<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 September 30, 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
of incorporation or organization)                   Identification No.)

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

                                 (623) 247-1300
                           (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 September
30, 1999: 2,456,990.

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

<PAGE>


                         PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements

                           CRAGAR INDUSTRIES, INC.
                          Condensed Balance Sheets
                  September 30, 1999 and December 31, 1998


<TABLE>
<CAPTION>

                                                                                   September 30,          December 31,
                                                                                       1999                   1998
                                                                                   -------------          ------------
                        ASSETS                                                      (unaudited)
<S>                                                                                <C>                    <C>
Current Assets:

      Cash and cash equivalents                                                    $     265,155          $          -
      Accounts receivable, less allowance for doubtful accounts of
        $195,303 as of 9/30/99 and $108,995 as of 12/31/98                             1,883,313             2,879,277
      Inventories, net                                                                 3,185,693             4,352,453
      Prepaid expenses                                                                   315,246               200,017
                                                                                   -------------          ------------
         Total current assets                                                          5,649,407             7,431,747

Property and equipment, net                                                              496,747               654,534
Other assets, net                                                                         21,320                21,320
                                                                                   -------------          ------------
                                                                                   $   6,167,474          $  8,107,601
                                                                                   -------------          ------------
                                                                                   -------------          ------------

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

      Accounts payable                                                             $   1,425,628          $  2,376,112
      Accrued expenses                                                                 1,280,952             1,032,644
      Accrued interest                                                                    79,609                74,678
      Line of credit                                                                     496,305             2,530,161
      Long-term debt, current installments                                               250,400               250,400
                                                                                   -------------          ------------
         Total current liabilities                                                     3,532,894             6,263,995

Line of credit, excluding current installments                                         3,478,133             3,290,333
Long-term debt, excluding current installments                                           781,867               709,667
                                                                                   -------------          ------------
         Total liabilities                                                             7,792,894            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                                           1,880,294             2,090,513
      Common stock, par value $.01; authorized 5,000,000 shares
         2,456,990 shares issued and outstanding                                          24,570                24,540
      Additional paid-in capital - common                                             12,097,115            12,097,115
      Accumulated deficit                                                            (15,627,624)          (16,368,787)
                                                                                   -------------          ------------
         Total stockholders' equity (deficit)                                      $  (1,625,420)           (2,156,394)
                                                                                   -------------          ------------

                                                                                   $   6,167,474          $  8,107,601
                                                                                   -------------          ------------
                                                                                   -------------          ------------
</TABLE>

            See accompanying notes to condensed financial statements


                                        2

<PAGE>

                           CRAGAR INDUSTRIES, INC.
                     CONDENSED STATEMENTS OF OPERATIONS
       Three Months and Nine Months Ended September 30, 1999 and 1998
                               (unaudited)

<TABLE>
<CAPTION>

                                                                 Three Months Ended                Nine Months Ended
                                                                 September 30, 1999                September 30, 1999
                                                           ----------------------------      -----------------------------
                                                               1999             1998             1999              1998
                                                           -----------      -----------      ------------      -----------
<S>                                                        <C>              <C>              <C>               <C>
Net Sales                                                  $ 2,428,920      $ 2,981,267      $ 10,818,776      $ 9,709,999
Cost of goods sold                                           1,806,393        2,740,636         8,527,808        8,174,862
                                                           -----------      -----------      ------------      -----------
        Gross profit                                           622,527          240,631         2,290,968        1,535,137
Selling, general and administrative expenses                   501,975        1,381,903         1,653,708        3,240,599
                                                           -----------      -----------      ------------      -----------
        Income (loss) from operations                          120,552       (1,141,272)          637,260       (1,705,462)
                                                           -----------      -----------      ------------      -----------
Non-operating (income) expenses, net
     Interest expense                                          145,658          163,826           476,918          495,303
     Gain on sale of economic rights to certain assets        (272,600)               -          (272,600)               -
     Other, net                                                 24,385           44,717            52,168           75,572
                                                           -----------      -----------      ------------      -----------
        Total non-operating expenses                          (102,557)         208,543           256,486          570,875
                                                           -----------      -----------      ------------      -----------

