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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X]      QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the Quarterly Period Ended June 30, 2001


[ ]      TRANSITION REPORT UNDER 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)


       7373 NORTH SCOTTSDALE ROAD, SUITE B-274, SCOTTSDALE, ARIZONA 85253
                    (Address of principal executive offices)

                                 (480) 596-6483
                           (Issuer's telephone number)


         Check whether the issuer (1) 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
         June 30, 2001:  3,691,029.

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

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<PAGE>

                             CRAGAR INDUSTRIES, INC.
                            Condensed Balance Sheets
                       June 30, 2001 and December 31, 2000

                                                       June 30,    December 31,
                                                        2001          2000
                                                    ------------  ------------
                                                     (unaudited)
                                     ASSETS
Current Assets
        Cash and cash equivalents                   $    110,406  $     68,300
        Accounts receivable, net of allowance for
            doubtful accounts of $15,000
            and  $25,000                                       -       294,641
        Non-trade receivables                            125,611       117,684
        Investments                                    1,307,519     1,307,519
        Prepaid expenses                                 139,829         2,500
                                                    ------------  ------------
               Total current assets                    1,683,365     1,790,644

Property and equipment, net                                    -        41,926

Other Assets                                              36,304        57,624
                                                    ------------  ------------

Total Assets                                        $  1,719,669  $ 1,890,194
                                                    ============  ============

                     LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
        Accounts payable                            $    376,802  $    440,882
        Line of credit                                 1,305,500     1,200,000
        Accrued interest                                  11,590         9,730
        Accrued expenses                                 394,844       703,215
                                                    ------------  ------------
               Total current liabilities               2,088,736     2,353,827

Line of Credit                                                 -
Long Term Debt                                                 -       105,500
                                                    ------------  ------------

Total Liabilities                                      2,088,736     2,459,327
                                                    ------------  ------------
Stockholders' Deficit
        Preferred stock, par value $ .01;
               authorized 200,000 shares 0 and
               11,000 shares respectively issued
               and outstanding                                 -           110
        Additional paid-in capital - preferred                 -     1,093,515
        Common stock, par value $ .01; authorized
               10,000,000 shares 3,685,196 and
               3,016,716 shares respectively
               issued and outstanding                     36,910        30,167
        Additional paid-in capital - common           15,359,721    13,904,530
        Accumulated deficit                          (15,765,698)  (15,597,455)
                                                    ------------  ------------
               Total stockholders' deficit              (489,066)     (569,133)
                                                    ------------  ------------

Total Liabilities and Stockholders' Deficit          $ 1,719,669   $ 1,890,194
                                                    ============  ============

See accompanying notes to condensed financial statements

                                        2
<PAGE>

                             CRAGAR INDUSTRIES, INC.
                       Condensed Statements of Operations
            Three Months and Six Months Ended June 30, 2001 and 2000
                                   (unaudited)
<TABLE><CAPTION>
                                                        Three Months Ended            Six Months Ended
                                                              June 30,                    June 30,
                                                    --------------------------  --------------------------
                                                        2001          2000          2001          2000
                                                    ------------  ------------  ------------  ------------
<S>                                                <C>           <C>           <C>           <C>
Net Sales                                           $          -  $    229,186  $          -  $    545,537
Royalty revenues                                         114,960       136,582       246,379       279,509
                                                    ------------  ------------  ------------  ------------
     Total revenues                                      114,960       365,768       246,379       825,046

Cost of goods sold                                             -       294,171             -       626,222
                                                    ------------  ------------  ------------  ------------

     Gross profit                                        114,960        71,597       246,379       198,824

Selling, general and administrative expenses              81,466       284,069       179,016       471,773
                                                    ------------  ------------  ------------  ------------

     Income (loss) from operations                        33,494      (212,472)       67,363      (272,949)
                                                    ------------  ------------  ------------  ------------

Non-operating income (expenses), net
   Interest expense                                      (35,673)      (57,466)      (74,823)     (121,445)
   Other                                                  23,792     1,889,227        87,526     1,915,783
                                                    ------------  ------------  ------------  ------------
     Total non-operating income (expenses), net          (11,881)    1,831,761        12,703     1,794,338
                                                    ------------  ------------  ------------  ------------

Net earnings before income taxes                          21,613     1,619,289        80,066     1,521,389

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

Net earnings                                        $     21,613  $  1,619,289  $     80,066  $  1,521,389
                                                    ============  ============  ============  ============

Basic earnings per share
   Net earnings                                     $       0.01  $       0.51  $       0.02  $       0.47
                                                    ============  ============  ============  ============

Weighted average shares outstanding                    3,633,422     2,456,990     3,612,744     2,456,990
                                                    ============  ============  ============  ============

Diluted earnings per share
   Net earnings                                     $       0.00  $       0.24  $       0.01  $       0.23
                                                    ======================================================

Weighted average shares outstanding                    5,450,476    5,095,721      5,435,567     5,095,721
                                                    ======================================================
</TABLE>
See accompanying notes to condensed financial statements

