<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
       EXCHANGE ACT OF 1934
                  For the Quarterly Period Ended March 31, 1999


[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
       EXCHANGE ACT OF 1934 
             For the Transition Period from _________ to __________


                           Commission File No. 1-12559


                             CRAGAR INDUSTRIES, INC.
                 (Name of small business issuer in its charter)

             DELAWARE                                    86-0721001
  (State or other jurisdiction              (I.R.S. Employer Identification No.)
of incorporation or organization)


                    4636 NORTH 43RD AVENUE, PHOENIX, ARIZONA
                 85031 (Address of principal executive offices)

                                 (602) 247-1300
                           (Issuer's telephone number)

     Check whether the issuer (1) has filed all reports required to be filed 
by Section 13 or 15(d) of the Exchange Act 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 [ ]

     Number of shares of common stock, $.01 par value, outstanding as of March
31, 1999: 2,453,990.

     Transitional small business disclosure format. Yes [ ] No [X]


                                       1
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                             CRAGAR INDUSTRIES, INC.
                                 BALANCE SHEETS
                      MARCH 31, 1999 AND DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                            March 31,     December 31,
                                                                              1999           1998
                                                                          --------------  ------------
                                                                            (Unaudited)
<S>                                                                       <C>             <C>
                                        ASSETS

Current Assets:

     Cash and cash equivalents                                            $      94,645  $           -
     Accounts receivable, less allowance for doubtful accounts of
         $110,248 as of 3/31/99 and $108,995 as of 12/31/98                   4,245,638      2,879,277
     Inventories, net                                                         4,048,922      4,352,453
     Prepaid expenses                                                           213,505        200,017
                                                                          --------------  -------------
             Total current assets                                             8,602,710      7,431,747
Property and equipment, net                                                     586,773        654,534
Other assets, net                                                                21,320         21,320
                                                                          --------------  -------------
                                                                              9,210,803  $   8,107,601
                                                                          --------------  -------------
                                                                          --------------  -------------
                         LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Accounts payable                                                     $   2,490,583  $   2,376,112
     Accrued expenses                                                         1,317,017      1,032,644
     Accrued interest                                                            81,101         74,678
     Line of credit                                                           2,867,641      2,530,161
     Long-term debt, current installments                                       250,400        250,400
                                                                          --------------  -------------
             Total current liabilities                                        7,006,742      6,263,995

Line of credit, excluding current installments                                3,352,933      3,290,333
Long-term debt, excluding current installments                                  907,067        709,667
                                                                          --------------  -------------
             Total liabilities                                               11,266,742     10,263,995
                                                                          --------------  -------------
Stockholders' equity:
     Preferred stock, par value $.01; authorized 200,000 shares,
           22,500 shares issued and outstanding                                     225            225
     Additional paid-in capital - preferred                                   2,020,440      2,090,513
     Common stock, par value $.01; authorized 5,000,000 shares,
           2,453,990 shares issued and outstanding                               24,540         24,540
     Additional paid-in capital - common                                     12,097,115     12,097,115
     Accumulated deficit                                                    (16,198,259)   (16,368,787)
                                                                          --------------  -------------
             Total stockholders' equity (deficit)                            (2,055,939)    (2,156,394)
                                                                          --------------  -------------
                                                                          $   9,210,803   $  8,107,601
                                                                          --------------  -------------
                                                                          --------------  -------------
</TABLE>


See accompanying notes to condensed financial statements.


                                       2
<PAGE>


                             CRAGAR INDUSTRIES, INC.
                            STATEMENTS OF OPERATIONS
                   THREE MONTHS ENDED MARCH 31, 1999 AND 1998
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                Three Months Ended March 31,
                                                             --------------------------------
                                                                  1999                 1998
                                                             --------------     -------------
<S>                                                         <C>                <C>          
Net sales                                                    $   4,186,763      $  3,115,197
Cost of goods sold                                               3,313,470         2,487,467
                                                             --------------     -------------
             Gross profit                                          873,293           627,730

Selling, general and administrative expenses                       588,782           826,431
                                                             --------------     -------------
             Income (loss) from operations                         284,511          (198,701)
                                                             --------------     -------------

Non-operating (income) expenses, net
     Interest expense, net                                         185,105           172,208
     Other, net                                                     (1,049)          (20,307)
                                                             --------------     -------------
             Total non-operating expenses                          184,056           151,901
                                                             --------------     -------------

             Income (loss) before income taxes                     100,455          (350,602)

Income taxes                                                             -                 -
                                                             --------------     -------------

             Net earnings (loss)                             $     100,455      $   (350,602)
                                                             --------------     -------------
                                                             --------------     -------------

Basic earnings (loss) per share                              $        0.02      $      (0.15)
                                                             --------------     -------------
                                                             --------------     -------------

Weighted average shares outstanding - basic                      2,453,990         2,453,990
                                                             --------------     -------------
                                                             --------------     -------------

Diluted earnings (loss) per share                            $        0.01      $      (0.15)
                                                             --------------     -------------
                                                             --------------     -------------

Weighted average shares outstanding - diluted                    4,836,401         2,453,990
                                                             --------------     -------------
                                                             --------------     -------------
</TABLE>

See accompanying notes to condensed financial statements.