Income (loss) before income taxes
     and extraordinary items                                   223,109       (1,349,815)          380,774       (2,276,337)
Income taxes                                                         -                -                 -                -
                                                           -----------      -----------      ------------      -----------
Income (loss) before extraordinary item                        223,109       (1,349,815)          380,774       (2,276,337)

Extraordinary item
     Gain on forgiveness of debt                                     -                -           150,200                -
                                                           -----------      -----------      ------------      -----------
Net income (loss)                                          $   223,109      $(1,349,815)     $    530,974      $(2,276,337)
                                                           -----------      -----------      ------------      -----------
                                                           -----------      -----------      ------------      -----------
Basic earnings (loss) per share
     Income (loss) before extraordinary item               $      0.07      $     (0.57)     $       0.11      $     (0.97)
     Extraordinary item                                              -                -              0.06                -
                                                           -----------      -----------      ------------      -----------
     Net income (loss)                                     $      0.07      $     (0.57)     $       0.17      $     (0.97)
                                                           -----------      -----------      ------------      -----------
                                                           -----------      -----------      ------------      -----------
Weighted average shares outstanding - basic                  2,456,990        2,453,990         2,456,990        2,453,990
                                                           -----------      -----------      ------------      -----------
                                                           -----------      -----------      ------------      -----------
Diluted earnings (loss) per share
     Income (loss) before extraordinary item               $      0.04      $     (0.57)     $       0.05      $     (0.97)
     Extraordinary item                                              -                -              0.03                -
                                                           -----------      -----------      ------------      -----------
     Net income (loss)                                     $      0.04      $     (0.57)     $       0.08      $     (0.97)
                                                           -----------      -----------      ------------      -----------
                                                           -----------      -----------      ------------      -----------
Weighted average shares outstanding - diluted                5,183,197        2,453,990         5,183,197        2,453,990
                                                           -----------      -----------      ------------      -----------
                                                           -----------      -----------      ------------      -----------
</TABLE>

            See accompanying notes to condensed financial statements


                                        3


<PAGE>


                             CRAGAR INDUSTRIES, INC.

                       Condensed Statements of Cash Flows
                  Nine Months Ended September 30, 1999 and 1998

                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                  Nine Months Ended September 30,
                                                                             ------------------------------------------
                                                                                    1999                   1998
                                                                             --------------------   -------------------
<S>                                                                          <C>                    <C>
Cash flows from operating activities
     Net earnings (loss)                                                             $   530,974          $ (2,276,337)
     Adjustments to reconcile net earnings (loss) to net cash
            used in operating activities:
     Provision for (write-off of) doubtful accounts                                       86,308               241,777
     Reduction in provision for obsolete and slow moving inventory                      (376,429)               24,799
     Depreciation and amortization of property and equipment                             216,854               219,871
     Amortization of other assets                                                              -                61,667
     Amortization of warrants issued with line of credit                                       -                21,900
     Increase (decrease) in cash resulting from changes in:
         Accounts receivable                                                             909,656              (414,382)
         Inventory                                                                     1,543,189              (144,449)
         Prepaid expenses                                                               (115,229)             (132,245)
         Other assets                                                                          -                12,940
         Accounts payable and accrued expenses                                          (702,176)              324,626
         Accrued interest                                                                  4,930               (65,791)
                                                                             --------------------   -------------------
            Net cash povided by (used in) operating activities                         2,098,077            (2,125,624)
                                                                             --------------------   -------------------
Cash flows from investing activities
     Purchases of property and equipment                                                 (59,066)              (43,468)
                                                                             --------------------   -------------------
            Net cash used in investing activities                                        (59,066)              (43,468)
                                                                             --------------------   -------------------
Cash flows from financing activities
     Proceeds from sale of preferred stock                                                     -             1,650,000
     Net borrowings (repayments) on Norwest line of credit                                     -            (5,518,544)
     Net borrowings (repayments) on NCFC line of credit                               (1,846,056)            5,369,226
     Proceeds from long-term debt                                                        260,000             1,127,000
     Repayments of long-term debt                                                       (187,800)             (104,333)
     Repayments of capital lease obligations                                                   -              (105,626)
                                                                             --------------------   -------------------
            Net cash provided by (used in) financing activities                       (1,773,856)            2,417,723
                                                                             --------------------   -------------------
            Net increase (decrease) in cash and equivalents                              265,155               248,631

