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 Quarter Ended                           Commission File No.
September 30, 2000                                    33-19107
------------------                                    --------


                                LBO Capital Corp.
             (Exact name of Registrant as Specified in its Charter)

Colorado                                                       38-2780733
--------                                                       ----------
(State or Other Jurisdiction                                  (IRS Employer
 of Incorporation or Organization)                         Identification No.)




32751 Middlebelt Road, Suite B
Farmington Hills, MI                                              48334
--------------------------------                              -------------
(Address of Principal Executive Offices)                        (Zip Code)


                                (248) 851-5651
              (Registrant's Telephone Number Including Area Code)

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

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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

As of November 4, 2000 a total of  12,100,000  shares,  $.0001 par value  common
stock, were issued and outstanding.


<PAGE>






                           LBO CAPITAL CORP.

             Form 10-Q Filing of Quarter Ended September 30, 2000

                                     INDEX
                                                                            Page
                                                                          Number

Part I.  FINANCIAL INFORMATION

Item 1.     Financial Statements.

            Balance Sheets
               September 30, 2000 (Unaudited) and December 31, 1999          3

            Statements of Operations (Unaudited)
               Three and Nine months ended September 30, 2000 and 1999       4

            Statements of Cash Flows (Unaudited)
               Nine months ended September 30, 2000 and 1999                 5

            Notes to Financial Statements (Unaudited)                      6-7

Item 2.     Management's Discussion and Analysis of Financial Statements
            (Unaudited)                                                      7

PART II.    OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K                                 8




            Financial Statements of Ajay Sports, Inc.
            as of September 30, 2000


            Signature Page


Note:  No other  information  is included in answer to any item under Part II as
those other Items are either not  applicable,  or if  applicable,  the answer is
negative.



<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements.

                                   LBO CAPITAL CORP.
                                     BALANCE SHEETS

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

                                                      (Unaudited)
                                                     September 30          December 31,
                                                         2000                 1999
                                                    -------------------------------------
ASSETS
Current Assets:
    Cash and Equivalents                             $          17         $          63
    Marketable Securities - Available for Sale              17,259                32,600
    Interest Receivable                                        -0-                15,780
    Note Receivable                                            -0-               300,000
                                                       ------------          ------------

       Total Current Assets                                 17,276               348,443

Other Assets                                               321,000                   -0-
                                                       ------------          ------------
    Investments
       Total Other Assets                                  321,000                   -0-
                                                       ------------          ------------

TOTAL ASSETS                                         $     338,276         $     348,443
                                                       ============          ============


                         LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
    Accounts Payable                                           731                 3,250
    Accounts Payable - Related Entities                        210                   300
    Notes Payable - Other                                  830,251               823,201
    Accrued Expenses and Taxes                             262,920               194,021
                                                       ------------          ------------
       Total Current Liabilities                         1,094,112             1,020,772

Stockholders' Equity
    Common Stock, $.0001 par value;
       Authorized 100,000,000 Shares;
       Issued and Outstanding 12,100,000 shares              1,210                 1,210
    Additional Paid-In Capital                             623,094               623,094
    Unrealized Gain(Loss) on Available for Sale
          Securities                                       (31,137)              (15,796)
    Accumulated Deficit                                 (1,349,003)           (1,280,837)
                                                       ------------          ------------

       Total Stockholders' Deficit                        (755,836)             (672,330)
                                                       ------------          ------------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT            $     338,276         $     348,443
                                                       ============          ============


                       See notes to financial statements.

                                           3
</TABLE>

<PAGE>
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements.
<TABLE>
<CAPTION>
<S>                                               <C>                 <C>                     <C>                <C>

                                                         LBO CAPITAL CORP.
                                                      STATEMENTS OF OPERATIONS



                                                   For the Three Months Ended September 30    For the Six Months Ended September 30,
                                                       2000                1999                     2000                  1999
                                                   -------------   ---------------------      ----------------   -------------------



REVENUES:
     Interest Income - Other                       $        -0-        $        7,561          $     5,219        $          8,219

EXPENSES:
     Professional Services                                  424                   513                1,793                   1,152
     Management Fees                                        830                   840                2,570                   2,460
     Interest Expense                                    24,044                21,074               68,900                  46,114
     Other Expenses                                          36                    30                  123                     225
                                                     -----------         -------------           ----------         ----------------