                                       3
<PAGE>


                             CRAGAR INDUSTRIES, INC.
                            STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 1999 AND 1998
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                   Three Months Ended March 31,
                                                                               ------------------------------------
                                                                                     1999                 1998
                                                                               --------------       --------------
<S>                                                                           <C>                  <C>
Cash flows from operating activities
     Net earnings (loss)                                                       $     100,455        $     (350,602)
     Adjustments to reconcile net earnings (loss) to net cash
     used in operating activities:
         Provision for (write-off of) doubtful accounts                                1,252                36,483
         Reduction in provision for obsolete and slow-moving inventory              (166,389)             (145,792)
         Depreciation and amortization of property and equipment                      73,952                71,630
         Amortization of other assets                                                      -                12,940
         Increase (decrease) in cash resulting from changes in:
             Accounts receivable                                                  (1,367,614)             (636,763)
             Inventories                                                             469,920              (214,093)
             Prepaid expenses                                                        (13,487)              (88,892)
             Bank overdraft                                                                -                 9,033
             Accounts payable and accrued expenses                                   398,844               628,007
             Accrued interest                                                          6,423               (52,235)
                                                                               --------------       ---------------
                 Net cash used in operating activities                              (496,644)             (730,284)
                                                                               --------------       ---------------

Cash flows from investing activities
     Purchases of property and equipment                                              (6,191)              (59,480)
                                                                               --------------       ---------------
                 Net cash used in investing activities                                (6,191)              (59,480)
                                                                               --------------       ---------------

Cash flows from financing activities
     Issuance of preferred stock and warrants                                              -             1,650,000
     Net borrowings (repayments) on note payable                                     400,080              (781,373)
     Proceeds from long-term debt                                                    260,000                     -
     Repayments of long-term debt                                                    (62,600)               (2,210)
     Repayments of capital lease obligations                                               -               (92,975)
                                                                               --------------       ---------------
                 Net cash provided by financing activities                           597,480               773,442
                                                                               --------------       ---------------

                 Net increase (decrease) in cash                                      94,645               (16,322)

Cash and cash equivalents at beginning of period                                           -                16,322
                                                                               --------------       ---------------

Cash and cash equivalents at end of period                                     $      94,645        $            -
                                                                               --------------       ---------------
                                                                               --------------       ---------------

Supplemental disclosure of cash flow information:
     Cash paid for interest                                                    $     178,682        $      224,443
                                                                               --------------       ---------------
                                                                               --------------       ---------------
</TABLE>


See accompanying notes to condensed financial statements.


                                       4
<PAGE>


                             CRAGAR INDUSTRIES, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                        THREE MONTHS ENDED MARCH 31, 1999
                                   (Unaudited)

1.       Summary of Significant Accounting Policies
         Basis of Presentation:

         The interim financial data of Cragar Industries, Inc., ("CRAGAR" or
         `the Company") presented as of and for the three months ended March 31,
         1999 and 1998 is unaudited; however, in the opinion of the Company, the
         interim data includes all adjustments, consisting only of normal
         recurring adjustments, necessary for a fair presentation of the results
         for the interim periods.

         The year-end balance sheet information was derived from audited
         financial statements. These interim financial statements should be read
         in conjunction with the Company's audited financial statements.

         The preparation of financial statements requires management to make
         estimates and assumptions that affect the reported amount of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates.

2.       Inventories
         Inventories consist of the following:


<TABLE>
<CAPTION>
                                                                          March 31, 1999         December 31, 1998
                                                                          --------------         -----------------
                                                                           (Unaudited)
                  <S>                                                       <C>                      <C>
                  Raw Materials                                             $  2,195,984             $  2,612,857
                  Work in Process                                                123,259                  161,164
                  Finished Goods                                               2,562,539                2,577,681
                                                                            ------------             ------------
                                                                               4,881,782                5,351,702
                  Less allowance for obsolete and slow-moving inventory          832,860                  999,249
                                                                            ------------             ------------
                  Inventories, net                                          $  4,048,922             $  4,352,453
                                                                            ------------             ------------
                                                                            ------------             ------------
</TABLE>

3.       Net Earnings (loss) per Share

         Net Earnings (loss) per common share amounts are based on the
         weighted average number of common shares and common stock equivalents
         outstanding as reflected on Exhibit 11 to this Quarterly Report on Form
         10-QSB.

4.       Other Related Reserves and Allowances

<TABLE>
<CAPTION>
                                                              March 31, 1999           December 31, 1998
                                                              --------------           -----------------
                                                               (Unaudited)
            <S>                                               <C>                      <C>
            Stock Adjustments and Returns                     $     91,505             $       129,849
            Rebates Reserve                                         10,079                       5,869
            Cash Discounts                                          23,409                      21,156
            Advertising Allowance                                   17,433                      49,069
            Warranty Reserve                                       429,278                     397,991
            Royalty Reserve                                          4,020                       2,732
</TABLE>


                                       5
<PAGE>


5.       Preferred Stock and Warrants

         During the first quarter ended March 31, 1998, the Company issued
         22,500 shares of Series A Preferred Stock for $1,350,000 cash and the
         conversion of $900,000, in principal amount, of investor notes payable.
         The Company also granted warrants valued at $229,333 to purchase
         333,333 shares of Common Stock at a price of $8.75 per share in
         connection with the preferred stock issuance. On April 20, 1998, the
         Company issued warrants to NationsCredit Commercial Funding valued at
         $21,960 to purchase 50,000 shares of Common Stock at a price of $5.25
         per share. On August 8, 1998, the Company agreed to grant warrants to
         certain individuals who provided bridge loans to the Company in the
         aggregate principal amount of $900,000 during December 1997 and January
         1998. For each $100,000 made available to the Company, the Company
         granted warrants to purchase 1,500 shares of Common Stock at an
         exercise price of $3.00 per share. The principal amounts of the loans
         were subsequently converted into 90,000 shares of Series A Preferred
         Stock. In addition, the Company agreed to grant warrants to certain
         individuals who continue to pledge assets to secure the Company's
         obligations under the Loan and Credit Agreement with NationsCredit
         Commercial Funding. The Company agreed to grant warrants to purchase
         7,000 shares for each $100,000 in value of the assets pledged on an
         annual basis, which warrants will be exercisable at an exercise price
         equal to the price of the Company's Common Stock on the date of grant.
         On May 15, 1998, the Company granted options to each of Sidney Dworkin,
         Donald McIntrye and Mark Schwartz, Directors of the Company, to
         purchase 2,000 shares of Common Stock at an exercise price of $5.25 per
         share. During November 1998, all previously granted options under the
         Directors' Stock Option Plan were repriced to $4.125, which was the
         fair market price of the Common Stock on the date of repricing. During
         the first quarter ended March 31, 1999, no warrants or options to
         purchase shares of Common Stock were exercised and no Series A
         Preferred Stock was converted to Common Stock. Dividends in arrears for
         outstanding Preferred Stock at March 31, 1999 totaled $175,000, which
         are payable, at the discretion of the Company, in cash or additional
         shares of the Company's Series A Preferred Stock. See "Factors That May
         Affect Future Results and Financial Condition - Dependence on External
         Financing."