Cash and cash equivalents at beginning of period                                               -                16,322
                                                                             --------------------   -------------------
Cash and cash equivalents at end of period                                           $   265,155          $    264,953
                                                                             --------------------   -------------------
                                                                             --------------------   -------------------
Supplemental disclosure of cash flow information:
     Cash paid for interest                                                          $   471,987          $    561,094
                                                                             --------------------   -------------------
                                                                             --------------------   -------------------
     Conversion of investor notes payable to preferred stock                         $         -          $    600,000
                                                                             --------------------   -------------------
                                                                             --------------------   -------------------
</TABLE>

           See accompanying notes to condensed financial information

                                       4
<PAGE>
                             CRAGAR INDUSTRIES, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                      NINE MONTHS ENDED SEPTEMBER 30, 1999
                                   (Unaudited)

1.       Summary of Significant Accounting Policies and Practices Basis of
         Presentation:

         The interim financial data of Cragar Industries, Inc. (the Company) as
         of and for the three months and nine months ended September 30, 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.

2.       Inventories

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                                 SEPTEMBER 30, 1999         DECEMBER 31, 1998
                                                                                 ------------------         -----------------
                                                                                    (Unaudited)
                  <S>                                                            <C>                        <C>
                  Raw materials                                                   $ 1,665,082                  $ 2,612,857
                  Work in process                                                     113,969                      161,164
                  Finished Goods                                                    2,029,462                    2,577,681
                                                                                  -----------                  -----------
                                                                                    3,808,513                    5,351,702
                  Less allowance for obsolete and slow-moving inventory               622,820                      999,249
                                                                                  -----------                  -----------
                  Inventories, net                                                $ 3,185,693                  $ 4,352,453
                                                                                  -----------                  -----------
                                                                                  -----------                  -----------
</TABLE>

3.       Basic and Diluted Earnings (Loss) per Share

         Basic and diluted earnings and loss per share amounts are based on the
         weighted average number of common shares outstanding as reflected on
         Exhibit 11 to this Quarterly Report on Form 10-QSB.

4.       Other Related Reserves and Allowances

<TABLE>
<CAPTION>
                                                                                 SEPTEMBER 30, 1999         DECEMBER 31, 1998
                                                                                 ------------------         -----------------
                                                                                    (Unaudited)
                  <S>                                                            <C>                        <C>
                  Stock adjustments and returns                                  $      187,577               $     129,849
                  Rebates reserve                                                         4,235                       5,869
                  Warranty reserve                                                      420,575                     397,991
                  Other reserves                                                         48,331                      72,957
</TABLE>

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

                                       5
<PAGE>
         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. As of September 30,
         1999 the Company had granted warrants to purchase 73,500 shares of
         the Company's common stock at exercise prices equal to the fair
         market value on the dates of grant. During the first quarter of 1999
         the Company agreed to grant warrants to certain individuals who
         provided financing to the Company in the aggregate principal amount
         of $260,000 during March 1999. For each $100,000 made available to
         the Company, the Company granted warrants to purchase 33,333 shares
         of common stock at an exercise price of $3.00 per share. On May 21,
         1999, the Company granted options to Sidney Dworkin, Donald McIntyre
         and Mark Schwartz, each of whom are outside Directors of the
         Company, to purchase 2,000 shares of common stock at an exercise
         price of $3.75 per share, which was the fair market value on the
         date of grant. Also, on May 21, 1999, the Company agreed that, in
         lieu of cash payments for director fees, Messrs. Dworkin, McIntyre
         and Schwartz would each be granted options to purchase 4,000 shares
         (or 2,000 per meeting for the February and May 1999 board meetings)
         of the Company's common stock, at an exercise price of $3.75 per
         share, which was the fair market value on the date of grant. Until
         the Company's cash position improves, the Board of Directors has
         agreed that for each board meeting an outside director attends, the
         Company will grant options to that director to purchase 2,000 shares
         of the Company's common stock exercisable at an exercise price equal
         to the price of the Company's common stock on the date of grant. As
         a result, the Company granted to each of the outside directors
         options to purchase 2,000 shares of the Company's common stock at an
         exercise price of $3.125, which was the fair market value on the
         date of grant, for their attendance at the August 1999 board
         meeting. During the third quarter ended September 30, 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 Series A Preferred Stock
         at September 30, 1999 totaled $253,750, 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 include, but
     are not limited to, anticipated consequences of the completed transaction
     with Weld Racing, Inc. and the proposed transaction with Carlisle Tire &
     Wheel Co., expectations regarding cash flow and the sufficiency of working
     capital, 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.