                                        3
<PAGE>

                             CRAGAR INDUSTRIES, INC.
                       Condensed Statements of Cash Flows
                     Six Months Ended June 30, 2001 and 2000
                                   (unaudited)
<TABLE><CAPTION>
                                                                                     Six Months Ended
                                                                                         June 30,
                                                                                --------------------------
                                                                                   2001          2000
                                                                                ------------  ------------
<S>                                                                            <C>           <C>
Cash flows from operating activities
        Net earnings                                                            $     80,066  $  1,521,389
        Adjustments to reconcile net earnings to net cash
               provided by (used in) operating activities:
        Provision for (write-off of) doubtful accounts                                     -       (16,741)
        Reduction in (increase in) provision for obsolete
               and slow moving inventory                                                   -    (1,085,368)
        Issuance of common stock for service                                         120,000             -
        Depreciation and amortization of property and equipment                            -        35,500
        Gain on sale of property and equipment                                             -      (100,438)
        Gain on sale economic rights to certain investment assets                          -    (1,824,073)
        Increase (decrease) in cash resulting from changes in:
               Accounts receivable                                                   294,641       786,856
               Inventory                                                                   -     1,575,795
               Non-trade receivables                                                  (7,927)            -
               Prepaid expenses                                                     (137,329)      (77,469)
               Other assets                                                           21,320             -
               Accounts payable and accrued expenses                                (372,450)     (320,508)
               Accrued interest                                                        1,860        (4,364)
                                                                                ------------  ------------
                     Net cash provided by (used in) operating activities                 180       490,579
                                                                                ------------  ------------
Cash flows from investing activities
        Purchases in investments                                                           -    (2,133,975)
        Dispositions of property and equipment                                        41,926         2,580
        Dispositions of economic rights to certain investment assets                       -     2,742,980
                                                                                ------------  ------------
                     Net cash provided by (used in) investing activities              41,926       611,585
                                                                                ------------  ------------
Cash flows from financing activities
        Net borrowings (repayments) on bank line of credit                                 -      (867,907)
        Proceeds from long-term debt                                                       -             -
        Repayments of long-term debt                                                       -             -
                                                                                ------------  ------------
                     Net cash provided by (used in) financing activities                   -      (867,907)
                                                                                ------------  ------------

                     Net increase (decrease) in cash and cash equivalents             42,106       234,257

Cash and cash equivalents at beginning of period                                      68,300         1,387
                                                                                ------------  ------------

Cash and cash equivalents at end of period                                      $    110,406  $    235,644
                                                                                ============  ============

Supplemental disclosure of cash flow information:
        Cash paid for interest                                                  $     72,963  $    125,809
                                                                                ============  ============
        Issuance of common stock for service                                    $    120,000  $          -
                                                                                ============  ============
</TABLE>
See accompanying notes to condensed financial statements

                                        4
<PAGE>

                             CRAGAR INDUSTRIES, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                         SIX MONTHS ENDED JUNE 30, 2001
                                   (Unaudited)

1.       Summary of Significant Accounting Policies
         Basis of Presentation:

         The interim financial data as of and for the three months and six
         months ended June 30, 2001 and 2000 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.

2.       Basic and Diluted Earnings (Loss) per Share

         Basic and diluted earnings (loss) per 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.

3.       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. During the year ended
         December 31, 2000 and in January 2001, the holders of the Company's
         Series A Preferred Stock converted their 22,500 shares into 1,072,524
         shares of Common Stock. In January 2001, all 333,333 of the warrants
         expired unexercised.

         During March 2001, the Company granted warrants to purchase 7,000
         shares of the Company's common stock at $2.125 per share relating to
         the line of credit provided by a stockholder.

         On May 14, 2001, the Company granted options to each of Marc Dworkin,
         Donald McIntyre, Michael Miller and Mark Schwartz, members of the Board
         of Directors of the Company, to purchase 4,000 shares of common stock
         at an exercise price of $2.25 per share, which was the fair market
         value on the date of grant. One-half of this grant was based on a
         resolution passed on May 21, 1999 by the Board of Directors of the
         Company whereby, it was agreed that, in lieu of cash payments for
         director fees, directors would each be granted options to purchase
         2,000 shares of the Company's common stock for each board meeting, at
         an exercise price equal to the closing price of the underlying common
         stock on the date of grant. The other one-half of the grant, or
         additional 2,000 shares of the Company's common stock, is based on the
         Non-Employee Option Plan, which provides for annual grants to directors
         of options to purchase 2,000 shares of the Company's common stock upon
         their election to the Board of Directors.


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 and Exchange Commission or otherwise. Such
forward-looking statements are within the meaning of that term in Section 27A of
the

                                       5
<PAGE>

Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such statements may include, but not be
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. Specifically, Management is uncertain whether the
anticipated cash flow from operations will be sufficient to meet the Company's
anticipated operations and working capital needs. Therefore, the Company is
seeking to secure additional working capital through the sale of equity or debt
securities. 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. In addition, no
assurance can be given regarding the Company's ability to obtain such financing
on favorable terms, if at all. If the Company is unable to obtain additional
financing, its ability to meet its anticipated operating and working capital
needs will be materially and adversely affected. As a result of the Company's
stockholders' deficit and the uncertainty surrounding the Company's ability to
meet its anticipated operating and working capital needs, the independent
auditors' report on the Company's 2000 financial statements has been qualified
for a going concern.

INTRODUCTION

         From Cragar's inception in December 1992 through the first nine months
of 1999, we designed, produced, and sold high-quality custom vehicle wheels and
wheel accessories. We sold our wheel products in the automotive aftermarket
through a national distribution network of value-added resellers, including tire
and automotive performance warehouse distributors and retailers and mail order
companies.

         In connection with a reassessment of our business strategy, we
considered combinations and strategic alliances with other companies that could
complement Cragar's existing business, including outsourcing our manufacturing
and sales operations. In furtherance of this business strategy, in September
1999, we entered into an Exclusive Field of Use License Agreement and an
Agreement of Purchase and Sale of Assets with Weld Racing, Inc. ("Weld") to
manufacture, sell, and distribute our line of wheels with non-cast wrought
aluminum alloy outer rims and related accessories ("Wrought Wheel Business") in
exchange for a royalty based on sales of the licensed products and sold certain
assets to Weld related to our Wrought Wheel Business. Cragar and Weld completed
this transaction in October 1999.

         In October 1999, we entered into a similar transaction with Carlisle
Tire and Wheel Co. ("Carlisle"), pursuant to which we granted an exclusive
worldwide license to Carlisle to manufacture, sell, and distribute our line
wheels with steel outer rims and related accessories ("SOR Wheel Business") in
exchange for a royalty based on sales of the licensed products and sold certain
assets to Carlisle related to our SOR Wheel Business. Cragar and Carlisle
completed this transaction in December 1999.

