PART I.     FINANCIAL INFORMATION

Item 1.      FINANCIAL STATEMENTS

                       AJAY SPORTS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                             June 30, 1999          December 31,
                                              (Unaudited)               1998
ASSETS                                       -------------          ------------

Current assets:
     Cash                                     $        463         $          6
     Marketable  securities                            484                  396
     Trade accounts receivable, net                  4,214                1,889
     Inventories                                     4,942                5,680
     Prepaid expenses and other                        821                  485
                                              ------------          ------------
                    Total current assets            10,924                8,456

Fixed assets, net                                    1,754                1,708
Other assets                                           145                  179
Deferred tax benefit                                 5,138                1,119
Goodwill                                             7,639                1,621
                                              ------------          ------------
                   Total assets               $     25,600         $     13,083
                                              ============          ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
      Notes payable to banks                  $      8,695         $        195
      Current portion of capital lease                   4                    4
      Accounts payable                               3,134                2,225
      Accrued expenses                                 769                  380
                                              ------------          ------------
                    Total current liabilities       12,602                2,804

Notes payable to affiliates - long term              1,587                1,587
Notes payable to banks  -  long term                 7,138                5,951
Notes payable                                        2,070                    -
                                              ------------          ------------
                    Total  liabilities              23,397               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, 264,177 shares
               outstanding at stated value           2,642                2,642
          Series D, $0.01 par value, 6,000,000 shares   60                   60
      Common stock, $.01 par value 100,000,000 shares
               authorized, 3,956,815 shares outstanding 40                   40
Additional paid-in capital                          15,065               14,762
Accumulated deficit                                (16,984)             (16,006)
Accumulated unrealized (losses) gains on securities    106                   (7)
                                              ------------          ------------
    Total stockholders' equity                       2,179                2,741
                                              ------------          ------------
   Total liabilities and stockholders' equity $     25,600         $     13,083
                                              ============          ============



<PAGE>
<TABLE>
<CAPTION>



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



                                                 Three Months              Six Months
                                                Ended June 30,           Ended June 30,
                                              1999         1998        1999         1998
                                            ------        ------      ------       ------
<S>                                        <C>            <C>         <C>          <C>

Net sales                                 $  4,560       $  8,991     $  8,823     $  16,589

Cost of sales                                4,043          7,335        7,638        13,665
                                          ---------      ---------    ---------    ----------
      Gross profit                             517          1,656        1,185         2,924

Selling, general and                           985          1,178        1,836         2,206
   administrative expenses                ---------      ---------    ---------    ----------

      Operating income                        (468)           478         (651)          718

Non-operating expense:
      Interest expense, net                    275            315          528           650
      Other, net                                44             38           70           (98)
                                          ---------      ---------    ---------    ----------
      Total non-operating expense              319            353          598           552
                                          ---------      ---------    ---------    ----------
Income (loss) before income taxes             (787)           125       (1,249)          166

Income tax expense (benefit)                  (275)             -         (275)            -
                                          ---------      ---------    ---------    ----------
Net income (loss)                         $   (512)      $    125     $   (974)    $     166
                                          =========      =========    =========    ==========
Basic and diluted earnings per share*     $   0.00       $   0.00     $   0.00     $    0.00
                                          =========      =========    =========    ==========
Weighted average common shares outstanding   3,957          3,879        3,957         3,879
                                          =========      =========    =========    ==========
</TABLE>






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



<PAGE>

<TABLE>
<CAPTION>


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



                                                                                Six    Months
                                                                               Ended  June  30,
                                                                          1999               1998
                                                                        --------           --------
<S>                                                                     <C>                <C>

Cash flows from operating activities:

     Net income  (loss)                                                 $  (974)           $  166
      Adjustments to reconcile to net cash flows from
      operating activities:
           Depreciation and amortization                                    196`               181
      Change in assets [(increase)/decrease] and
       liabilities [increase/(decrease)]:
           Trade accounts receivable, net                                (2,325)           (1,189)
            Inventories                                                     738               639
            Prepaid expenses and other current assets                      (336)              (68)
            Other assets                                                     34              (171)
            Deferred tax benefits                                        (4,019)                -
            Accounts payable                                                913              (676)
            Accrued expenses                                                389              (112)
            Goodwill                                                     (6,044)                -
                                                                        --------           -------
                   Net cash used in operating activities                (11,428)           (1,230)
                                                                        --------           -------
Cash flows from investing activities:
     Net Acquisitions of fixed assets                                      (215)              (75)
                                                                        --------           -------
                    Net cash used in investing activities                  (215)              (75)
                                                                        --------           -------
Cash flows from financing activities:
        Net change in notes payable to banks                              9,687              (163)
        Net proceeds from notes payable to  affiliates                        -             1,300
        Net proceeds from notes payable                                   2,070                 -
        Net change in marketable securities                                  97                 -
        Net proceeds from  minority interest in subsidiary                  246

                                                                        --------           -------
                     Net cash provided by  financing activities          12,100             1,137
                                                                        --------           -------
Net increase (decrease) in cash                                             457              (168)
Cash at beginning of period                                                   6               234
                                                                        --------           -------
Cash at end of period                                                   $   463            $   66
                                                                        ========           =======
Supplemental disclosures of cash flow information:
       Cash paid for interest                                           $   215            $  633
                                                                        ========           =======
       Cash paid for income tax                                               -                 -
                                                                        ========           =======
</TABLE>



<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


This report contains forward-looking  statements including statements containing
words such as "believes", "anticipates",  "expects" and the like. All statements
other than  statements  of  historical  fact included in this report are forward
looking statements.  The Company believes that its expectations reflected in its
forward looking statements are reasonable, but it can give no assurance that the
expectations  ultimately will prove to be correct.  Important factors including,
without limitation, statements relating to planned acquisitions,  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,  could
cause the Company's actual results to differ  materially from those  anticipated
in these forward-looking  statements.  The Company does not intend to update the
forward looking statements contained in this report.


1.    BASIS OF PRESENTATION

The  condensed  consolidated  financial  statements  included  herein  have been
prepared by Ajay Sports,  Inc. (the "Company") without audit and pursuant to the
rules and regulations of the Securities and Exchange Commission.  In the opinion
of the Company, the financial statements reflect all adjustments,  which consist
only of normal recurring adjustments,  necessary to present fairly the financial
position of the Company at June 30, 1999 and the results of  operations  for the
three and six-month  periods ended June 30, 1999 and 1998 and the cash flows for
the same six-month periods.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted pursuant to the SEC rules and regulations dealing
with  interim  financial  statements.  However,  the Company  believes  that the
disclosures  made in the  condensed  financial  statements  included  herein are
adequate to make the  information  presented  not  misleading.  These  condensed
financial statements should be read in conjunction with the financial statements
and notes thereto  included in the Company's  Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.

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

The interim period results are not  necessarily  indicative of results which may
be expected for any other interim period or for the full year. Certain costs are
estimated for the full year and  allocated to interim  periods based on activity
associated with the interim period. Accordingly,  such costs are subject to year
end adjustment.




<PAGE>





2.    INVENTORIES

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


                           June 30,                  December 31,
                            1999                         1998
                          ---------                 --------------

Raw Materials              $ 1,320                     $ 1,493

Work in Process              1,146                       1,052

Finished Goods               2,476                       3,135
                          ---------                 ---------------
                           $ 4,942                     $ 5,680
                          =========                 ===============

3.    NOTES PAYABLE TO BANKS

On February 2, 1999, the Company  entered an agreement with Wells for a seasonal
over  advance of up to $750,000  beginning  February  2, 1999.  Half of the over
advance, or up to $375,000,  initially was due to Wells on June 1, 1999 with the
other half, or up to $375,000,  due to Wells on July 1, 1999. The full amount of
this over advance has been extended  through  August 1999.  The interest rate on
advances  outstanding on the over advance is prime plus 2%. The terms and length
of the over advance loan are currently being  renegotiated with the objective of
providing more availability of funds to the Company.