                                       6
<PAGE>
     INTRODUCTION

          Cragar Industries, Inc. (the "Company") 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. The Company historically has sold its 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 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, 1998). As of December 31, 1998,
     the balance of the excess of fair value of assets acquired over cost was
     zero.

     RESULTS OF OPERATIONS

          The following table sets forth various items as a percentage of net
     sales revenue for the three month and nine month periods ended September
     30, 1999 and September 30, 1998:

<TABLE>
<CAPTION>
                                  THREE MONTHS ENDED SEPTEMBER 30,      NINE MONTHS ENDED SEPTEMBER 30,
                                         1999           1998                    1999          1998
                                        -----          -----                   -----          -----
<S>                               <C>                  <C>                     <C>            <C>
Net sales                               100.0%         100.0%                  100.0%         100.0%
Cost of goods sold                       74.4           91.9                    78.8           84.2
                                        -----          -----                   -----          -----

Gross profit                             25.6            8.1                    21.2           15.8
SG&A                                     20.6           46.4                    15.3           33.4
                                        -----          -----                   -----          -----

Income (loss) from operations             5.0          (38.3)                    5.9          (17.6)
Non-operating income (expense) net        4.2           (7.0)                   (2.4)          (5.8)
Income taxes                                -              -                       -              -
Extraordinary gain                          -              -                     1.4              -
                                        -----          -----                   -----          -----
Net earnings (loss)                       9.2%         (45.3)%                   4.9%         (23.4)%
                                        =====          =====                   =====          =====

</TABLE>

     COMPARISON OF QUARTER ENDED SEPTEMBER 30, 1999 AND QUARTER ENDED SEPTEMBER
     30, 1998

          Net sales consist of gross sales less discounts, returns and
     allowances. Net sales for the quarter ended September 30, 1999 were
     $2,428,920 compared to $2,981,267 during the quarter ended September 30,
     1998, representing an 18.5% decrease in sales. The decrease was primarily
     attributable to a slow-down in orders by the Company's largest customer.
     Discounts, returns and allowances increased by 26.0% from the comparable
     quarter ended September 30, 1998. The increase in discounts, returns and
     allowances was primarily attributable to seasonal trends and increase in
     business with national retailers for the quarter ended September 30, 1999.

          Gross profit is determined by subtracting cost of goods sold from net
     sales. Cost of goods sold consists primarily of the costs of labor,
     aluminum, steel, raw materials, overhead, and material processing 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 September 30, 1999 was $622,527 compared to $240,631 for the quarter
     ended September 30, 1998. As a percentage of net sales, gross profit
     increased in the third quarter of 1999 compared to the third quarter of
     1998, from 8.1% to 25.6%. The increase in gross profit from the third
     quarter of 1998 to the third quarter of 1999 was attributable to continued
     focus on decreasing manufacturing

                                       7
<PAGE>
     costs, a change in the established product mix, higher average prices on
     certain products and higher margins realized on an increased percentage
     of sales to retail customers. The Company 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
     other factors. The Company also anticipates its future operating results
     to change significantly if the proposed transaction with Carlisle Tire &
     Wheel Co. is completed. See "Management's Discussion and Analysis or
     Plan of Operations -- Recent Developments."

          Selling, general, and administrative ("SG&A") expenses consist
     primarily of commissions, marketing expenses, promotional programs,
     salaries and wages, product development expenses, office expenses,
     accounting and legal expenses, bad debt reserves, and general overhead.
     SG&A expenses for the third quarter ended September 30, 1999 were $501,975
     compared to $1,381,903 for the quarter ended September 30, 1998. This
     decrease of 63.7% was primarily due to the Company's continued cost cutting
     programs and a significant reduction in marketing expenses spent over the
     third quarter in 1998.