         In September 2000, we entered into and completed a similar transaction
with Performance Wheel Outlet, Inc. ("Performance") to manufacture, sell, and
distribute our line of one-piece cast aluminum wheels ("One-Piece Business") in
exchange for a royalty based on sales of the licensed products.

         As a consequence of the transactions with Performance, Weld, and
Carlisle, we no longer engage in the manufacture, marketing, sale, or
distribution of any products related to our One-Piece Wheel Business, Wrought
Wheel Business and SOR Wheel Business, which together generated approximately
100% of our revenues in 2000. In general, the outsourcing of the manufacturing,
marketing, sales, and distribution operations with respect to the licensed
products, together with the sale of all the related assets, has substantially
decreased our revenues and related operating and marketing costs.

                                       6
<PAGE>

         We intend to rely on Performance's, Weld's, and Carlisle's greater
financial, operational, and distribution capabilities to increase net sales of
the licensed products and generate a stream of increasing revenues in the form
of quarterly royalty payments. In addition, we are entitled to royalties based
on the net sales of any new products developed by Carlisle related to the SOR
Wheel Business under the CRAGAR brand name, including products and related
accessories for vehicles other than automobiles, trucks, and vans, such as
all-terrain vehicles and golf carts. We are also entitled to receive royalties
based on net sales of any new products developed by Weld related to the Wrought
Wheel Business under the CRAGAR brand name, including motorcycle wheels,
two-piece aluminum wheels, and new types of race wheels. Because our licensing
partners' primary fiduciary obligation is to their shareholders rather than our
shareholders, they may make decisions or take steps that may result in lower
royalty payments or that could adversely affect the CRAGAR brand name. See
"Factors That May Affect Future Results and Financial Conditions - Dependence on
Third Parties to Generate Royalties."

         As part of our new business strategy, we also intend to pursue
licensing opportunities through the utilization of the CRAGAR brand name for
other products, including but not limited to aftermarket performance automotive
products. Effective April 1, 2001 we entered into a Licensing Representation
Agreement with Trademarketing Resources, Inc. ("TRI"). TRI will act as our
exclusive agent for the purpose of exercising the merchandising rights in and to
the trademarks owned by us, including CRAGAR(R), CRAGAR Lite(R), Keystone(R)
Klassic(R), S/S(R), Street Pro(R), Star Wire(TM), CRAGAR XLS(TM),
TRU=CRUISER(TM), and TRU=SPOKE(R). In addition, TRI will act as our exclusive
agent with respect to advertising and promoting all products, services, and
premiums in all media.

RECENT DEVELOPMENTS

         In January 2001, the holders of our Series A Preferred Stock converted
their 11,000 shares and accrued dividends into 616,131 shares of Common Stock..
As a result, we no longer have shares of Series A Preferred Stock outstanding.

         Effective April 1, 2001, we retained the services of Trademarketing
Resources, Inc. ("TRI") a Licensing Agent. TRI will act as our exclusive agent
for the purpose of exercising the merchandising rights in and to the trademarks
owned by us, including CRAGAR(R), CRAGAR Lite(R), Keystone(R) Klassic(R),
S/S(R), Street Pro(R), Star Wire(TM), CRAGAR XLS(TM), TRU=CRUISER(TM), and
TRU=SPOKE(R). According to the Licensing Representation Agreement, TRI will act
as our exclusive agent to develop a marketing strategy to broaden the use of our
intellectual property, including the CRAGAR brand name. Once we approve the
marketing strategy, then TRI will implement the strategy. TRI will also oversee
and coordinate the licensing activities of Carlisle, Weld, and Performance. As
part of the agreement with TRI, we issued 58,182 shares of our common stock to
certain individuals who will be providing us services directly under the TRI
agreement. They will receive an additional 58, 182 shares of Cragar common stock
on April 2, 2002. There can be no assurance that we, through TRI, will be
successful developing or implementing such a marketing strategy or that any
sales of products utilizing our intellectual property, including the CRAGAR
brand name and, related royalties, will be material. In addition, TRI will act
as our exclusive agent with respect to coordinating advertising and promotion
all of our products, services, and premiums across all media.

         As of April 9, 2001 we entered into a Settlement Agreement and Mutual
Release with Keystone Automotive Operations, Inc. ("Keystone") related to the
complaint in the matter of Cragar Industries, Inc. versus Keystone Automotive
Operations, Inc. ("Keystone") in the Superior Court of Arizona, County of
Maricopa, Case No. CV99-21619. As part of the Settlement Agreement and Mutual
Release, we entered into a Trademark License Agreement with Keystone that
granted us the exclusive right to use the Keystone(R) Klassic(R) trademark for
the manufacturing, sale, and marketing of Keystone Klassic automotive wheels.
Keystone retains the ownership of the trademark.

                                       7
<PAGE>

RESULTS OF OPERATIONS

         The following table sets forth various items as a percentage of total
revenues for the three-month and six-month periods ended June 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED JUNE 30,              SIX MONTHS ENDED JUNE 30,
                                             ---------------------------             ---------------------------
                                                2001             2000                   2001             2000
                                             ----------       ----------             ----------       ----------
<S>                                          <C>              <C>                     <C>              <C>
     Total revenues                            100.0%           100.0%                 100.0%           100.0%
     Cost of goods sold                          -               80.4                    -               75.9
                                             ----------       ----------             ----------       ----------


     Gross profit                              100.0             19.6                  100.0             24.1
     SG&A                                       70.9             77.7                   72.7             57.2
                                             ----------       ----------             ----------       ----------
     Income (loss) from operations              29.1            (58.1)                  27.3            (33.1)

     Non-operating income (expense), net       (10.3)           500.8                    5.2            217.5
     Income taxes                                -                -                      -                -
                                             ----------       ----------             ----------       ----------
     Net earnings (loss)                        18.8%           442.7%                  32.5%           184.4%
                                             ==========       ==========             ==========       ==========
</TABLE>

COMPARISON OF QUARTER ENDED JUNE 30, 2001 AND QUARTER ENDED JUNE 30, 2000

         The comparison of our financial results for the fiscal quarter ended
June 30, 2001 and 2000 set forth below has been significantly affected by
significant change in our business strategy in the fourth quarter of 1999. As a
result of this change in strategy, which contemplates royalties from net sales
of CRAGAR brand products from our licensing partners as our primary source of
revenue, we have experienced a dramatic reduction in revenues and related costs
and expenses between the periods.