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

         This report contains forward-looking statements. Additional written 
or oral forward-looking statements may be made by the Company from time to 
time in filings with the Securities Exchange Commission or otherwise. Such 
forward-looking statements are within the meaning of that term in Section 27A 
of the Securities Act of 1933, as amended, and Section 21E of the Securities 
Exchange Act of 1934, as amended. Such statements may include, but are not 
limited to, projections of revenues, income or loss, estimates of capital 
expenditures, plans for future operations, products or services, and 
financing needs or plans, as well as assumptions relating to the foregoing. 
The words "believe," "expect," "anticipate," "estimate," "project," and 
similar expressions identify forward-looking statements, which speak only as 
of the date the statement was made. Forward-looking statements are inherently 
subject to risks and uncertainties, some of which cannot be predicted or 
quantified. Future events and actual results could differ materially from 
those set forth in, contemplated by, or underlying the forward-looking 
statements. The following disclosures, as well as other statements in the 
Company's report, including those contained below in this Item 2, 
"Management's Discussion and Analysis of Financial Condition or Plan of 
Operation," and in the Notes to the Company's Financial Statements, describe 
factors, among others, that could contribute to or cause such differences.

INTRODUCTION

         CRAGAR designs, produces, and sells high-quality custom vehicle 
wheels and wheel accessories. The Company possesses one of the most widely 
recognized brand names in the automotive aftermarket industry. The Company 
markets a wide selection of custom wheels and components that are designed to 
appeal to automotive enthusiasts who desire to modify the styling, design, or 
performance of their cars, trucks, or vans.


                                       6
<PAGE>

CRAGAR sells its wheel products in the automotive aftermarket through a 
national distribution network of value-added resellers, including tire and 
automotive performance warehouse distributors, retailers and mail order 
houses.

         The Company was formed in 1992 to acquire certain assets, including 
the accounts receivable, inventory, property, equipment, patents, trademarks, 
and copyrights in a leveraged buyout from the Wheel and Tire Division of Mr. 
Gasket Company, Inc., which had filed for reorganization. The fair value of 
the net assets acquired exceeded the final purchase price, and, accordingly, 
the fair value of the property and equipment, patents, trademarks, and 
copyrights acquired was reduced to zero. The remaining balance of $3,687,341 
was classified as excess of fair value of assets acquired over cost (commonly 
referred to as negative goodwill) and was amortized to income over five years 
using the straight-line method ($737,468 per annum through December 31, 1997).

RESULTS OF OPERATIONS

         The following table sets forth various items as a percentage of net 
sales revenue for the three month periods ended March 31, 1999 and March 31, 
1998:

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED MARCH 31,
                                                      1999                    1998
                                                     -----                   -----
         <S>                                         <C>                      <C>
         Net sales                                   100.0%                  100.0%
         Cost of goods sold                           79.1                    79.8
                                                     -----                   -----
         Gross profit                                 20.9                    20.2
         SG&A                                         14.1                    26.6
                                                     -----                   -----
         Income (loss) from operations                 6.8                    (6.4)
         Non-operating expense, net                    4.4                     4.9
         Income taxes                                    -                       - 
                                                     -----                   -----
         Net earnings (loss)                           2.4%                  (11.3)%
                                                     -----                   -----
                                                     -----                   -----
</TABLE>

COMPARISON OF QUARTER ENDED MARCH 31, 1999 AND QUARTER ENDED MARCH 31, 1998

         Net sales consist of gross sales less returns, discounts, and 
allowances. Net sales for the quarter ended March 31, 1999 were $4,186,763 
compared to $3,115,197 during the quarter ended March 31, 1998, representing 
a 34.4% increase in net sales. The increase was primarily attributable to 
sales of the Company's new wire wheel to J. H. Heafner, Inc., the Company's 
largest customer, additional sales to existing customers and a reduction in 
its inventory of slow-moving and obsolete product. Returns, discounts, and 
allowances decreased by 7.1% between the quarter ended March 31, 1999 and the 
quarter ended March 31, 1998. The decrease in returns, discounts, and 
allowances was primarily attributable to modifications in customer agreements 
for the period ended March 31, 1999.

         Gross profit is determined by subtracting cost of goods sold from 
net sales. Cost of goods sold consists primarily of the costs of raw 
materials, including steel and aluminum, overhead, material processing, and 
labor used in the production of the Company's products, as well as the 
freight costs of shipping product to the Company's customers. Gross profit 
for the quarter ended March 31, 1999 was $873,293 compared to $627,730 for 
the quarter ended March 31, 1998. As a percentage of net sales, gross profit 
increased in the first quarter of 1999 compared to the first quarter of 1998, 
from 20.2% to 20.9%. The gross profit improvement in the quarter ended March 
31, 1999 was primarily the result of product mix changes, continued cost 
reduction programs, and increased production, which resulted in improved 
overhead absorption. Cost reduction efforts including the reduction of 
production personnel and outsourcing of selected manufacturing processes 
positively affected gross profit in the first quarter of 1999. However, the 
Company also expects its gross profits and overall results of operations to 
vary from period to period based upon a variety of factors, including changes 
in order levels from customers, the timing of orders, changes in product mix, 
the level of net sales and

                                       7
<PAGE>


other factors, such as overhead absorption. Overhead absorption variations 
result from changes in production levels and efficiencies.

         Selling, general, and administrative ("SG&A") expenses consist 
primarily of salaries and wages, marketing expenses and promotional programs, 
office expenses, legal and accounting expenses, commissions, bad debt 
reserves, product development expenses, and general overhead. These expenses 
for the first quarter ended March 31, 1999 were $588,782 compared to $826,431 
for the quarter ended March 31, 1998. This decrease of $237,649, or 28.8%, 
was due in part to the Company's concentrated focus on reducing SG&A 
expenses. The reductions were realized throughout SG&A expenditures, though, 
primarily with reductions in labor and related costs, implementation of a 
less costly sales and marketing plan, and lower legal, accounting, and 
professional fees.