          Non-operating income, net, for the third quarter of 1999 was $102,557
     compared to non-operating expenses, net of $208,543 for the third quarter
     of 1998. The decrease of $311,100 was primarily attributable to gain on
     sale of the economic rights to certain assets. The Company sold the
     economic rights derived from certain assets for $300,000 during the third
     quarter of 1999. The gain on the sale, after deducting the underlying cost
     of the assets and related selling costs, totaled $272,600. In addition, the
     Company had lower interest costs resulting from a lower outstanding balance
     on the NCFC Credit Facility (as defined herein). See "Management's
     Discussion and Analysis or Plan of Operation -- Liquidity and Capital
     Resources."

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

          Net earnings for the third quarter ended September 30, 1999 were
     $223,109 compared to a net loss of $1,349,815 for the third quarter ended
     September 30, 1998. Basic earnings per share for the third quarter ended
     September 30, 1999 was $.07 compared to a basic loss per share of $.57 for
     the third quarter ended September 30, 1998. Diluted earnings per share for
     the three months ended September 30, 1999 were $.04 compared to the diluted
     loss per share of $.57 for the same three month period in 1998. See Exhibit
     11 to this Quarterly Report on Form 10-QSB.

     COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1999 AND NINE MONTHS ENDED
     SEPTEMBER 30, 1998

          Net sales increased 11.4% from $9,709,999 in the nine month period
     ended September 30, 1998 to $10,818,776 for the nine month period ended
     September 30, 1999. The increase was primarily attributable to sales of the
     Company's new wire wheel to J. H. Heafner, Inc., the Company's largest
     customer, and other existing customers, additional sales to existing
     customers, and reduction in its inventory of slow-moving and obsolete
     products.

          Gross profit for the nine months ended September 30, 1999 was
     $2,290,968 compared to $1,535,137 for the same period in 1998. As a
     percentage of sales, gross profit improved from 15.8% for the nine month
     period ended September 30, 1998 to 21.2% for the nine month period ended
     September 30, 1999. The gross profit improvement during the nine months
     ended September 30, 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 nine months of
     1999. However, the Company also expects its gross profit 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 other factors,
     such as overhead absorption. Overhead absorption variations result from
     changes in production levels and efficiencies. The Company also anticipates
     its future

                                       8
<PAGE>
     operating results to change significantly if the proposed transaction
     with Carlisle Tire & Wheel Co. is completed. See "Management's
     Discussion and Analysis or Plan of Operations -- Recent Developments."

          The Company sold the economic rights derived from certain assets for
     $300,000 during the third quarter of 1999. The gain on the sale, after
     deducting the underlying cost of the assets and related selling costs,
     totaled $272,600.

          SG&A expenses for the nine months ended September 30, 1999 decreased
     $1,586,891 to $1,653,708 from $3,240,599 over the nine months ended
     September 30, 1998. This 49.0% decrease was due in part to the Company's
     concentrated focus on reducing SG&A expenses. The Company achieved these
     reductions primarily through 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 nine months ended September 30,
     1999 were $256,486 compared to $570,875 for the same period for 1998. The
     decrease of $314,389 was primarily attributable to the gain on sale of the
     economic rights to certain assets. The Company sold the economic rights
     derived from certain assets for $300,000 during the third quarter of 1999.
     The gain on the sale, after deducting the underlying cost of the assets and
     related selling costs, totaled $272,600. In addition the Company had lower
     interest costs resulting from a lower outstanding balance on the NCFC
     Credit Facility (as defined herein). See "Management's Discussion and
     Analysis or Plan of Operation -- Liquidity and Capital Resources."

          Net earnings for the nine months ended September 30, 1999 were
     $530,974 compared to a net loss of $2,276,337 for the nine months ended
     September 30, 1998. Excluding the extraordinary gain of $150,200 resulting
     from the forgiveness of debt by certain material and media vendors, the
     Company had net earnings for the nine months ended September 30, 1999 of
     $380,774. Basic earnings per share for the nine months ended September 30,
     1999 was $.17 compared to a basic loss per share of $.97 for the nine
     months ended September 30, 1998. Diluted earnings per share were $.08 for
     the nine months ended September 30, 1999 versus a diluted loss per share of
     $.97 for the nine months ended September 30, 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. During the quarter ended
     June 30, 1999, the Company negotiated a short-term overadvance provision of
     $250,000 as part of its NCFC Credit Facility. The overadvance provision
     expired during the third quarter of 1999. As of September 30, 1999, the
     outstanding balance under the NCFC Credit Facility was approximately
     $4,750,000, and the Company had excess availability of approximately
     $80,000. The NCFC Credit Facility contains no financial performance
     covenants and requires prior approval rights to any declarations of cash
     dividend payments.

