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PART I.     FINANCIAL INFORMATION

Item 1.      FINANCIAL STATEMENTS

<S>                                                         <C>                       <C>

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

                                                                 June 30,2000               December 31,
                                                                 (Unaudited)                    1999
ASSETS                                                           ------------                ------------

Current assets:
     Cash                                                     $             20            $           101
     Marketable  securities - available for sale                           291                        348
     Trade accounts receivable, net                                      1,537                      3,247
     Inventories                                                            16                      3,969
     Prepaid expenses and other                                            963                       1179
                                                               ---------------             --------------
                                                                         2,827                      8,844

Fixed assets, net                                                          133                      1,693
Other assets                                                             6,784                      7,037
Deferred tax benefit                                                     7,543                      6,582
Goodwill                                                                 1,566                      1,577
                                                               ---------------             --------------
                   Total assets                               $         18,853            $        25,733
                                                               ===============             ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
      Current portion of long term debt                       $            900            $           995
      Accounts payable                                                       -                      5,043
      Accrued expenses                                                   1,176                      1,099
                                                               ---------------             --------------
                    Total current liabilities                            2,076                      7,137

Notes payable to affiliates - long term                                      -                      2,087
Notes payable to banks  -  long term                                     7,575                     13,886
Notes payable - long term                                                1,200                      2,070
Commitments and contingencies                                                -                          -
Net liabilities of discontinued operations                               7,730                          -
                                                               ---------------             --------------
                    Total  liabilities                                  18,581                     25,180
                                                               ---------------             --------------

 Minority Interest in Subsidiary                                            18                         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 shares
                 outstanding at stated value                             2,179                      2,179
            Series D, $0.01 par value, 6,000,000 shares                     60                         60
      Common stock, $.01 par value 100,000,000 shares authorized,
                 4,120,017 and 4,091,091 shares outstanding                 41                         41
Additional paid-in capital                                              16,763                     15,500
Accumulated deficit                                                    (19,961)                   (18,470)
Accumulated other comprehensive income                                     (78)                       (31)
                                                               ----------------           ----------------
            Total stockholders' equity                                     254                        529
                                                               ----------------           ----------------
            Total liabilities and stockholders' equity        $         18,853           $         25,733
                                                               ================           ================

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<S>                                            <C>              <C>               <C>                   <C

                                                               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,
                                                  2000              1999                 2000              1999
                                                  -----             -----                -----             -----
Net sales                                      $   1,589         $       -         $      2,397          $      -

Cost of sales                                          3                 -                    8                 -
                                                --------          --------          -----------           -------
      Gross profit                                 1,586                 -                2,389                 -

Selling, general and
   administrative expenses                           976                 -                1,729                 -
                                                --------          --------          -----------           -------
      Operating income (loss)                        610                 -                  660                 -

Non-operating expense:
      Interest expense, net                          249                 -                  499                 -
      Other, net                                     174                                    403                 -
                                                --------          --------          -----------           -------
      Total non-operating expense                    423                 -                  902                 -
                                                --------          --------          -----------           -------
Income (loss) before minority interest and
     income taxes                                    187                 -                 (242)                -

Minority interest in income (loss) of subsidiary       2                 -                   (6)                -
                                                --------          --------          ------------          -------
Income (loss) before income taxes                    185                 -                 (236)                -

Income tax expense (benefit)                          65                 -                  (83)                -
                                                --------          --------          ------------          -------
Net income (loss) from continuing operations         120                 -                 (153)                -

 Discontinued operations:
  (Loss) from operations of golf wholesale segment
     to be disposed of (net of income tax
     benefit of $601 in 2000 and $268 in 1999)      (559)             (363)              (1,130)             (961)
  (Loss) from operations of furniture operations
    to be disposed of (net of income tax benefit$112
    of in 2000 and $7 in 1999)                      (185)             (149)                (208)              (13)
                                                ---------         ---------         ------------          --------
       Total (loss) from discontinued operations    (744)             (512)              (1,338)             (974)
                                                ---------         ---------         ------------          --------
Net (loss)                                         $(624)        $    (512)        $     (1,491)         $   (974)
                                                =========         =========         ============         =========

Earnings (loss) per share - primary and fully diluted
  Income (loss) from continuing operations         $ 0.03         $       -         $      (0.04)         $      -
  (Loss) from discontinued operations               (0.23)            (0.15)               (0.37)            (0.29)
                                                 ---------         ---------         ------------          --------
  Net (loss) per share                              (0.20)        $   (0.15)        $      (0.41)         $  (0.29)
                                                 =========         =========         ============         =========
Weighted average common shares outstanding           4,101             3,957                4,096             3,957
                                                 =========         =========         ============         =========
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<S>                                                            <C>                 <C>



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


                                                                             Six Months
                                                                           Ended  June 30,
                                                                 2000                          1999
                                                                 ---------------     --------------

Cash flows from operating activities:

      Net (loss)                                            $            (1491)     $          (974)
      Adjustments to reconcile to net cash flows from
      operating activities:
           Depreciation and amortization                                   502                  196
      Change in assets [(increase)/decrease] and
       liabilities [increase/(decrease)]:
           Trade accounts receivable, net                                 (343)               (2,325)
            Inventories                                                   1718                  738
            Prepaid expenses and other current assets                      196                 (302)
            Deferred tax benefits                                         (961)              (4,019)
            Accounts payable                                              (413)                 913
            Accrued expenses                                               309                  389
            Goodwill                                                                         (6,044)
                                                             ------------------     ----------------
                   Net cash used in operating activities                  (483)             (11,428)
                                                             ------------------     ----------------
Cash flows from investing activities:
       Acquisitions of fixed assets                                        (24)                (215)
                                                             ------------------     ----------------
        Net cash used in investing activities                              (24)                (215)
                                                             ------------------     ----------------

Cash flows from financing activities:
        Net change in notes payable                                         24               11,757
        Sales of common stock of subsidiary                                357                  246
        Common stock issued for accounts payable                            28                    0
        Net change in marketable securities                                 57                   97
        Minority interest in loss of subsidiary                             (6)                   0
                                                             ------------------     ---------------
              Net cash provided by  financing activities                   460               12,100
                                                             ------------------     ----------------
Net increase (decrease) in cash                                            (47)                 457
Cash at beginning of period                                                101                    6
                                                             ------------------     ----------------
Cash at end of period                                        $              54       $          463
                                                              =================     ================
       Cash paid for interest                                $           1,083       $          215
                                                              =================     ================
       Cash paid for income tax                                              -                    -
                                                              =================     ================
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                   NOTES TO CONSOLIDATED FINANCIAL STATEMENT

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,  a change in
the  Company's   relationships  with  its  bank  lenders  and/or  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, 2000 and the results of  operations  for the
six-month  periods  ended June 30, 2000 and 1999 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, 1999.

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.

On June 1, 2000,  the  Company  adopted a formal  plan to  discontinue  its golf
manufacturing  and wholesale  distribution  businesses  (Ajay Leisure  Products,
Inc.,  Palm  Springs  Golf,  Inc.,  and  Prestige  Golf,  Inc.)  and to sell its
furniture manufacturing  business  (Leisure  Life,  Inc.).  In accordance  with
generally accepted accounting principles, operating results for these businesses
are shown separately in the accompanying  statement of operations,  and the
statement of operations for 1999 has been restated and operating results of
the segments to be discontinued and sold are also shown separately.

Net sales of the  discontinued  segments  (000's) were $6,501 and $3,950 for the
six months and three months ended June 30, 2000,  respectively,  and were $8,823
and  $4,262  for  the  six  months  and  three   months  ended  June  30,  1999,
respectively.  These  amounts are not included in net sales in the  accompanying
statement of operations.

Assets and liabilities,  at book values, of the discontinued  segments consisted
of the following at June 30, 2000 (000's):

      Cash                                $      34
      Accounts receivable                     2,054
      Inventories                             2,235
      Prepaid expenses                          240
      Property, plant, and equipment          1,329
      Other assets                               90
                                             ------
         Total assets                         5,982
                                             ------
      Accounts payable                        4,630
      Accrued expenses                        1,197
      Notes payable                           7,528
      Other liabilities                         357
                                             ------
         Total liabilities                   13,712

         Excess of liabilities over assets $  7,730
                                              =====

Liabilities  of the  operations  being  discontinued  exceeded  assets  of those
operations at June 30, 2000. The net liability has been separately classified in
the  accompanying  balance sheet at June 30, 2000. The December 31, 1999 balance
sheet has not been restated.
<PAGE>
2.    INVENTORIES

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


                           June 30,                  December 31,
                              2000                          1999
                           --------                  ------------
Raw Materials                $     -                        $ 827

Work in Process                    -
                                                              903

Finished Goods                    16                        2,239
                              ------                       ------
                             $    16                      $ 3,969
                             $======                      $======

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.  The full amount of
this over advance was due June 2000.  The interest rate on advances  outstanding
on the over  advance is prime plus 2%. The  Company has been  operating  under a
forbearance agreement since June 2, 2000 as it was unable to repay the
overadvance when it was due.  Other  Wells  loans  are also  under  this
forbearance  agreement. Proceeds  from  assets  sold  as  part  of its
discontinuance  and  sale of the discontinued  operations  are  expected  to
provide funds to satisfy  the Wells loans.

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. Effective
June 22, 2000 the loan was extended and is now a demand note, with interest due
monthly and principal payment of $75,000 a month beginning September 1, 2000.
At June 30, 2000 the principal balance due on this loan was $8,425,000 plus fees
due of $300,000.

On July 1, 2000 the Company was unable to repay the principal amount of
$1,304,538, which was due under its loan from U.S. National Bank of Oregon. The
Company expects to be notified that it is considered in default of the loan
agreement, and is in the process of raising additional equity and/or debt which
can be used in part to satisfy its debt with this Bank.

4.    DIVIDENDS

Dividends on Series B and C Convertible Preferred Stock have not been declared
for 1997,1998,1999 or 2000 due to unavailability of funds.  Dividends are in
arrears on Series B in the amount of $1,156,575 and on Series C in the amount
of $926,202.  Dividends are permitted to be paid under the credit agreements
when sufficient funds become available.