or
7.4% of net sales, for the six months ended June 30, 2003. This increase in
expenses was due primarily to two factors. First, the reduction of the Company's
previously established remarketing reserve as discussed above caused selling
general and administrative expenses to decrease approximately $148,000 in 2002.
Second, selling, general and administrative expenses increased due to increased
marketing costs related to the introduction of new products and the Company's
marketing efforts to rental facilities in 2003.

         Research and Development Expenses. Research and development expenses
decreased from approximately $1,383,000 for the six months ended June 30, 2002
to approximately $364,000 for the six months ended June 30, 2003. The decrease
was due to the Company completing the development of undercarriages for
Caterpillar's MTL product line in 2002.

         Net Earnings. Net earnings for the six months ended June 30, 2003
increased to approximately $3,053,000 from approximately $648,000 for the six
months ended June 30, 2002. The increase was primarily a result of increased
sales and decreased operating expenses, offset in part by a lower gross profit
percentage and a higher effective income tax rate.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 2003, the Company had working capital of approximately
$50.7 million compared with approximately $47.4 million at December 31, 2002, an
increase of approximately $3.3 million. Cash and short-term investments
increased approximately $4.0 million due to increased sales, better accounts
receivable collection, proceeds received from the Company's auction and proceeds
received from the exercise of stock options. Accounts receivable increased
approximately $5.6 million due to the increased sales during the second quarter
of 2003. Overall inventory levels decreased approximately $2.6 million during
2003, due primarily to the sale of finished goods and used equipment in
inventory at December 31, 2002. Partially offsetting the overall inventory
decrease was an increase of approximately $900,000 in raw materials to support
higher production levels. Current liabilities increased approximately $3.3
million due primarily to increased accounts payable from increased production
levels. In addition, the Company's income taxes payable increased approximately
$569,000 due to increased profitability in 2003.

         In October 2000, the Company and Caterpillar entered into an alliance
agreement to jointly develop and manufacture a new product line of Caterpillar
rubber track skid steer loaders called Multi-Terrain Loaders, or MTLs. The
product line, which includes five new models, features Caterpillar's patented
skid steer loader technology and ASV's patented Maximum Traction Support
System(TM) rubber track undercarriage. The machines complement existing models
in both ASV's and Caterpillar's current product lines. They are being sold
through the Caterpillar dealer network.

                                       10

<PAGE>

         The Company recognizes as sales its cost for the undercarriage, as
defined in the agreement, plus a portion of the gross profit that Caterpillar
recognizes upon sale of the MTL to Caterpillar dealers, when the Company ships
undercarriages to Caterpillar. The MTLs are not a commissionable product under
the Company's Commercial Alliance Agreement with Caterpillar. The Company
anticipates sales of MTL undercarriages to Caterpillar could be in the range of
$45-47 million for the twelve months ended December 31, 2003.

         In December 2000, the Company made a sale to one customer totaling
approximately $4.0 million. During 2001, this customer did not make payments in
accordance with the terms of its agreement with the Company, including
approximately $800,000 of machines and attachments sold by the customer for
which payment was not remitted to the Company.

         In January 2002, the Company and the customer entered into a note
agreement for the value of the machines that had been previously sold by the
customer for which payment was not remitted to the Company. The initial amount
of the note was $800,000 and is due in 48 monthly installments plus interest at
the prime rate plus 2%, beginning March 15, 2002. As of July 31, 2003, the
customer was three payments in arrears under this note. The Company anticipates
it may refinance the existing note balance over a term not to exceed 60 months
with payments due in monthly principal installments plus interest at the prime
rate plus 2%. The Company has also obtained a security interest in the machines
that have not yet been sold by the customer. In addition, the customer has
agreed to remit payment to the Company for any machines it sells, which the
customer has been doing.

         This customer is in the process of pursuing $6-7 million of debt and
equity financing through a private placement offering with non-affiliated
investors. The customer is also pursuing external financing for approximately
$600,000 of the amount owed the Company under its trade account receivable
balance. The Company anticipates it may convert a portion of the amount owed to
it under its trade account receivable balance to equity in the private
placement, such amount not to exceed $300,000. The Company does not currently
anticipate it will incur a loss on the amounts owed to it by this customer.

         On October 7, 2002, the Company announced a stock buy-back program
whereby ASV may repurchase up to $5 million of its common stock in the open
market. The Company is funding the repurchases with available funds. The
repurchase program is expected to last until October 7, 2003 or until such
amount of common stock is repurchased. As of August 1, 2003, the Company had
repurchased 110,700 shares of its common stock under this new buy-back program
at an aggregate purchase price of approximately $1,004,000.