         Total revenues consist of gross sales less discounts, returns, and
allowances plus royalties on sale of licensed products. Total revenues for the
quarter ended June 30, 2001 were $114,960 compared to $365,768 during the
quarter ended June 30, 2000, representing a 68.6% decrease in sales. Total
revenues for the quarter ended June 30, 2001, consisted solely of royalty income
derived from Carlisle and Weld. The decrease was primarily attributable to our
having completely sold off all our remaining inventory during 2000 and having no
similar product sales during the same period in 2001.

         Gross profit is determined by subtracting cost of goods sold from total
revenues. Historically, cost of goods sold consisted primarily of the costs of
labor, aluminum, steel, raw materials, overhead, and material processing used in
the production of our products, as well as the freight costs of shipping product
to our customers. Gross profit for the quarter ended June 30, 2001 was $114,960
compared to $71,597 for the quarter ended June 30, 2000. This increase was
attributable to the fact that there were no product sales during the quarter
ended June 30, 2001.

         Selling, general, and administrative ("SG&A") expenses consist
primarily of accounting and legal expenses, office expenses, salaries and wages,
marketing expenses, accounting and legal expenses, and general overhead. These
expenses for the quarter ended June 30, 2001 were $81,466 compared to $284,069
for the quarter ended June 30, 2000, a 71.3% decrease. This decrease was due
primarily to the completion of our change in business strategy in 2000 and the
resulting elimination of a substantial portion of our SG&A expenses.

         Non-operating income, net, for the second quarter of 2001 was $(11,881)
compared to net non-operating income of $1,831,761 for the second quarter of
2000. This decrease of $1,843,642, was primarily attributable to the gain
realized in the second quarter of 2000 on the sale of the economic rights to
180,333 shares of Wrenchead common stock.

         Because of carry-forward losses from previous years, we had no income
tax provision in the second quarter of 2001 or 2000.

                                        8
<PAGE>

         Net earnings for the quarter ended June 30, 2001 were $21,613 compared
to net earnings of $1,619,289 for the quarter ended June 30, 2000. Basic
earnings per share for the quarter ended June 30, 2001 was $0.01 compared to
basic earnings per share of $0.51 for the quarter ended June 30, 2000. Diluted
earnings per share for the quarter ended June 30, 2001 was $0.00 compared to
diluted earnings per share of $0.24 for the quarter ended June 30, 2000. See
Exhibit 11 to this Quarterly Report on Form 10-QSB.

COMPARISON OF SIX MONTHS ENDED JUNE 30, 2001 AND SIX MONTHS ENDED JUNE 30, 2000

         The comparison of our financial results for the six months ended June
30, 2001 and 2000 set forth below has been significantly affected by significant
change in our business strategy in the fourth quarter of 1999. As a result of
this change in strategy, which contemplates royalties from net sales of CRAGAR
brand products from our licensing partners as our primary source of revenue, we
experienced a dramatic reduction in revenues and related costs and expenses
between the periods.

         Total revenues consist of gross sales less discounts, returns, and
allowances plus royalties on the sale of licensed products. Total revenues for
the six months ended June 30, 2001 were $246,379 compared to $825,046 during the
six months ended June 30, 2000, representing a 70.1% decrease in sales. Total
revenues for the six months ended June 30, 2001, consisted solely of royalty
income derived from Carlisle and Weld. The decrease was primarily attributable
to our having completely sold off all our remaining inventory during 2000 and
having no similar product sales during the same period in 2001.

         Gross profit is determined by subtracting cost of goods sold from total
revenues. Historically, cost of goods sold consisted primarily of the costs of
labor, aluminum, steel, raw materials, overhead, and material processing used in
the production of our products, as well as the freight costs of shipping product
to our customers. Gross profit for the six months ended June 30, 2001 was
$246,379 compared to $198,824 for the six months ended June 30, 2000. This
increase was attributable to the fact that there were no product sales during
the six months ended June 30, 2001.

         Selling, general, and administrative ("SG&A") expenses consist
primarily of accounting and legal expenses, office expenses, salaries and wages,
marketing expenses, accounting and legal expenses, and general overhead. These
expenses for the six months ended June 30, 2001 were $179,016 compared to
$471,773 for the six months ended June 30, 2000, a 62.1% decrease. This decrease
was due primarily to the completion of our change in business strategy in 2000
and the resulting elimination of a substantial portion of our SG&A expenses.

         Non-operating income, net, for the six months ended June 30, 2001 was
$12,703 compared to net non-operating income of $1,794,338 for the six months
ended June 30, 2000. This decrease of $1,781,635, was primarily attributable to
the gain realized in second quarter of 2000 on the sale of the economic rights
to 180,333 shares of Wrenchead common stock.

         Because of carry-forward losses from previous years, we had no income
tax provision in the six months ended June 30 of 2001 or 2000.