          At September 30, 1999, the Company had an accumulated deficit of
     $15,627,624. For the nine months ended September 30, 1999, the Company's
     operating activities provided $2,098,077 of cash, which was primarily
     attributable to the Company' net earnings for the period and the decrease
     in accounts receivable and inventory. During the nine months ended
     September 30, 1999, the Company's financing activities used $1,773,856 of
     cash. The decrease in cash from financing activities was primarily due to a
     net decrease of $1,846,056 in net borrowings under the revolving line of
     the NCFC Credit Facility and long-term debt payments of $187,800. The
     Company received $260,000 in proceeds from loans provided by private
     lenders during the first quarter of 1999.

                                       9
<PAGE>


          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.
     If the Company is unable to obtain additional funding, its ability to meet
     its current and future business 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 became 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 became
     effective for the Company on July 1, 1999. The adoption of SFAS No. 133 did
     not 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.

     RECENT DEVELOPMENTS

          On September 30, 1999, the Company agreed to sell the assets related
     to its wrought aluminum wheel business to Weld Racing, Inc. in exchange
     for $98,070 in cash and an as yet undetermined amount in the form of
     short-term promissory notes. The Company also agreed to grant Weld Racing
     an exclusive license to manufacture, distribute and sell its

                                     10

<PAGE>

    wrought aluminum wheels in exchange for a royalty based on net sales of
    these products by Weld Racing. Cragar completed these transactions in
    October 1999. Copies of the Agreement of Purchase and Sale of Assets and
    the Exclusive Field of Use License Agreement are included as exhibits to
    this report, although certain specified information has been omitted as
    confidential and filed with the Commission.

          On October 15, 1999, the Company agreed to sell the assets related
    to its steel outer rim wheel business to Carlisle Tire & Wheel Co. in
    exchange for cash in an amount to be determined at closing. The Company
    also agreed to grant Carlisle an exclusive license to manufacture,
    distribute and sell its steel outer rim wheels in exchange for a royalty
    based on net sales of these products sold by Carlisle. This transaction
    is subject to a number of conditions, including approval by the holders
    of at least a majority of Cragar's outstanding common stock. In
    connection with a special meeting of shareholders to be held not later
    than January 15, 2000, Cragar will distribute a proxy statement to its
    shareholders providing information regarding the proposed transaction. If
    the shareholders approve the proposed transaction with Carlisle, the
    Company intends to complete the transaction as soon as practicable after
    the meeting, but in no event later than January 15, 2000. If the proposed
    transaction with Carlisle is completed, the Company anticipates a
    substantial decrease in both net sales and costs resulting from the
    outsourcing of its manufacturing and distribution operations in exchange
    for royalty payments from others. Copies of the Agreement of Purchase and
    Sale of Assets and the Exclusive Field of Use License Agreement are
    included as exhibits to this report, although certain information has
    been omitted as confidential and filed with the Commission.

     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.

     HISTORY OF PREVIOUS LOSSES

          The Company was incorporated in December 1992 and has incurred
     significant losses in each of its completed fiscal years. There can be no
     assurance that the Company will be profitable in the future. For the nine
     months ended September 30, 1999, the Company incurred net earnings of
     $530,974. Net sales for the nine months ended September 30, 1999 increased
     to $10,818,776 from $9,709,999 for the same period in 1998. As of September
     30, 1999, the Company had an accumulated deficit of $15,627,624 and a total
     stockholders' deficit of $1,625,420.

     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 67.6% of the Company's gross sales
     for the first nine months of 1999. The top three customers accounted for
     39.7% of gross sales. For the nine months ended September 30, 1999, J. H.
     Heafner Company, Inc. accounted for 23.4% of gross sales, Buckeye Sales,
     Inc. accounted for 8.4% of gross sales, and ATECH Motorsports accounted for
     7.9% 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.