             Total Expenses                              25,334                22,456               73,385                  49,950
                                                     -----------         -------------           ----------         ----------------

Income (Loss) Before Income Taxes                       (25,334)              (14,895)             (68,166)                (41,731)

Income Tax Expense (Benefit):
     Currently Payable                                      -0-                   -0-                  -0-                     -0-
                                                     -----------         -------------           ----------         ----------------

      Net Income (Loss)                            $    (25,334)       $      (14,895)         $   (68,166)       $        (41,731)
                                                     ===========         =============           ==========         ===============

       Net Income (Loss) per Share                 $       (.00)       $         (.00)         $      (.00)       $           (.00)
                                                     ===========         =============           ==========         ===============

       Weighted Average Number of Common Shares
          Outstanding                                12,100,000            12,100,000            12,100,000             12,100,000
                                                     ===========         =============           ==========         ===============






                                                 See notes to financial statements.

                                                                 4
</TABLE>

<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements.
<TABLE>
<CAPTION>
<S>                                               <C>                        <C>

                                   LBO CAPITAL CORP.
                                       CASH FLOWS


                                                  (UNAUDITED)
                                                  September 30,            September 30,
                                                      2000                      1999
                                                  ---------------------------------------
Cash Flows for Operating Activities:
Net Loss                                           $    (68,166)             $   (41,731)
Adjustments to Reconcile Net Income to Net
  Cash Provided by Operating Activities:
Changes in Assets and Liabilities:
  (Decrease) Increase in:
    Interest Receivable - Other                          15,781                   (8,219)
    Accounts Payable                                     (2,520)                  (3,032)
    Accounts Payable - Related Entities                     (90)                      30
    Accrued Expenses and Taxes                           68,900                   46,114
                                                     -----------               ----------

        Total Adjustments                                82,070                   34,893
                                                     -----------               ----------
Net Cash (Used for) Operations                           13,904                   (6,838)

Cash (Used for) Investing Activities
  Note Receivable - Other                                   -0-                 (300,000)
  Purchase of Investments                               (21,000)                     -0-
                                                     -----------               ----------
                                                        (21,000)                (300,000)
                                                     -----------               ----------
Cash Flows from Financing Activities:
  Proceeds on Notes Payable                               7,050                  306,850
                                                     -----------               ----------

             Net Cash Provided by Financing Activities    7,050                  306,850
                                                     -----------               ----------
Net Increase (Decrease) in Cash                             (46)                      12

Cash and Cash Equivalents:
  At Beginning of Period                                     63                       73
                                                     -----------               ----------
  At End of Period                                 $         17              $        85
                                                     ===========               ==========
Supplemental Disclosures of Cash Flow Information:
  Interest Paid                                    $        -0-              $       -0-
                                                     ===========               ==========


                                  See notes to financial statements.

                                               5
</TABLE>

<PAGE>

                               LBO CAPITAL CORP
                   NOTES TO FINANCIAL STATEMENTS (Unaudited)

      NOTE 1.  INTERIM FINANCIAL STATEMENTS

      The accompanying financial statements of LBO Capital Corp. ("the Company")
have been  prepared by the Company  without  audit by  independent  accountants,
except  for the  balance  sheet at  December  31,  1999.  In the  opinion of the
Company's management, the financial statements reflect all adjustments necessary
to present  fairly the  Company's  financial  position at September 30, 2000 and
December 31,  1999,  and the results of  operations  and cash flows for the nine
month periods ended September 30, 2000 and 1999.

      Certain  information  and  footnote   disclosures   normally  included  in
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted.  These unaudited financial statements
should be read in  conjunction  with the financial  statements and notes thereto
included in the  Company's  Annual Report 10-K.  The results for the  nine-month
periods  ended  September  30,  2000 are not  necessarily  indicative  of future
financial results.

      NOTE 2.  INVESTMENTS.

      As previously  reported,  the Company had acquired 1,880,000 shares of the
restricted  common  stock of Ajay  Sports,  Inc.  ("Ajay")  in April  1989,  for
$182,000.  Subsequently,  this was reduced to 1,480,000  shares.  As a result of
recording the Company's equity in net losses of Ajay, the carrying value of this
investment is zero. The Company also obtained  200,000  warrants of Ajay at that
time.  Each  warrant  entitles  the Company to purchase one share of Ajay common
stock at $.18.