         In October 2002, the Company began a program to market its RC-30 and
RC-50 products directly to rental facilities. Under this program, ASV identifies
rental facilities that will lease ASV machines from an unaffiliated finance
company. ASV records the sale of the machines to the finance company when they
are delivered to the rental facility and receives payment from the finance
company at that time. The lease agreement between the rental facility and the
finance company provides the rental facility a 90-day period during which any
rental income generated is split between the rental facility and ASV. After the
90-day period has expired, the rental facility has the option of terminating the
lease, in which case ASV is responsible for the costs associated with
transferring the machines to another rental facility. If the rental facility
elects to continue the lease, ASV will refund any rental payments received
during the 90-day period. At the end of the four-year lease, should the rental
facility elect not to purchase the leased machines, ASV has guaranteed to pay a
residual value equal to 25% of the original selling price of the financed
equipment should the rental facility choose not to make the residual payment. At
that point, ASV would take possession of the equipment. As of June 30, 2003, the
total amount of future residual payments the Company may be required to make in
the event of nonpayment by rental facilities totaled approximately $570,000. The
Company believes the value of the related equipment will equal or exceed the
amount of residual payment. Accordingly, the Company does not anticipate any
loss will be incurred should any residual payments need to be made.

         The Company believes cash expected to be generated from operations, its
existing cash and short-term investments, together with its available, unused
$10 million credit line, will satisfy the Company's projected working capital
needs and other cash requirements for the next twelve months and for the
foreseeable future.

         The statements set forth above under "Liquidity and Capital Resources"
and elsewhere in this Form 10-Q regarding ASV's future sales levels, product
mix, profitability, expense levels and liquidity are forward-looking statements
based on current expectations and assumptions, and entail various risks and
uncertainties that could cause actual results to differ materially from those
expressed in such forward-looking statements. Certain factors may affect whether
these anticipated events occur including ASV's ability to successfully
manufacture the machines, unanticipated delays, costs or other difficulties in
the development and manufacture of the machines, market acceptance of the
machines, general market conditions, corporate developments at ASV, Polaris or
Caterpillar and ASV's ability to realize the anticipated benefits from

                                       11

<PAGE>

its alliances with Polaris and Caterpillar. Any forward-looking statements
provided from time-to-time by the Company represent only management's then-best
current estimate of future results or trends. Additional information regarding
these risk factors and uncertainties is detailed in the Risk Factors filed as
Exhibit 99 to this Current Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company has no history of, and does not anticipate in the future,
investing in derivative financial instruments, derivative commodity instruments
or other such financial instruments. Transactions with international customers
are entered into in US dollars, precluding the need for foreign currency hedges.
Additionally, the Company invests in money market funds and fixed rate U.S.
government and corporate obligations, which experience minimal volatility. Thus,
the exposure to market risk is not material.

ITEM 4. CONTROLS AND PROCEDURES

         Evaluation of Disclosure Controls and Procedures. Under the supervision
and with the participation of the Company's management, including the Company's
Chief Executive Officer and Chief Financial Officer, the Company evaluated the
effectiveness of the design and operation of its disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end
of the period covered by this report. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that, as of the end of
the period covered by this report, the Company's disclosure controls and
procedures are adequately designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Securities and Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported, within the time periods specified in applicable rules
and forms.

         Changes in Internal Controls. During our second fiscal quarter, there
have not been any significant changes in the Company's internal control over
financial reporting (as defined in Rule 13(a)-15(f) under the Exchange Act) that
have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         ASV is a party to certain claims arising in the ordinary course of
business. In the opinion of management, the outcome of such claims will not
materially affect ASV's current or future financial position or results of
operation.

ITEM 2.  CHANGES IN SECURITIES

         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None

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

         The annual meeting of shareholders of A.S.V., Inc. was held on May 30,
         2003. Matters submitted at the meeting for vote by the shareholders
         were as follows:

                                       12

<PAGE>

                  (a)      Election of Directors.

                           The following directors were elected at the Annual
                           Meeting, each with the following votes:

<TABLE>
<CAPTION>
                                   For                         Against
                                   ---                         -------
<S>                             <C>                            <C>
Gary D. Lemke                   9,575,849                      260,750
Edgar E. Hetteen                9,575,939                      260,660
Jerome T. Miner                 9,759,648                       76,751
Leland T. Lynch                 9,760,548                       76,051
James H. Dahl                   9,630,039                      206,560
R. E. "Teddy" Turner, IV        9,759,506                       77,013
Richard A. Benson               9,623,189                      213,410
Robert R. Macier                9,680,009                      156,590
</TABLE>

                  (b)      Ratification of Appointment of Independent Public
                           Accountants.