         Net earnings for the six months ended June 30, 2001 were $80,066
compared to net earnings of $1,521,389 for the six months ended June 30, 2000.
Basic earnings per share for the six months ended June 30, 2001 was $0.02
compared to basic earnings per share of $0.47 for the six months ended June 30,
2000. Diluted earnings per share for the quarter ended June 30, 2001, was $0.01
compared to diluted earnings per share of $0.23 for the quarter ended June 30,
2000. See Exhibit 11 to this Quarterly Report on Form 10-QSB.

                                        9
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         In April 1998, we secured a credit facility (the "NCFC Credit
Facility") with NationsCredit Commercial Funding Corporation ("NCFC"). The terms
of the NCFC Credit Facility specified 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 was secured by substantially all of our assets and
certain pledged assets from three investors. During the third quarter of 2000,
we paid off and terminated the NCFC Credit Facility. The proceeds for the
pay-off were provided by a loan from two investors totaling $1,200,000 at an
interest rate of 2.25% above the prime rate. The loan is secured by
substantially all of our assets and expires in August 2001. During the first
quarter of 2001, we entered into a similar agreement with another investor for a
loan totaling $105,500 at an interest rate of 2.25% above the prime rate. The
loan is secured by substantially all of our assets and expires in April 2002.

         At June 30, 2001, we had an accumulated deficit of $15,765,698. For the
quarter ended June 30, 2001, our operating activities provided $181 of cash,
which was primarily attributable to our collection of our outstanding accounts
receivable offset by payments on accounts payable and accrued expenses. During
the quarter ended June 30, 2001, our investing activities provided $41,925 of
cash. The increase in cash from investing activities was primarily attributable
to the net proceeds received on the sale of our remaining property and
equipment.

         We do not anticipate any major capital budget expenditures in 2001. In
addition, we do not believe our operating activities will generate sufficient
cash flow to meet our operating cash flow requirements and other current
obligations. Consequently, it is likely we will be required to raise additional
funds from equity or debt financing or receive an extension on its loans. No
assurance can be given that such additional financing will be available on terms
acceptable to us, if at all.

         See "Factors that May Affect Future Results and Financial Condition -
Dependence on External Financing" and "History of Previous Losses; Stockholders'
Deficit; Going Concern Opinion."

ACCOUNTING MATTERS

         The Securities and Exchange Commission ("SEC") issued Staff Accounting
Bulletin ("SAB") No. 101 "Revenue Recognition" which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. SAB No. 101 is applicable beginning with our fourth quarter
fiscal 2001 consolidated financial statements. Based on our current analysis of
SAB No. 101, we do not believe it will have a material impact on our financial
results.

         The FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation, the Interpretation of APB Opinion No.
25" ("FIN 44"). The Interpretation is intended to clarify certain problems that
have arisen in practice since the issuance of APB No. 25, "Accounting for Stock
Issued to Employees." The effective date of the Interpretation was July 1, 2000.
The provisions of the Interpretation apply prospectively, but they will also
cover certain events occurring after December 15, 1998 and after January 12,
2000. We believe the adoption of FIN 44 has not had a material adverse affect on
our current and historical financial statements.

PENDING ACCOUNTING PRONOUNCEMENTS

         In June 2001 the Financial Accounting Standards Board adopted Opinion
No. 141, Business Combinations, and Opinion No. 142, Goodwill and Other
Intangibles. The Pronouncements provide for the cessation of the pooling method
of accounting for business combinations as well as providing that goodwill and
other intangible assets that have indefinite useful lives will not be amortized
but rather will be tested at least annually for impairment. The Company has yet
to determine what effect, if any, the adoption of these financial standards
will have on the financial statements. The effective dates for Financial
Accounting  Standards Nos. 141 and 142 are July 1, 2001 and for fiscal years
beginning after December 15, 2001, respectively.

SEASONALITY

         Historically, we have experienced higher revenue in the first two
quarters of the year than in the latter half of the year. We believe 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. We expect this seasonality to have an effect on the revenue stream derived
from sales of CRAGAR brand products by our licensing partners.

                                       10
<PAGE>

INFLATION

         Increases in inflation generally result in higher interest rates.
Higher interest rates on our borrowings would decrease our profitability. To
date, general price inflation has not had a significant impact on our
operations; however, increases in inflation may have an adverse effect on net
sales of CRAGAR products by our licensing partners which would result in our
receiving lower royalty payments. See "Factors that May Affect Future Results
and Financial Condition - Dependence on External Financing" and "History of
Previous Losses; Stockholders' Deficit; Going Concern Opinion."

FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION

         Our future operating results and financial condition are dependent
upon, among other things, our ability to implement our new business strategy.
Potential risks and uncertainties that could affect our profitability are set
forth below.

HISTORY OF PREVIOUS LOSSES; STOCKHOLDERS' DEFICIT; GOING CONCERN OPINION

         We were incorporated in December 1992 and have incurred significant
losses in each of our completed fiscal years through December 31, 1998. For the
year ended December 31, 2000, we reported net earnings of $1,075,029 and for the
year ended December 31, 1999, we reported net earnings of $54,678. For the
six-months ended June 30, 2001 we reported net earnings of $80,066. As of
December 31, 2000, we had an accumulated deficit of $15,315,524 and a total
stockholders' deficit of $569,133. There can be no assurance that we will be
profitable in the future.

         As a result of our total stockholders' deficit and the uncertainty
regarding our ability to meet our anticipated operating and working capital
needs, the independent auditors' report on the Company's 2000 financial
statements has been qualified for a going concern.

DEPENDENCE ON THIRD PARTIES TO GENERATE ROYALTIES

         As a result of our change in business strategy, our revenues and
operating results will be substantially dependent on the efforts and success of
our third party licensing partners. Because the amount of royalties payable to
us are determined by the net sales of those products by our licensing partners,
our revenues will be subject to the abilities of our licensing partners to
generate substantial net sales and deliver a high-quality product on a timely
basis to our customers. In addition, because the primary fiduciary obligations
of our licensing partners are to their shareholders rather than our
shareholders, they may make decisions or take steps that would result in lower
royalty payments than would otherwise be the case. If any of our licensing
partners does not meet its obligation under its respective licensing agreement,
our primary remedy is to terminate that license agreement, which may be an
effective remedy only if we can identify and secure other capable licensees of
the affected products.