         Non-operating expenses, net, for the first quarter of 1999 were 
$184,056 compared to $151,901 for the first quarter of 1998. The increase of 
$32,155, or 21.2%, is primarily attributable to an increase in interest 
expense resulting from the Company's increase in the amount outstanding and 
related loan fees and costs charged under its credit facility.

         Because of its carry-forward losses from previous years, the Company 
had no income tax provision in the first quarter of 1999 and 1998.

         Net earnings for the first quarter ended March 31, 1999 were 
$100,455 compared to net loss of $350,602 for the first quarter ended March 
31, 1998, an increase in earnings of $451,057. Basic earnings per share for 
the first quarter ended March 31, 1999, after deducting the dividends due 
holders of the Series A Preferred Stock, was $.02 compared to basic loss per 
share of $0.15 for the first quarter ended March 31, 1998. See Exhibit 11 to 
this Quarterly Report on Form 10-QSB.

LIQUIDITY AND CAPITAL RESOURCES

         On April 20, 1998, the Company secured a credit facility (the "NCFC 
Credit Facility") with NationsCredit Commercial Funding Corporation ("NCFC"). 
The terms of the NCFC Credit Facility specify a maximum combined term loan 
and revolving loan totaling $8.5 million at an interest rate of 1.25% above 
the prime rate. The NCFC Credit Facility is secured by substantially all of 
the Company's assets and certain pledged assets from three investors and 
expires on April 19, 2002. As of March 31, 1999 the outstanding balance under 
the NCFC Credit Facility was approximately $7,100,000, and the Company had 
excess availability of approximately $55,000. The NCFC Credit Facility 
contains no financial performance covenants and requires prior approval 
rights to any declarations of cash dividend payments.

         At March 31, 1999, the Company had an accumulated deficit of 
$16,198,259. For the quarter ended March 31, 1999, the Company's operating 
activities used $496,644 of cash, which was primarily attributable to the 
increase in accounts receivable, offset by net earnings, the decrease in 
inventory, and increases in accounts payable and accrued expenses. The 
Company's decrease in inventory at March 31, 1999 from the year ended 
December 31, 1998 level provided approximately $303,000 in cash. During the 
quarter ended March 31, 1999, the Company's financing activities provided 
$597,480 in cash. The increase in cash from financing activities was due to a 
net increase of $400,080 in borrowings under the revolving line of the NCFC 
Credit Facility and $260,000 in proceeds from loans received from private 
lenders offset by long-term debt payments of $62,600.

         Although the Company believes that the amount available under the 
NCFC Credit Facility together with cash from operations and its current cash 
position will be sufficient to fund the Company's working capital 
requirements for 1999, there can be no assurance that the Company's cash flow 
will be sufficient to finance its operations as currently planned or that it 
will be able to supplement its cash flow with additional financing. 
Therefore, the Company is currently attempting to secure additional equity or 
subordinated debt. No assurance can be given of the Company's ability to 
obtain such financing on favorable terms, if at all. If the Company is


                                       8
<PAGE>


unable to obtain additional financing, its ability to meet its current and 
future revenue growth plans could be materially and adversely affected.

ACCOUNTING MATTERS

         In June 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive 
Income" (SFAS No. 130) which became effective for the Company January 1, 
1998. SFAS No. 130 establishes standards for reporting and displaying 
comprehensive income and its components in a full set of general-purpose 
financial statements. The adoption of SFAS No. 130 did not have a material 
impact on the Company.

         In June 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 131, "Disclosures about 
Segments of an Enterprise and Related Information" (SFAS No. 131) which 
became effective for the Company January 1, 1998. SFAS No. 131 establishes 
standards for the way that public enterprises report information about 
operating segments in annual financial statements and requires that those 
enterprises report selected information about operating segments in interim 
reports issued to stockholders. The adoption of SFAS No. 131 did not have a 
material impact on the Company.

         In February 1998, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 132, "Employer's Disclosures 
about Pensions and Other Postretirement Benefits" (SFAS No. 132) which 
becomes effective for the Company on January 1, 1999. SFAS No. 132 
establishes standards for the information that public enterprises report in 
annual financial statements. The adoption of SFAS No. 132 did not have a 
material impact on the Company.

         In June 1998, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 133, "Accounting for 
Derivative Instruments and Hedging Activities" (SFAS No. 133) which becomes 
effective for the Company on July 1, 1999. Management does not expect the 
adoption of SFAS No. 133 to have a material impact on the Company.

SEASONALITY

         Historically, the Company has experienced higher revenue in the 
first two quarters of the year than in the latter half of the year. The 
Company believes that this results from seasonal buying patterns resulting, 
in part, from an increased demand for certain automotive parts and 
accessories and its ultimate customers having added liquidity from income tax 
refunds during the first half of the year.

INFLATION

         Increases in inflation generally result in higher interest rates. 
Higher interest rates on the Company's borrowings would decrease the 
profitability of the Company. To date, general price inflation has not had a 
significant impact on the Company's operations; however, increases in metal 
prices have from time to time, and could in the future, adversely affect the 
Company's gross profit.

FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION

         The Company's future operating results and financial condition are 
dependent upon, among other things, the Company's ability to implement its 
business strategy. Potential risks and uncertainties that could affect the 
Company's profitability are set forth below.


                                       9
<PAGE>


HISTORY OF PREVIOUS LOSSES

         The Company was incorporated in December 1992 and has incurred 
significant losses in each of its completed fiscal years. For the quarter 
ended March 31, 1999, however, the Company incurred net earnings of $100,455. 
There can be no assurance that the Company will be profitable in the future. 
Net sales for the year ended December 31, 1998 declined to $12,081,884 from 
$16,545,159 for the year ended December 31, 1997. Net sales for the three 
months ended March 31, 1999 increased to $4,186,763 from $3,115,197 for the 
same period in 1998. As of March 31, 1999, the Company had cumulative losses 
of $16,198,259 and total stockholders' deficit of $2,055,934.