      On  August  13,  1998,  Ajay  announced  that its board of  directors  had
authorized the implementation of a 1-for-6 reverse split of the company's common
stock,  effective  with the  commencement  of trading on August  14,  1998.  The
reverse split was approved by the  stockholders of Ajay at the company's  annual
meeting on May 29, 1998.

      Following the reverse  split,  holders of Ajay's common stock received one
new share of $.01 par value  common  stock for every six shares of common  stock
currently  held.  Therefore,  the number of Ajay  shares  held by the Company is
246,667.  The reverse split also  affected the number and exercise  price of the
Company's warrants, such that the Company now holds 33,333 warrants entitling it
to purchase one share of Ajay's common stock at $1.08 per share.
<PAGE>

      On February 29, 2000, the Registrant  converted its note  receivable  from
Pro Golf  International,  Inc.  ("PGI"),  and the interest accrued but unpaid on
such note  receivable,  into common stock of PGI. The conversion was made at the
rate of $60 per common share,  the price at which PGI was raising equity capital
under a Confidential  Private  Placement  Memorandum dated February 4, 2000. The
Registrant  had initially  made an investment  in the  subordinated  debt of the
Registrant on June 23, 1999, as part of the purchase of PGI by the  Registrant's
investee  company,  Ajay Sports,  Inc. on that date, and the Registrant had held
the note  from PGI until  the time of this  conversion  into  common  stock.  In
exchange  for  converting  the  $300,000  note  and  $21,000  of  interest,  the
Registrant received 5,350 shares of PGI's common stock.


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

      (a) Material Changes in Financial Condition

      Working capital decreased  by $83,507  in the  nine-month  period  ended
September 30, 2000 due to the net loss of $68,166 and the decrease in unrealized
gain on investments of $15,341 for the nine months ended September 30, 2000.

      (b) Results of Operations

      Registrant's  operations  for the nine  months  ended  September  30, 2000
resulted  in a loss of  $68,166.  This was due  mainly to  interest  expense  of
$68,900 and management fees of $2,570 offset by interest income of $5,219.

Liquidity and Capital Resources

      The  Registrant is currently  meeting its cash needs from borrowing from a
company.  There is no assurance  that this will  continue in future  years.  The
Registrant's principal asset is its investment in marketable securities of Ajay,
which it has held for over nine years.  These shares are carried at a zero value
on the  Registrant's  Balance  Sheet as a result of recording  the  Registrant's
equity in net losses of Ajay.  The market value of Ajay stock on  September  30,
2000 was $.26 per share. Ajay stock is traded over-the-counter.  The approximate
market value of the  Registrant's  246,667  shares was $64,133 on that date. The
Registrant also owns 15,341 shares of Enercorp,  Inc. common stock. These shares
are  carried at their fair  market  value of $1.125 per share at  September  30,
2000, which is $31,137 below cost. These shares could be liquidated to meet cash
flow needs if necessary.

<PAGE>

Part II.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits.

      Pursuant to the  provisions of Reg. ss.  210.3-09 of  Regulation  S-X, the
Registrant is required to file separate financial statements of its equity basis
investee  Ajay,  which  financial  statements  for  September 30, 2000 are filed
herewith.

(b)   Reports on Form 8-K.

      None


<PAGE>

                                LBO CAPITAL CORP.

                                    FORM 10-Q

                    For the Quarter Ended September 30, 2000


                                Signature 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.

                                LBO CAPITAL CORP.
                                -----------------
                                  (Registrant)


                                      By:  /s/ Thomas W. Itin
                                           ----------------------------------
                                           Thomas W. Itin, President,
                                            Chairman of Board of Directors



      Date signed:  November 13, 2000

<PAGE>

<TABLE>
<CAPTION>

PART I.     FINANCIAL INFORMATION

Item 1.      FINANCIAL STATEMENTS
<S>                                                       <C>                 <C>

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

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

Current assets:
     Cash                                                 $       52           $      101
     Marketable  securities - available for sale                   -                  348
     Trade accounts receivable, net                            1,795                3,247
     Inventories                                                  91                3,969
     Prepaid expenses and other                                  601                1,179
                                                            --------             --------
                    Total current assets                       2,539                8,844