INABILITY TO SUPPORT MANUFACTURING, MARKETING, SALE, AND DISTRIBUTION IF THIRD
PARTY TERMINATES THE LICENSE AGREEMENT

         If any of our licensing partners terminates its license agreement or we
terminate the license agreement for any reason, we may be forced to incur the
cost of manufacturing, marketing, selling, and distributing the licensed
products without the financial resources and distribution capabilities of our
licensees. In the alternative, we would be forced to possibly secure another
licensee capable of manufacturing, marketing, selling, and distributing the
licensed products on behalf of us and paying any royalties based on the net
sales of those products. There can be no assurance that we would be able to meet
these obligations in the event that one or more of the license agreements is
terminated.

                                       11
<PAGE>

DEPENDENCE ON EXTERNAL FINANCING

         During the fiscal quarter ending September 30, 2000, we paid off and
terminated our credit facility with the proceeds from a loan from two investors
totaling $1,200,000 at an interest rate of 2.25% above the prime rate. The loan
is secured by substantially all of our assets and expires in August 2001. We
anticipate that we will be required to extend the loans or raise additional
funds through equity or debt financing to repay such loans and to fund working
capital. No assurance can be given, however, that additional financing will be
available on terms acceptable to us, if at all.

INVESTMENT IN WRENCHEAD MAY NOT BE PROFITABLE

         We have made a substantial investment in Wrenchead, Inc. There can be
no assurance that the investment in Wrenchead will turn out to be profitable.

ROYALTY PAYMENTS WILL DECREASE AS A PERCENTAGE OF SALES AS ROYALTIES INCREASE

         The royalty structure negotiated by us with two of our current
licensing partners provides for a decrease in the applicable percentage of net
sales that determines royalty payments to us as net sales increase above certain
levels. The consequence of this structure is that our ability to realize the
benefits of a substantial increase in sales with respect to any group of our
licensed products sold by those licensing partners will be limited by the
negotiated royalty fee structure as net sales of the licensed products increase.

CHANGE IN BUSINESS STRATEGY MAY DEPRESS THE PRICE OF COMMON STOCK

         The completion of the sale and licensing of our one-piece cast aluminum
wheels and related accessories ("One-Piece Wheel Business"), our wheels with
non-cast wrought aluminum alloy outer rims and related accessories ("Wrought
Wheel Business"), our line of wheels with steel outer rims and related
accessories ("SOR Wheel Business") and any other related licensing arrangement
we may complete in the future represents a significant change in our business
model. In general, the outsourcing of the manufacturing, marketing, sales, and
distribution operations with respect to the licensed products, together with the
sale of the related assets, will result in a substantial decrease in our
revenues and operating and marketing costs. We anticipate that the decrease in
revenues and operating and marketing costs will be replaced by a stream of
royalty payments generated by the net sales of the licensed products by our
licensing partners. As a result, we only have one year of history of financial
results upon which shareholders can rely to make a determination that the new
business strategy will be successful. Given the uncertainty of the consequences
of this change in business strategy, as well as the significant decrease in
revenues expected to occur, there can be no assurance that the change will
result in a profitable stream of royalty payments. As a result of this
uncertainty, the price of our common stock may be adversely affected.

EXTENSION OF CRAGAR BRAND NAMES TO OTHER PRODUCTS MAY NOT BE SUCCESSFUL

         Our new business strategy contemplates using the services of
Trademarketing Resources, Inc. ("TRI") to extend the CRAGAR brand names to new
products developed by our licensees as well as to non-wheel related products
within the automotive aftermarket industry. We regard this extension of our
brand names to new products as a key element of a strategy that is designed to
increase net sales of CRAGAR brand products to generate increased royalty
revenues. There can be no assurance, however, that TRI, our licensees, or we
will be successful in developing and marketing any new products under the CRAGAR
brand names, or if any new products are developed, that the net sales of these
products will have a positive impact on our financial results.

NO DUTY TO DISTRIBUTE ROYALTY PAYMENTS TO OUR SHAREHOLDERS

         Any royalty payments made to us pursuant to the licensing agreements
initially will be used by us to increase our working capital and reduce our
debt. We have never paid any cash dividends on our common stock and do not
anticipate doing so in the foreseeable future. As a result, shareholders should
not anticipate that they will receive any distribution of the royalties
generated by our licensing transactions.

                                       12
<PAGE>

DEPENDENCE ON KEY CUSTOMERS; LICENSEES ABILITY TO MARKET AND SELL TO EXISTING
AND NEW CUSTOMERS

         A limited number of customers have historically accounted for a
substantial portion of our revenues in each year. Given our change in business
strategy, we expect that our current licensing partners will account for an even
greater percentage of our revenues in the future. The financial condition and
success of our customers and our ability to obtain orders from new customers
have been critical to our success and will be critical to the success of our
licensing partners. For the year ended December 31, 2000, our 10 largest
customers accounted for approximately 100% of gross sales, since other than
sales of excess inventory, gross sales were attributable to the licensing
agreements and the larger sale of excess inventory to PDK, Inc. For the year
ended December 31, 1999, our 10 largest customers accounted for approximately
65.2% of gross sales (excluding sales in the amount of $1,676,948, recorded as
part of the sales of assets to Weld Racing, Inc., a Missouri Corporation
("Weld") and Carlisle Tire and Wheel Company, a Delaware Corporation and a
wholly owned subsidiary of the Carlisle Companies, Inc. ("Carlisle")) with J.H.
Heafner Company, Inc. accounting for 22.7% of gross sales, Buckeye Sales, Inc.
accounting for 8.2% and Autosales, Incorporated accounting for 7.9% of gross
sales. The sales recorded as part of the sales of assets to Weld and Carlisle
represented 11.9% of the aggregate gross sales (gross sales including sales
recorded as a part of the sales of assets to Weld and Carlisle). As a result of
our change in business strategy as described above, we believe an increasing
percentage of revenues will be dependent on royalties from sales of CRAGAR
products by our licensing partners. There can be no assurance that any of the
licensees will be successful in their sales and marketing efforts.