DEPENDENCE ON KEY DISTRIBUTORS; IMPLEMENTATION OF NEW DISTRIBUTION CHANNELS

         A limited number of customers have accounted for a substantial 
portion of the Company's revenue in each year. The financial condition and 
success of its current customers and the Company's ability to obtain orders 
from new customers are critical to the Company's success. The Company's top 
ten customers accounted for approximately 66.7% of the Company's gross sales 
for the first three months of 1999. The top three customers accounted for 
41.7% of gross sales. For the three months ended March 31, 1999, J. H. 
Heafner Company, Inc. accounted for 30.7% of gross sales, ATECH Motorsports 
accounted for 5.5% of gross sales and B & R/Player Wire Wheels accounted for 
5.5% of gross sales. For the year ended December 31, 1998, the Company's ten 
largest customers accounted for a total of approximately 57.2% of gross 
sales, with J. H. Heafner Company, Inc. accounting for 13.5%, Keystone 
Automotive Operations, Inc. 7.7%, and RELCO Corp. 5.1%. Due to the 
significant concentration of sales to the Company's top ten customers, the 
loss of any one such customer could have a material impact on the Company's 
results of operations and financial condition.

         The Company does not have any long-term contractual relationships 
with any of its major customers. While the Company's business strategy calls 
for it to expand its product distribution capabilities to additional markets 
and to broaden its customer base so that it can become less dependent on 
significant customers, any loss, material reduction, or delay of orders by 
any of the Company's major customers, including reductions as a result of 
market, economic, or competitive pressures in the automotive aftermarket 
industry, could adversely affect the Company.

         On September 19, 1997, the Company's then principal customer, Super 
Shops, filed for reorganization under Chapter 11 of the Federal Bankruptcy 
Code in the United States Bankruptcy Court, Central District of California. 
Super Shops has ceased operations and has begun a liquidation plan. While the 
Company has continued to establish and improve sales relationships with new 
and existing customers since Super Shops, Inc. filed for bankruptcy 
protection, it is still uncertain whether those relationships will fully 
replace the revenues previously generated by Super Shops. Failure to resolve 
this matter satisfactorily could have a material adverse effect on the 
Company.

DEPENDENCE ON THIRD PARTY SUPPLIERS

         The Company's business depends upon the assembly of component parts 
and the shipment of finished wheels and wheel accessories from third-party 
suppliers. From time to time, the Company has experienced delays in the 
delivery of component parts and finished products from vendors. In addition, 
one of the Company's significant suppliers is located in China, which from 
time to time has been subject to numerous trading restrictions by the United 
States. The Company also has suppliers in Brazil, Korea and Taiwan. The 
purchase of materials from foreign suppliers may be adversely affected by 
political and economic conditions abroad over which the Company has no 
control. Although to date the Company has generally been able to acquire 
adequate supplies of such components and finished product in a timely manner, 
any extended interruption in supply, significant increase in the price, or 
reduction in the quality of such components could have a material adverse 
effect on the Company's business, financial condition, and results of 
operations. The Company has begun to outsource selectively the production of 
some of its products and may increase such


                                      10
<PAGE>


outsourcing in the future. While the Company anticipates that such 
outsourcing programs will stabilize costs and shift certain inventory, 
warranty, and other risks to its suppliers, there can be no assurance that 
the continued or increased outsourcing of its products will have these 
desired effects.

LISTING AND MAINTENANCE CRITERIA FOR SECURITIES; PENNY STOCK RULES

         The Common Stock and Warrants are quoted on the OTC Bulletin Board 
under the symbol "CRGR". The Company's capital and surplus and shareholders' 
equity have fallen below the minimums required by NASDAQ and the Boston Stock 
Exchange, primarily as a result of continuing losses. As a result, the 
Company's Common Stock and Warrants are no longer listed on NASDAQ and the 
Boston Stock Exchange. There can be no assurance that the Company in the 
future will meet the requirements for listing on the Nasdaq SmallCap Market 
or the Boston Stock Exchange with respect to the Common Stock or Warrants. If 
the Common Stock or the Warrants fail to re-attain such listings, the market 
value of the Common Stock and Warrants likely would decline and holders 
likely would find it more difficult to dispose of, or to obtain accurate 
quotations as to the market value of, the Common Stock and Warrants. In 
addition, if the Company fails to re-attain Nasdaq SmallCap Market listing 
for its securities, and no other exclusion from the definition of a "penny 
stock" under the Securities Exchange Act of 1934 is available, then any 
broker engaging in a transaction in the Company's securities would be 
required to provide any customer with a risk disclosure document, disclosure 
of market quotations, if any, disclosure of the compensation of the 
broker-dealer and its salesperson in the transaction, and monthly account 
statements showing the market values of the Company's securities held in the 
customer's accounts. The bid and offer quotation and compensation information 
must be provided prior to effecting the transaction and must be contained on 
the customer's confirmation. If brokers become subject to the "penny stock" 
rules when engaging in transactions in the Company's securities, they would 
become less willing to engage in such transactions, thereby making it more 
difficult for the Company's security holders to dispose of Common Stock and 
Warrants.

DEPENDENCE ON EXTERNAL FINANCING

         On April 20, 1998, the Company executed the NCFC Credit Facility, a 
portion of the proceeds of which were used to pay off the Company's previous 
credit facility with Norwest Business Credit, Inc., which expired on April 
15, 1998. The terms of this new credit facility provide for a maximum 
combined term loan and revolving loan totaling $8.5 million at an interest 
rate of 1.25% above the prime rate, and has a maturity date of April 2002. As 
of March 31, 1999, the outstanding amount owed by the Company under the NCFC 
Credit Facility was approximately $7,100,000, and the Company had excess 
availability of approximately $55,000. The NCFC Credit Facility is secured by 
substantially all of the Company's assets and has a term of four years. The 
NCFC Credit Facility also is secured by certain investment property with a 
value of approximately $1,500,000 that was pledged to NCFC by three private 
investors. In exchange for that pledge, the Company agreed to grant warrants 
to purchase 7,000 shares of Common Stock on an annual basis per $100,000 
pledged as long as the pledge remains outstanding, which warrants are 
exercisable at a price equal to the price of the Company's Common Stock on 
the date of grant. In addition, during March 1999, the Company obtained 
additional secured subordinated debt financing in the amount of $260,000 from 
three private lenders. The terms of this financing provides for an annual 
interest rate of 10% with maturity in March 2001. This financing is 
subordinate to the NCFC Credit Facility. In exchange for the financing, the 
Company also agreed to grant, to the lenders, warrants to purchase 33,333 
shares of Common Stock at an exercise price of $3.00 per share for each 
$100,000 in extended debt.