Fixed assets, net                                             13,104                1,693
Other assets, net                                              6,747                7,037
Deferred tax benefit                                           9,242                6,582
Goodwill                                                           -                1,577
                                                            --------             --------
                   Total assets                            $  31,632           $   25,733
                                                           =========            =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
      Current portion of long term debt                    $     900           $      995
      Accounts payable                                             -                5,043
      Accrued expenses                                         1,376                1,099
                                                            --------              -------
                    Total current liabilities                  2,276                7,137

Notes payable to affiliates - long term                            -                2,087
Notes payable to banks  -  long term                           7,575               13,886
Notes payable - long term                                      7,700                2,070
Commitments and contingencies                                      -                    -
Net liabilities of discontinued operations                    10,500                    -
                                                            --------              -------
                    Total  liabilities                        28,051               25,180
                                                            --------              -------

Minority interest in subsidiary                                   21                   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                                    23,263               15,500
Accumulated deficit                                          -23,119              -18,470
Accumulated other comprehensive income                          -114                  -31
                                                            --------              -------
            Total stockholders' equity                         3,560                  529
                                                            --------              -------
            Total liabilities and stockholders' equity    $   31,632           $   25,733
                                                            ========              =======

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


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

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


                                                           Three   Months            Nine   Months
                                                          Ended September 30,        Ended September 30,
                                                       2000           1999          2000        1999
                                                       ----           -----         ------      ------
Net sales                                           $   1,260     $     995        $   3,657  $    995

Cost of sales                                               1             -                9         -
                                                      -------        ------          -------     ------
      Gross profit                                      1,259           995            3,648        995

Selling, general and
   administrative expenses                                707           950            2,436        950
                                                       ------        ------          -------     ------

      Operating income (loss)                             552            45            1,212         45

Non-operating (income) expense:
      Interest expense, net                               255           122              754        122
      Other, net                                          197            -5              600         -5
                                                       ------        ------          -------     ------
      Total non-operating expense                         452           117            1,354        117
                                                       ------        ------          -------     ------
Income (loss) before minority interest and income taxes   100           -72             -142        -72

Minority interest in income (loss) of subsidiary            3            -1               -3         -1
                                                       ------        ------          -------     ------
Income (loss) before income taxes                          97           -71             -139        -71

Income tax expense (benefit)                               34           -25              -49        -25
                                                       ------        ------          -------     ------
Net income (loss) from continuing operations               63           -46              -90        -46

Discontinued operations:
     (Loss) from operations of golf wholesale segment
            to be disposed of (net of income tax benefit
            of $601 in 2000 and $867 in 1999)               -          -650           -1,130     -1,611
     (Loss) on disposal of golf wholesale segment
           (net of income tax benefit of $1,708)       -3,158             -           -3,158          -
     (Loss) from operations of furniture operations to be
            disposed of (net of income tax benefit of $135
            in 2000 and $235 in 1999)                     -63          -423             -248       -436
                                                       ------        ------          -------     ------
      Total (loss) from discontinued operations        -3,221        -1,073           -4,536     -2,047
                                                       ------        ------          -------     ------

Net (loss)                                          $ -3,158     $  -1,119        $  -4,626   $ -2,093
                                                       ======       =======           ======     ======

Earnings (loss) per share - primary and fully diluted
  Income (loss) from continuing operations          $   0.00     $   -0.01        $   -0.02   $  -0.01
  (Loss) from discontinued operations                  -0.79         -0.27            -1.17      -0.52
                                                      ------       -------           ------     ------
  Net (loss) per share                              $  -0.79     $   -0.28        $   -1.19   $  -0.53
                                                      ======       =======           ======     ======
Weighted average common shares outstanding             4,120         3,957            4,104      3,957
                                                      ======       =======           ======     ======

</TABLE>

<PAGE>

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

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


                                                                      Nine    Months
                                                                      Ended September 30,
                                                                  2000               1999
                                                                 ----------       ---------
Cash flows from operating activities:

      Net (loss) from operations                              $     -4,626        $   -2,093
      Adjustments to reconcile to net cash flows from
      operating activities:
           Depreciation and amortization                             1,987               303
           Loss on dispositions of property and equipment              290
      Change in assets [(increase)/decrease] and
       liabilities [increase/(decrease)]:
           Trade accounts receivable, net                              140            -1,025
            Inventories                                              3,691             1,448
            Prepaid expenses and other current assets                  376              -377
            Other assets                                                 -               -34
            Deferred tax benefits                                   -2,660            -3,624
            Accounts payable                                           188             1,545
            Accrued expenses                                           833               656
           Trademarks                                                    -            -6,989
                                                                 ---------        ----------

              Net cash provided (used in) operating activities         219           -10,190
                                                                 ---------        ----------
Cash flows from investing activities:
       Acquisitions of fixed assets                                   -170              -234
                                                                 ---------        ----------
            Net cash used in investing activities                     -170              -234
                                                                 ---------        ----------

Cash flows from financing activities:
        Net change in notes payable                                   -570            10,509
        Sales of common stock of subsidiary                            357                 -
        Common stock issued for accounts payable                        43                 -
        Net change in marketable securities                             83                16
        Net change from conversion of preferred stock                    -               303
        Minority interest in loss of subsidiary                         -3                24
                                                                 ---------         ---------
            Net cash provided by (used in)financing activities         -90            10,852
                                                                 ---------         ---------
Net increase (decrease) in cash                                        -41               428
Cash at beginning of period                                            101                 6
                                                                 ---------         ---------
Cash at end of period                                            $      60        $      434
                                                                 =========         =========
Supplemental disclosures of cash flow information:
       Cash paid for interest                                    $     878        $      622
                                                                 =========        ===========

       Cash paid for income tax                                  $       -        $        -
                                                                 =========         =========

Non-cash financing transactions:
       Common stock issued for real property                     $  13,000        $        -
                                                                 ==========        =========

</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,  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 September 30, 2000 and the results of operations  for
the nine-month  periods ended September 30, 2000 and 1999 and the cash flows for
the same nine-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.,  Prestige Golf, Inc. and Ajay De Mexico,  Inc..)
and to sell its  furniture  manufacturing  business  (Leisure  Life,  Inc.).  In
accordance with generally accepted accounting principles,  operating results for
these  businesses  for the 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 $6,979 and $478 for the nine
months and three months ended September 30, 2000, respectively, and were $10,512
and $1,689 for the nine  months  and three  months  ended  September  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 September 30, 2000 (000's):

      Cash                                $          7
      Accounts receivable                        1,312
      Inventories                                  187
      Prepaid expenses                             194
      Property, plant, and equipment               933
      Other assets                                  75
                                                 --------
         Total assets                            2,708
                                                 --------

      Accounts payable                           4,792
      Accrued expenses                           1,486
      Notes payable                              6,382
      Other liabilities                            548
                                                --------
         Total liabilities                      13,208
                                                --------

         Excess of liabilities over assets     $10,500
                                                =======

Liabilities  of the  operations  being  discontinued  exceeded  assets  of those
operations  at  September  30,  2000.  The net  liability  has  been  separately
classified in the accompanying balance sheet at September 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:

                           September 30,             December 31,
                                2000                               1999
                           ---------                 ------------------

Raw Materials                $     -                     $ 827

Work in Process                    -
                                                           903

Finished Goods                    91                     2,239
                               -------                   -----

                             $    91                   $ 3,969
                              =======                   ======



3.    NOTES PAYABLE TO BANKS

On February 2, 1999, the Company  entered an agreement with Wells Fargo Bank 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 Company has been  operating
under a forbearance  agreement since June 2, 2000, as it was unable to repay the
loan  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.

The  Company  also was not able to repay  its loan with  U.S.  National  Bank of
Oregon when the principle  amount of  $1,315,000  became due on July 1, 2000 and
has been  operating  under a forbearance  agreement  that expired on October 31,
2000 and is being renegotiated.

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 became a demand note,  with interest due
monthly  and  principal  of $75,000 a month  beginning  September  1, 2000.  The
Company was  declared to be in default of the loan  provisions  on  September 1,
2000 and has been operating  under a forbearance  agreement since that time. The
forbearance agreement calls for monthly payments of interest, with all principal
and fees due by December 1, 2000. At September  30, 2000 the  principal  balance
due on this loan was $8,425,000, and fees were owed of $300,000.

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 $1,181,575 and on Series C in the amount of
$986,467.  Dividends  are permitted to be paid under the credit  agreement  when
sufficient funds become available.

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