HIGHLY COMPETITIVE INDUSTRY

         The market for our products is highly competitive. We historically
competed 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. We anticipate that our licensing
partners will compete on those same terms. We believe that Weld, Carlisle, and
Performance have sufficient financial, operational, and distribution
capabilities to compete effectively within the custom aftermarket wheel
industry. However, there can be no assurance that our licensing partners will be
successful in marketing custom aftermarket wheels under the CRAGAR brand names.
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 our licensing partners, possibly
resulting in the reduction or elimination of royalty payments due to us.

GENERAL ECONOMIC FACTORS

         The automotive aftermarket is directly impacted by certain external
factors, such as the general demand for aftermarket automotive parts, prices for
raw materials used in producing our products, fluctuations in discretionary
consumer spending, and general economic conditions, including employment levels,
business conditions, interest rates, and tax rates. While we believe that
current economic conditions favor stability in the markets in which our products
are sold, 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 our licensing partners' businesses in the
future, causing a decrease in royalty payments due us, or prevent us from
successfully implementing our business strategies.

NO ASSURANCE OF ADDITIONAL SUCCESSFUL ALLIANCES

         In furtherance of our change in business strategy and sale of our
licensing rights in the Wrought Wheel, SOR Wheel and One-Piece Wheel businesses,
we continue to consider alliances with other companies that could complement our
new business strategy, including other complementary automotive aftermarket
product lines where we can capitalize on the CRAGAR brand name. There can be no
assurance that suitable licensing candidates can be identified, or that, if
identified, adequate and acceptable licensing terms will be available to us that
would enable us to consummate such transactions. Furthermore, even if we
complete one or

                                       13
<PAGE>

more licensing agreements, there can be no assurance that our licensing partners
will be successful in manufacturing, marketing, selling and distributing the
licensed products.

         Moreover, any additional investment by us in Wrenchead or other
companies may result in a potentially dilutive issuance of equity securities, or
the incurrence of additional debt, which could adversely affect our financial
position. Alliances, whether licensing or direct investments in companies,
involve numerous risks, such as the diversion of the attention of our management
from other business concerns and our entrance into markets in which we have had
no or only limited experience, both of which could have a material adverse
effect on us.

VARIABILITY IN OPERATING RESULTS; SEASONALITY

         Our results of operations have historically been subject to substantial
variations as a result of a number of factors. In particular, our operating
results have varied due to 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 we participate. Historically, our
net sales have been highest in the first and second quarters of each year.
Significant variability in orders during any period has had an impact on our
cash flow or workflow. We believe that any period-to-period comparisons of our
financial results are not necessarily meaningful and should not be relied upon
as an indication of future performance. We expect that our licensing partners
will be subject to the same variations and industry seasonality as we have
experienced in the past. These variations may cause fluctuations in the sales of
CRAGAR branded products thereby causing fluctuations in the royalties due us.

CHANGING CUSTOMER TRENDS; NEED FOR PRODUCT DEVELOPMENT

         Our success will depend, in part, on the ability of our licensing
partners to correctly and consistently anticipate, gauge, and respond in a
timely manner to changing consumer preferences. There can be no assurance that
our licensed products will continue to enjoy acceptance among consumers or that
any of the future CRAGAR branded products developed and marketed by our
licensing partners will achieve or maintain market acceptance. Any misjudgment
by our licensing partners of the market for a particular product or product
extension, or their failure to correctly anticipate changing consumer
preferences, could have a material adverse effect on their businesses, financial
condition, and results of operations. Any material adverse effect experienced by
our licensing partners may have an adverse effect on us and our financial
condition and results of operations.

REGULATORY COMPLIANCE

         We historically have been 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 our
products. We believe that we have been and are currently in material compliance
with such regulations. Prior to November 1999, in the ordinary course of our
business, we used metals, oils, and similar materials, which were stored on
site. The waste created by use of these materials was transported off-site on a
regular basis by a state-registered waste hauler. Although we are 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 us.

         We are subject to regulation as a publicly traded company under the
Securities Exchange Act of 1934. In addition, as a consequence of the sale and
licensing of our Wrought Wheel, SOR Wheel and One-Piece businesses, which could
be considered a sale of substantially all of our assets, in exchange for the
receipt of a stream of royalty payments, we could face regulatory issues under
the Investment Company Act of 1940 if the

                                       14
<PAGE>

royalty payments are considered investment securities. If we are considered to
be an investment company under the 1940 Act, we would be required to register
under that Act as an investment company. As a registered investment company, we
would be subject to further regulatory oversight of the Division of Investment
Management of the Commission, and our activities would be subject to substantial
and costly regulation under the 1940 Act. While we do not believe that our
activities will subject us to the 1940 Act and accordingly do not intend to
register as an investment company under the Act, there can be no assurance that
such registration would not be required in the future.

RELIANCE ON INTELLECTUAL PROPERTY

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

CONTROL BY EXISTING STOCKHOLDERS

         Our directors, officers, and principal stockholders beneficially own
approximately 42.5% of our outstanding common stock. As a result, these persons
have a significant influence on our affairs and management, as well as on all
matters requiring stockholder approval, including electing and removing members
of our Board of Directors, causing us to engage in transactions with affiliated
entities, causing or restricting the sale or merger of our company, and changing
our dividend policy. Such concentration of ownership and control could have the
effect of delaying, deferring, or preventing a change in control of our company
even when such a change of control would be in the best interest of our other
stockholders.