         Although the Company believes that the amount available under the 
NCFC Credit Facility together with cash from operations and funds received 
from the additional debt financed during the first quarter ended March 31, 
1999, will be sufficient to fund the Company's working capital requirements 
for 1999, there can be no assurance that the Company's cash flow from 
operations, together with its current cash position and amounts available 
under the NCFC Credit Facility, will be sufficient to implement fully its 
business strategies especially in the event that the Company is required to 
refinance or replace the NCFC Credit Facility. As a result, the Company is 
attempting to secure additional funds through equity or debt financings. The 
Company


                                      11
<PAGE>


has engaged an investment banker, on a non-exclusive basis, to assist in 
securing such financing. No assurance can be given that such additional 
financing will be available on terms acceptable to the Company, if at all.

HIGHLY COMPETITIVE INDUSTRY

         The market for the Company's products is highly competitive. The 
Company competes primarily on the basis of product selection (which includes 
style and vehicle fit), timely availability of product for delivery, quality, 
design innovation, price, payment terms, and service. Many of the Company's 
competitors have substantially greater financial, personnel, marketing, and 
other resources than the Company. Increased competition could result in price 
reductions (which may be in the form of rebates or allowances), reduced 
margins, and loss of market share, all of which could have a material adverse 
effect on the Company.

GENERAL ECONOMIC FACTORS

         The Company's business is directly impacted by certain external 
factors, such as the general demand for aftermarket automotive parts, prices 
for raw materials used in producing the Company's products, fluctuations in 
discretionary consumer spending, and general economic conditions, including 
employment levels, business conditions, interest rates, and tax rates. While 
the Company believes that current economic conditions favor growth in the 
markets it serves, various factors, including those listed above, could lead 
to decreased sales and increased operating expenses. There can be no 
assurance that various factors will not adversely affect the Company's 
business in the future or prevent the Company from successfully implementing 
its business strategies.

DATA PROCESSING AND TECHNOLOGY AND YEAR 2000

         The Company recognizes the potential business impacts related to the 
Year 2000 computer system issue and is implementing a plan to assess and 
improve the Company's state of readiness with respect to such issues. The 
Year 2000 is one where computer systems may recognize the designation "00" as 
1900 when it means 2000, resulting in system failure or miscalculations.

         The Company has initiated a comprehensive review of its core 
information technology systems, which the Company is dependent upon for the 
conduct of day to day business operations, in order to determine the adequacy 
of those systems in light of future business requirements. Year 2000 
readiness was one of a variety of factors to be considered in the review of 
core systems.

         In recognition of the Year 2000 issue, the Company has continued a 
comprehensive review of all information technology and non-information 
technology systems used by the Company. Such review includes testing and 
analysis of Company products and inquiries of third parties supplying 
information technology and non-information technology systems, computer 
hardware and software products and components, and other equipment to the 
Company. In addition, the Company has sent requests for information to its 
critical suppliers requesting information about their Year 2000 readiness and 
plans for Year 2000 compliance.

         As a result of its review to date, the Company has determined that 
certain of its internal software systems are inadequate for the Company's 
future business needs, and need to be upgraded because of various 
considerations, including Year 2000 non-compliance. In certain cases the 
timing of system upgrades is being accelerated because of the Year 2000 
issue, although the Company believes upgrades, modification or replacement 
would have been necessary in the near future regardless of such issues. The 
Company expects to make necessary upgrades to its computer information 
systems, related to Year 2000 non-compliance, prior to the Year 2000. Other 
upgrades, modifications or replacement identified through this review process 
that are not critical to the Year 2000 issue will be undertaken in an orderly 
manner so as to not disrupt the Company's on-going operations. These 
non-critical upgrades, changes or modifications may not be started or 
completed by the Year 2000. The costs for upgrades or replacement of systems 
will be capitalized as assets and subsequently amortized over the estimated 
life of the assets. The costs for modification of systems will be expensed in 
the period incurred. The Company believes the


                                      12
<PAGE>


costs of upgrades to the current information technology systems will not 
exceed $75,000, including internal payroll costs, and will not have a 
material affect on its financial position or results of operations. The 
upgrades are expected to be made late in the second quarter or early third 
quarter 1999 and the full integration of the upgrades are expected to be 
complete by September 30, 1999.

         Based on the responses from the Company's critical suppliers, the 
suppliers are either Year 2000 compliant or have developed plans to be Year 
2000 compliant by December 31, 1999. The Company plans to continue monitoring 
its critical suppliers for Year 2000 compliance and take appropriate steps if 
it appears any critical suppliers will not be Year 2000 compliant by December 
31, 1999.

         At this time, the Company has not developed Year 2000 contingency 
plans, other than the review and remedial actions described above, and does 
not intend to do so unless the Company believes such plans are merited by the 
results of its continuing Year 2000 review.

         If the Company or the third parties with which it has relationships 
were to cease or not successfully complete its or their Year 2000 remediation 
efforts, the Company could encounter disruptions to its business that could 
have a material adverse effect on its business, financial position and 
results of operations. The Company could be materially and adversely impacted 
by widespread economic or financial market disruption or by Year 2000 
computer system failures at third parties with which it has relationships.