                           Shareholders ratified the appointment of Grant
                           Thornton LLP as the Company's independent auditors
                           for the fiscal year ending December 31, 2003, with a
                           vote of 9,741,458 votes for, 6,725 votes against and
                           88,416 shares abstaining.

ITEM 5.           OTHER INFORMATION

                  None

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS

      Exhibit
      Number      Description

      3.1         Second Restated Articles of Incorporation of the Company (a)

      3.1a        Amendment to Second Restated Articles of Incorporation of the
                  Company filed January 6, 1997 (d)

      3.1b        Amendment to Second Restated Articles of Incorporation of the
                  Company filed May 4, 1998 (g)

      3.2         Bylaws of the Company (a)

      3.3         Amendment to Bylaws of the Company adopted April 13, 1999 (l)

      4.1         Specimen form of the Company's Common Stock Certificate (a)

      4.3*        1994 Long-Term Incentive and Stock Option Plan (a)

      4.4         Warrant issued to Leo Partners, Inc. on December 1, 1996 (d)

      4.5*        1996 Incentive and Stock Option Plan (e)

      4.6*        1996 Incentive and Stock Option Plan, as amended (f)

      4.7*        1998 Non-Employee Director Stock Option Plan (f)

      4.8*        Amendment to 1998 Non-Employee Director Stock Option Plan (m)

      4.9         Securities Purchase Agreement dated October 14, 1998 between
                  Caterpillar Inc. and the Company (h)

      4.10        Warrant issued to Caterpillar Inc. on January 29, 1999 (i)

      4.11        Securities Purchase Agreement dated October 31, 2000 between
                  Caterpillar Inc. and the Company (n)

                                       13

<PAGE>

      4.12      Replacement Warrant issued to Caterpillar Inc. on October 31,
                2000 (n)

      10.1      Development Agreement dated July 14, 1994 among the Iron Range
                Resources and Rehabilitation Board, the Grand Rapids Economic
                Development Authority ("EDA") and the Company (b)

      10.2      Lease and Option Agreement dated July 14, 1994 between the EDA
                and the Company (b)

      10.3      Option Agreement dated July 14, 1994 between the EDA and the
                Company (b)

      10.4      Supplemental Lease Agreement dated April 18, 1997 between the
                EDA and the Company (e)

      10.5      Supplemental Development Agreement dated April 18, 1997
                between the EDA and the Company (e)

      10.6      Line of Credit dated May 22, 1997 between Norwest Bank
                Minnesota North, N.A. and the Company (e)

      10.7*     Employment Agreement dated October 17, 1994 between the
                Company and Thomas R. Karges (c)

      10.8      Extension of Lease Agreement dated May 13, 1998 between the
                EDA and the Company (g)

      10.9      First Amendment to Credit Agreement dated June 30, 1998
                between Norwest Bank Minnesota North, N.A. and the Company (g)

      10.10     Commercial Alliance Agreement dated October 14, 1998 between
                Caterpillar Inc. and the Company (h)

      10.11     Management Services Agreement dated January 29, 1999 between
                Caterpillar Inc. and the Company (j)

      10.12     Marketing Agreement dated January 29, 1999 between Caterpillar
                Inc. and the Company (j)

      10.13     Third Amendment to Credit Agreement dated June 9, 1999 between
                Norwest Bank Minnesota North, N.A. and the Company (k)

      10.14     Fourth Amendment to Credit Agreement dated June 1, 2000
                between Norwest Bank Minnesota North, N.A. and the Company (m)

      10.15**   Multi-Terrain Rubber-Tracked Loader Alliance Agreement dated
                October 31, 2000 between Caterpillar Inc. and the Company (n)

      10.16**   Manufacturing and Distribution Agreement dated January 2, 2001
                between Polaris Industries Inc. and the Company (o)

      10.17     Fifth Amendment to Credit Agreement dated June 1, 20021
                between Wells Fargo Bank Minnesota, N.A. and the Company (p)

      10.18     Sixth Amendment to Credit Agreement dated June 1, 2002 between
                Wells Fargo Bank Minnesota, N.A. and the Company (q)

      10.19     Seventh Amendment to Credit Agreement dated June 1, 2002
                between Wells Fargo Bank Minnesota, N.A. and the Company (r)

      10.20**   Marketing Agreement dated March 13, 2003 between Jacobsen, a
                division of Textron, Inc., and the Company (s)

      10.21     Business Loan Agreement dated July 7, 2003 between Wells Fargo
                Bank Minnesota, N.A. and the Company

      11        Statement re: Computation of Per Share Earnings

      31.1      Certification of the Chief Executive Officer pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002.

                                       14

<PAGE>

      31.2      Certification of the Chief Financial Officer pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002.

      32.1      Certification of the Chief Executive Officer pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002.

      32.2      Certification of the Chief Financial Officer pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002

      99        Risk Factors

-------------------
(a)  Incorporated by reference to the Company's Registration Statement on Form
     SB-2 (File No. 33-61284C) filed July 7, 1994.