EFFECT OF PREFERRED STOCK ON RIGHTS OF COMMON STOCK

         Our Amended and Restated Certificate of Incorporation authorizes our
Board of Directors 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 our Board of Directors. Accordingly, our 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, we issued 22,500 shares of
Series A Preferred Stock for approximately $2,250,000 in additional capital.
During the quarter ended September 30, 2000, 11,500 shares of Series A Preferred
Stock and the preferred stock dividends issued on that stock were converted into
456,393 shares of our common stock. During the month ended January 30, 2001, an
additional 11,000 shares of Series A Preferred Stock and the preferred stock
dividends issued on that stock were converted into 615,585 shares of common
stock. As of the month ended January 30, 2001 there was no longer any Series A
Preferred Stock outstanding.

         Additional series of preferred stock could be issued, under certain
circumstances, as a method of discouraging, delaying, or preventing a change in
control of our company that stockholders might consider to be in our company's
best interests. There can be no assurance that we will not issue additional
shares of preferred stock in the future.

DEPENDENCE ON KEY PERSONNEL

         Our future success depends, in large part, on the efforts of Michael L.
Hartzmark, our Chairman and Chief Executive Officer. The loss of the services of
Dr. Hartzmark could have a material adverse effect on our business. While Dr.
Hartzmark does not have an employment agreement with us, Dr. Hartzmark and his
family beneficially held, as of June 30, 2001, more than 16.6% of our common
stock. The successful implementation

                                       15
<PAGE>
of our business strategies will depend, for the most part, on qualified
management and other personnel being hired by our licensing partners. In
addition, the successful implementation of our brand extension strategy will
depend, for the most part, on the qualified management and other personnel
working at Trademarketing Resources, Inc. We have no input in the hiring
decisions being made by our licensing partners. We do not maintain key man
insurance on any of our personnel or consultants.

NO CASH DIVIDENDS

         We have never paid cash dividends or stock dividends on our common
stock and do not anticipate that we will pay cash dividends in the foreseeable
future. It is anticipated that any earnings will be used to finance growth of
our business and to reduce our debt.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Cragar is an unsecured creditor in the matter of in Re Super Shops,
Inc., et al., Case No. LA 97-46094-ER, a bankruptcy action filed by Super Shops,
Inc., previously Cragar's primary customer. Because Cragar 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.

         Cragar has filed a complaint in the matter of Cragar Industries, Inc.
versus Titan Wheel International, Inc. and Titan International, Inc. ("Titan")
in the United States District Court for the District of Arizona, Case No.
CIV99-0649, seeking damages of more than $4,500,000, claiming breach of
contract, breach of warranty, and conversion arising out of a supply contract
with Titan's subsidiary Automotive Wheel, Inc. for the delivery of automotive
wheels to Cragar. The Company recently amended its complaint to include the
charge of fraud by Titan.

         There are currently no other material pending proceedings to which
Cragar is a party or to which any of its property is subject, although Cragar
from time to time is involved in routine litigation incidental to the conduct of
its business.

         The Company currently maintains discontinued 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's business, financial condition, and results of operations.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         As part of the agreement with TRI, we issued 58,182 shares of our
common stock to certain individuals who will be providing us consulting services
directly under the TRI agreement. They will receive an additional 58, 182 shares
of Cragar common stock on April 2, 2002.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None

                                       16
<PAGE>

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

         The Annual Meeting of Shareholders of the Company was held on May 14,
2001. The shareholders elected the following persons to serve for one-year terms
as directors of the Company (with votes cast for, against, or withheld):

                                 Votes For      Votes Against     Votes Withheld
                                 ---------      -------------     --------------
Election of Directors
   Michael L. Hartzmark          2,842,712            0                 0
   Marc Dworkin                  2,842,712            0                 0
   Mark Schwartz                 2,842,712            0                 0
   Donald E. McIntyre            2,842,712            0                 0
   Michael Miller                2,842,712            0                 0


ITEM 5.  OTHER INFORMATION

         None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

         Exhibit No.  Description
         -----------  -----------

           3.1        Second Amended and Restated Certificate of
                      Incorporation of the Registrant filed with the State
                      of Delaware on October 1, 1996*
           3.2        Amended and Restated Bylaws of the Registrant*
          10.1        Amendment to Sales Agreement**
          10.2        Form of Loan Agreement with Mark Schwartz (also pledge,
                      warrant, etc.)***
          10.3        Form of Restricted Stock Agreement with Trademarketing
                      Resources, Inc.****
          10.4        Licensing Representation Agreement with Trademarketing
                      Resources, Inc.*****
          11          Schedule of Computation of Earnings per Share



         (b)  Reports on Form 8-K

              None

------------------
*        Incorporated by reference to the Company's Registration Statement on
         Form SB-2 (No. 333-13415).
**       Incorporated by reference to Company's Quarterly Report on Form 10QSB
         filed on August 14, 2000.
***      Incorporated by reference to Company's Annual Report on Form 10KSB
         filed on April 2, 2001.
****     Incorporated by reference to Company's Registration Statement on Form
         S-8 filed on May 22, 2001.
*****    Portions of the exhibit have been omitted pursuant to a request for
         confidential treatment.

                                       17
<PAGE>

                                   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:  August 15, 2001                         By:/s/ Michael L. Hartzmark
        ------------------                        --------------------------
                                                   Michael L. Hartzmark
                                                   Chairman, CEO and Treasurer

Dated:  August 15, 2001                         By:/s/ Richard P. Franke
       -------------------                        --------------------------
                                                   Richard P. Franke
                                                   Chief Financial Officer
                                                   (Principal Financial and
                                                   Accounting Officer)

















                                       18