NO ASSURANCE OF SUCCESSFUL ACQUISITIONS

         The Company continues to consider acquisitions of and alliances with 
other companies that could complement the Company's existing business, 
including outsourcing its manufacturing and sales operations and acquisitions 
of complementary product lines. There can be no assurance that suitable 
acquisition or joint venture candidates can be identified, or that, if 
identified, adequate and acceptable financing sources will be available to 
the Company that would enable it to consummate such transactions. 
Furthermore, even if the Company completes one or more acquisitions, there 
can be no assurance that the Company will be able to successfully integrate 
such acquired companies or product lines into its existing operations, which 
could increase the Company's operating expenses in the short-term and 
materially and adversely affect the Company's results of operations. 
Moreover, any acquisition by the Company may result in a potentially dilutive 
issuance of equity securities, the incurrence of additional debt, and 
amortization of expenses related to goodwill and intangible assets, all of 
which could adversely affect the Company's profitability. Acquisitions 
involve numerous risks, such as the diversion of the attention of the 
Company's management from other business concerns, the entrance of the 
Company into markets in which it has had no or only limited experience, and 
the potential loss of key employees of the acquired company, all of which 
could have a material adverse effect on the Company.

VARIABILITY IN OPERATING RESULTS; SEASONALITY

         The Company's results of operations have been and will continue to 
be subject to substantial variations as a result of a number of factors, any 
of which could have a material adverse effect on the Company. In particular, 
the Company's operating results can vary because of the size and timing of 
customer orders, delays in new product enhancements and new product 
introductions, vendor quality control and delivery difficulties, market 
acceptance of new products, product returns, product rebates and allowances, 
seasonality in product purchases by distributors and end users, and pricing 
trends in the automotive aftermarket industry in general and in the specific 
markets in which the Company participates. Historically, the Company's net 
sales have been highest in the first and second quarters of each year. 
Significant variability in orders during any period may have an adverse 
impact on the Company's cash flow or work flow, and any significant decrease 
in orders could have a material adverse effect on the Company's results of 
operations. The Company believes that any period-to-period comparisons of its 
financial results are not necessarily meaningful and should not be relied 
upon as an indication of future performance.


                                      13
<PAGE>


CHANGING CUSTOMER TRENDS; NEED FOR PRODUCT DEVELOPMENT

         The Company's success depends, in part, on its ability to correctly 
and consistently anticipate, gauge, and respond in a timely manner to 
changing consumer preferences. There can be no assurance that the Company's 
core products will continue to enjoy acceptance among consumers or that any 
of the Company's future product offerings will achieve or maintain market 
acceptance. The Company attempts to minimize the risks relating to changing 
consumer trends by offering a wide variety of product styles, analyzing 
consumer purchases, maintaining active product development efforts, and 
monitoring the sales performance of its various product lines. However, any 
misjudgment by the Company of the market for a particular product, or its 
failure to correctly anticipate changing consumer preferences, could have a 
material adverse effect on its business, financial condition, and results of 
operations. In order to enhance its product development efforts, the Company 
may supplement its existing product development staff by hiring one or more 
new employees with product development experience and by engaging an outside 
consultant to assist the Company's product development staff. There can be no 
assurance that the Company will be able to attract and retain such additional 
personnel or that the costs associated with additional product development 
efforts will not have an adverse effect on the Company.

REGULATORY COMPLIANCE

         The Company is subject to various federal and state governmental 
regulations related to occupational safety and health, labor, and wage 
practices as well as federal, state, and local governmental regulations 
relating to the storage, discharge, handling, emission, generation, 
manufacture, and disposal of toxic or other hazardous substances used to 
produce the Company's products. The Company believes that it is currently in 
material compliance with such regulations. Failure to comply with current or 
future environmental regulations could result in the imposition of 
substantial fines on the Company, suspension of production, alteration of its 
production processes, cessation of operations, or other actions which could 
have a material adverse affect on the Company. In the ordinary course of its 
business, the Company uses metals, oils, and similar materials, which are 
stored on site. The waste created by use of these materials is transported 
off-site on a regular basis by a state-registered waste hauler. Although the 
Company is not aware of any material claim or investigation with respect to 
these activities, there can be no assurance that such a claim may not arise 
in the future or that the cost of complying with governmental regulations in 
the future will not have a material adverse effect on the Company.

RELIANCE ON INTELLECTUAL PROPERTY

         The Company owns the rights to certain trademarks and patents, 
relies on trade secrets and proprietary information, technology, and 
know-how, and seeks to protect this information through agreements with 
employees and vendors. There can be no assurance that the Company's patents 
will preclude the Company's competitors from designing competitive products, 
that proprietary information or confidentiality agreements with employees and 
others will not be breached, that the Company's patents will not be 
infringed, that the Company would have adequate remedies for any breach or 
infringement, or that the Company's trade secrets will not otherwise become 
known to or independently developed by competitors.

RISKS ASSOCIATED WITH INTERNATIONAL SALES; CURRENCY FLUCTUATIONS

         In 1998 and 1997, the Company derived approximately 3.1% and 4.8%, 
respectively, of total gross sales from international markets. The Company 
does not anticipate that sales from international markets will increase 
significantly. The Company's international sales efforts are subject to the 
customary risks of doing business abroad, including exposure to regulatory 
requirements, political and economic instability, barriers to trade, trade 
restrictions (including import quotas), tariff regulations, foreign taxes, 
restrictions on transfer of funds, difficulty in obtaining distribution and 
support, and export licensing requirements, any of which could have a 
material adverse effect on the Company. In addition, a weakening in the value 
of foreign currencies


                                      14
<PAGE>


relative to the U.S. dollar and fluctuations in foreign currency exchange 
rates could have an adverse impact on the price of the Company's products in 
its international markets.

CONTROL BY EXISTING STOCKHOLDERS

         The directors, officers, and principal stockholders of the Company 
beneficially own more than 57.4% of the Company's outstanding Common Stock, 
assuming exercise of all outstanding options and warrants and conversion of 
Series A Preferred Stock. As a result, these persons will have a significant 
influence on the affairs and management of the Company, as well as on all 
matters requiring stockholder approval, including electing and removing 
members of the Company's Board of Directors, causing the Company to engage in 
transactions with affiliated entities, causing or restricting the sale or 
merger of the Company, and changing the Company's dividend policy. Such 
concentration of ownership and control could have the effect of delaying, 
deferring, or preventing a change in control of the Company even when such a 
change of control would be in the best interest of the Company's other 
stockholders.