On June  23,  1999 the  Company,  through  a newly  formed  subsidiary  Pro Golf
International,  Inc. increased its borrowings by $8,500,000 with a 75 day bridge
loan from Comerica Bank. The proceeds of this loan were used toward the purchase
of 100% of the outstanding  common stock of Pro Golf of America,  Inc. Long-term
financing is being  arranged to replace this loan and is expected to be in place
by the due date of the bridge loan.






<PAGE>



4.    SEGMENT INFORMATION


The contribution to net sales,  operating income (loss) and identifiable  assets
of the Company's industry segments for the quarter and six months ended June 30,
1999 and 1998 (unaudited) are as follows (in thousands):

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

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

                             Quarter Ended June 30, 1999
               --------------------------------------------------------------
                                                    GOLF
                                          ------------------------
                                           Mass         Specialty
                              Furniture    Merchant     Golf Stores      Franchise   Corporate      Consolidated

 Net Sales                    $   1,897    $   2,431    $    232                     $      -        $ 4,560

 Operating Profit/(Loss)             96         (198)       (112)                        (254)          (468)

 Total Assets                     3,095      9,739         1,682            12,308          -         25,600

 Depreciation/Amortization           30         58            13                            -            101

 Capital Expenditures                58         44             -                            -            102

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

                           Quarter Ended June 30, 1998
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
                                                    GOLF
                                          ------------------------
                                           Mass         Specialty
                              Furniture    Merchant     Golf Stores      Franchise   Corporate      Consolidated



 Net Sales                   $    1,190 $    7,329      $      472                    $      -       $     8,991

 Operating Profit/(Loss)             39        745            (130)                         (176)            478

 Total Assets                     2,350     12,463           2,312                            -            17,125

 Depreciation/Amortization           23         55               2                            -                80

 Capital Expenditures                39         13               -                            -                52
------------------------------------------------------------------------------------------------------------------

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


<PAGE>

                         Six Months Ended June 30, 1999
------------------------------------------------------------------------------------------------------------------
                                                    GOLF
                                          ------------------------
                                           Mass         Specialty
                              Furniture    Merchant     Golf Stores      Franchise   Corporate      Consolidated


 Net Sales                    $   4,165   $  4,385         $    273                  $        -     $      8,823

 Operating Profit/(Loss)            412       (508)            (147)                       (408)            (651)

 Total Assets                     3,095      8,515            1,682       12,308              -           25,600

 Depreciation/Amortization           54        116               26                           -              196

 Capital Expenditures                77         44                -                           -              121
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------

                         Six Months Ended June 30, 1998
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------


                                                    GOLF
                                          ------------------------
                                           Mass         Specialty
                              Furniture    Merchant     Golf Stores      Franchise   Corporate      Consolidated

 Net Sales                    $   2,950    $ 12,647         $ 992                    $      -       $     16,589

 Operating Profit/(Loss)            259       1,018          (240)                        (319)              718

 Total Assets                     2,350      12,463         2,312                           -             17,125

 Depreciation/Amortization           49         110            22                           -                181

 Capital Expenditures                62          13             -                           -                 75
---------------------------------------------------------------------------------------------------------------------


 The franchise segment is due to the acquisition of Pro Golf.


</TABLE>




<PAGE>


------------------------------------------------------------------------------
 5.   DIVIDENDS
------------------------------------------------------------------------------


Dividends on Series B and C Convertible  Preferred  Stock have not been declared
for 1997, 1998 or 1999 due to unavailability of funds.  Dividends are in arrears
on  Series B in the  amount  of  $1,056,575  and on  Series C in the  amount  of
$708,262.  Dividends  are permitted to be paid under the credit  agreement  when
sufficient funds become available.