(b)  Incorporated by reference to the Company's Post-Effective Amendment No. 1
     to Registration Statement on Form SB-2 (File No. 33-61284C) filed August 3,
     1994.

(c)  Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
     for the quarter ended September 30, 1994 (File No. 33-61284C) filed
     November 11, 1994.

(d)  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the year ended December 31, 1996 (File No. 0-25620) filed electronically
     March 28, 1997.

(e)  Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
     for the quarter ended June 30, 1997 (File No. 0-25620) filed electronically
     August 13, 1997.

(f)  Incorporated by reference to the Company's Definitive Proxy Statement for
     the year ended December 31, 1997 (File No. 0-25620) filed electronically
     April 28, 1998.

(g)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 1998 (File No. 0-25620) filed electronically
     August 12, 1998.

(h)  Incorporated by reference to the Company's Current Report on Form 8-K (File
     No. 0-25620) filed electronically October 27, 1998.

(i)  Incorporated by reference to the Company's Current Report on Form 8-K (File
     No. 0-25620) filed electronically February 11, 1999.

(j)  Incorporated by reference to the Company's Annual Report on Form 10-K for
     the year ended December 31, 1998 (File No. 0-25620) filed electronically
     March 26, 1999.

(k)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 1999 (File No. 0-25620) filed electronically
     August 9, 1999.

(l)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended September 30, 1999 (File No. 0-25620) filed
     electronically November 12, 1999.

(m)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 2000 (File No. 0-25620) filed electronically
     August 10, 2000.

(n)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended September 30, 2000 (File No. 0-25620) filed
     electronically November 13, 2000.

(o)  Incorporated by reference to the Company's Annual Report on Form 10-K for
     the year ended December 31, 2000 (File No. 0-25620) filed electronically
     March 30, 2001.

(p)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 2001 (File No. 0-25620) filed electronically
     August 13, 2001.

(q)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 2002 (File No. 0-25620) filed electronically
     August 14, 2002.

(r)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended September 30, 2002 (File No. 0-25620) filed
     electronically November 14, 2002.

                                       15

<PAGE>
(s)  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarter ended March 31, 2003 (File No. 0-25620) filed
     electronically May 14, 2003.

*    Indicates management contract or compensation plan or arrangement.

**   Certain information contained in this document has been omitted and filed
     separately accompanied by a confidential request pursuant to Rule 24b-2 of
     the Securities Exchange Act of 1934.

         (B)      REPORTS ON FORM 8-K

         The following current Reports on Form 8-K were filed by the Company
during the quarter ended June 30, 2003:

         Current Report on Form 8-K dated April 24, 2003 reporting under Item 9.
"Regulation FD Disclosure" that on April 24, 2003, ASV issued a press release
disclosing its financial results for the three months ended March 31, 2003. In
addition, the press release contained information regarding a conference call
held April 25, 2003 during which ASV discussed its financial results for the
three months ended March 31, 2003 and its outlook for the year ending December
31, 2003.

         Current Report on Form 8-K dated May 29, 2003 reporting under Item 9.
"Regulation FD Disclosure" that on May 29, 2003, ASV issued a press release
disclosing it has revised its outlook for its level of anticipated net sales and
earnings per share for its second quarter of 2003 and its fiscal year 2003.

                                       16

<PAGE>

                                   SIGNATURES

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

                                          A.S.V., INC.

Dated: August 14, 2003                    By /s/ Gary Lemke
                                             --------------------------------
                                             Gary Lemke
                                             President

Dated: August 14, 2003                    By /s/ Thomas R. Karges
                                             --------------------------------
                                             Thomas R. Karges
                                             Chief Financial Officer
                                             (principal financial and accounting
                                             officer)

                                       17

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT                                                                             METHOD OF FILING
-------                                                                             ----------------
<S>                                                                          <C>
10.21    Business Loan Agreement...........................................  Filed herewith electronically

11       Statement re: Computation of Per Share Earnings...................  Filed herewith electronically

31.1     Certification of the Chief Executive Officer......................  Filed herewith electronically

31.2     Certification of the Chief Financial Officer......................  Filed herewith electronically

32.1     Certification of the Chief Executive Officer......................  Filed herewith electronically

32.2     Certification of the Chief Financial Officer......................  Filed herewith electronically

99       Risk Factors......................................................  Filed herewith electronically
</TABLE>

                                       18