EFFECT OF PREFERRED STOCK ON RIGHTS OF COMMON STOCK

         The Company's Amended and Restated Certificate of Incorporation 
authorizes the Board of Directors of the Company to issue "blank check" 
preferred stock, the relative rights, powers, preferences, limitations, and 
restrictions of which may be fixed or altered from time to time by the Board 
of Directors. Accordingly, the Board of Directors is empowered, without 
stockholder approval, to issue preferred stock with dividend, liquidation, 
conversion, voting, or other rights that could adversely affect the voting 
power and other rights of the holders of Common Stock. In the first quarter 
of 1998, for example, the Company issued 22,500 shares of its Series A 
preferred stock for $2.25 million in additional capital, which as of March 
31, 1999, could have been converted into approximately 722,800 shares of 
Common stock. Additional series of preferred stock could be issued, under 
certain circumstances, as a method of discouraging, delaying, or preventing a 
change in control of the Company that stockholders might consider to be in 
the Company's best interests. There can be no assurance that the Company will 
not issue additional shares of Preferred Stock in the future.

DEPENDENCE ON KEY PERSONNEL

         The Company's future success depends, in large part, on the efforts 
and abilities of its management team, including Michael L. Hartzmark, Ph.D., 
its President and Chief Executive Officer. The loss of the services of Dr. 
Hartzmark could have a material adverse effect on the business of the 
Company. While Dr. Hartzmark does not have an employment agreement with the 
Company, Dr. Hartzmark and his family beneficially held, as of March 31, 
1999, over 20.9% of the Company's Common Stock assuming exercise of all 
outstanding options and warrants and conversion of Series A Preferred Stock. 
The successful implementation of the Company's business strategies may 
involve the hiring and retention of additional management, engineering, 
marketing, product development, and other personnel. There can be no 
assurance that the Company will be able to identify and attract additional 
qualified management and other personnel when needed or that the Company will 
be successful in retaining such additional management and personnel if added. 
Moreover, there can be no assurance that the additional costs associated with 
the hiring of additional personnel will not adversely affect the Company's 
results of operations. The Company does not maintain key man life insurance 
on any of its personnel.

LIMITED LIABILITY OF DIRECTORS

         The Company's Certificate of Incorporation provides, with certain 
exceptions, that the Company's directors will not be personally liable for 
monetary damages for breach of the directors' fiduciary duty of care to the 
Company or its stockholders. This provision does not eliminate the duty of 
care, and in appropriate circumstances, equitable remedies such as an 
injunction or other forms of non-monetary relief would remain available under 
Delaware law. This provision also does not affect a director's 
responsibilities under any other laws, such as the federal securities laws or 
state or federal environmental laws.


                                      15
<PAGE>


NO CASH DIVIDENDS

         The Company has never paid cash or stock dividends on its Common 
Stock and does not anticipate that it will pay cash dividends in the 
foreseeable future. It is contemplated that any earnings will be used to 
finance the growth of the Company's business. The Company will be paying 
dividends on its Series A Preferred Stock, however it anticipates those 
dividends will be paid in kind rather than in cash. In addition, the 
Company's NCFC Credit Facility prohibits the payments of cash dividends 
without the lender's consent.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On September 19, 1997, Super Shops, Inc., formerly the Company's 
principal customer, filed for reorganization under Chapter 11 of the Federal 
Bankruptcy Code in the United States Bankruptcy Court, Central District of 
California, Case No. LA 97-46094-ER. Because the Company is an unsecured 
creditor in this matter, the amount and timing of the recovery, if any, on 
its account receivable from Super Shops, Inc. is uncertain. In connection 
with this proceeding, the Company incurred an obligation of $125,000 in 1998, 
which is due to be paid in the third quarter of 1999, for preference payments 
as a result of the on-going liquidation of the bankruptcy estate. There are 
currently no other material pending proceedings to which the Company is a 
party or to which any of its property is subject, although the Company from 
time to time is involved in routine litigation incidental to the conduct of 
its business.

         The Company currently maintains product liability insurance, with 
limits of $1.0 million per occurrence and $2.0 million in the aggregate per 
annum. However, such coverage is becoming increasingly expensive and 
difficult to obtain. There can be no assurance that the Company will be able 
to maintain adequate product liability insurance at commercially reasonable 
rates or that the Company's insurance will be adequate to cover future 
product liability claims. Any losses that the Company may suffer as a result 
of claims in excess of the Company's coverage could have a material adverse 
effect on the Company.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         During March 1999, the Company obtained additional secured 
subordinated debt financing in the amount of $260,000 from three private 
lenders. The terms of this financing provides for an annual interest rate of 
10% with maturity in March 2001.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         The Company had dividends in arrears for outstanding Preferred Stock 
at March 31, 1999 totaling $175,000, which are payable, at the discretion of 
the Company, in cash or additional shares of the Company's Series A Preferred 
Stock.

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

         None

ITEM 5.  OTHER INFORMATION

         None


                                      16
<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

   (a) Exhibits

<TABLE>
<CAPTION>
     Exhibit No.  Description
     -----------  -----------
    <S>          <C>
         3.1      Second Amended and Restated Certificate of Incorporation of
                  the Registrant filed with State of Delaware on October 1,
                  1996*

         3.2      Amended and Restated Bylaws of the Registrant*

        10.1      Form of Promissory Note of the Registrant, dated March 16,
                  1999

        10.2      Form of Security Agreement underlying Promissory Note of the
                  Registrant, dated March 16, 1999

        11        Schedule of Computation of Earnings per Share

        27.1      1999 Financial Data Schedule for the Three Months Ended March
                  31, 1999
</TABLE>

   (b) Reports on Form 8-K

                  None

   --------------
    * Incorporated by reference to the Company's Registration Statement on 
      Form SB-2 (No. 333-13415).


                                   SIGNATURES

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


                             CRAGAR INDUSTRIES, INC.


Dated: May 12, 1999        By: /s/Michael L. Hartzmark
      ------------------      ----------------------------------
                              Michael L. Hartzmark
                              President and CEO

Dated: May 12, 1999        By: /s/Richard P. Franke
      ------------------      ----------------------------------
                              Richard P. Franke
                              Chief Financial Officer
                              (Principal Financial and Accounting Officer)


                                      17