                                     11

<PAGE>


          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 intends to increase such outsourcing
     in the future, particularly to the extent the Company completes the
     proposed transaction with Carlisle Tire & Wheel Co.. 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 AND LACK
     OF ACTIVE TRADING MARKET

          The Company's common stock and warrants are quoted on the OTC Bulletin
     Board under the symbol "CRGR" and "CRGRW", respectively. 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 and trading volume
     of the Company's securities has been insignificant. There can be no
     assurance that the Company in the future will meet the requirements for
     listing on Nasdaq or the Boston Stock Exchange with respect to the common
     stock or warrants. If the Company fails to re-attain such listings, 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 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.

          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

                                     12

<PAGE>

     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. Because the NCFC Credit Facility is
     secured by substantially all of the Company's assets, a default by the
     Company would likely have a material adverse effect on the Company's
     financial condition.

     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.

     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.

     DATA PROCESSING AND TECHNOLOGY AND YEAR 2000

          The Year 2000 issue is one where computer systems may recognize the
     designation "00" as 1900 when it means 2000, resulting in system failure or
     miscalculations.

          The Company 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.

          As a result of its review to date, the Company determined that certain
     of its internal software systems were inadequate for the Company's future
     business needs, and needed to be upgraded because of various
     considerations, including Year 2000 non-compliance. In certain cases the
     timing of system upgrades were 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
     upgrades were made early in the third quarter 1999 and the full integration
     of the upgrades were completed by September 30, 1999. The Company will
     continue to monitor and test the upgrades during the fourth quarter of 1999
     to insure their reliability and compliancy.

                                     13

<PAGE>

          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 AND STRATEGIC ALLIANCES

          The Company continues to consider acquisitions of and strategic
     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 or alliances, there can be no assurance that the acquisitions
     or alliances will positively affect the Company's results of operations.
     Acquisitions and alliances 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, the potential loss of key employees of the acquired company,
     and greater dependence on the manufacturing and distribution capabilities
     of third parties, all of which could 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. Given the Company's
     efforts to enter into licensing agreements with third parties to
     manufacture and sell wheel products under the Cragar brand name, the
     Company's failure to protect its intellectual property rights would
     adversely affect the Company's business and financial condition.

     CONTROL BY EXISTING STOCKHOLDERS

          The directors, officers, and principal stockholders of the Company
     beneficially own more than 48.9% 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,

                                     14

<PAGE>


     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 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 September 30, 1999, could have been converted into approximately
     755,833 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
     September 30, 1999, over 20.3% 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.

                           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 was paid in the third quarter of 1999, for
     preference payments as a result of the on-going liquidation of the
     bankruptcy estate.

                                     15

<PAGE>

          The Company filed suit against Titan Wheel International, Inc., a/k/a
     Automotive Wheels, Inc., and Titan International, Inc. ("Titan") in the
     Superior Court of Maricopa County, Arizona on February 17, 1999. The suit
     has since been removed to, and is currently pending in, the United States
     District Court for the District of Arizona. The suit claims breach of
     agreement, breach of warranty and conversion in connection with an
     agreement between the Company and Titan dated April 3, 1996. The suit
     claims damages in excess of $2.25 million.

          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 Series A
     Preferred Stock at September 30, 1999 totaling $253,750, 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

          During the second quarter ended June 30, 1999, the Company entered
     into a Stock Purchase Agreement with an individual investor of
     Wrenchead.com, Inc. to exchange up to $150,000 in cash and/or 75,000 shares
     of the Company's common stock for 240,000 shares of common stock of
     Wrenchead.com, Inc. with the exact structure to be determined at closing.
     Wrenchead.com, Inc. is a start-up company engaged in internet e-commerce
     with a focus on providing a comprehensive website to market and sell
     aftermarket automotive products, including the Company's products. This
     transaction is expected to be completed during the fourth quarter ended
     December 31, 1999.

          The Company sold the economic rights derived from certain assets for
     $300,000 during the third quarter of 1999. The gain on the sale of those
     rights is reported in the Company's financial statements as of and for the
     three months and nine months ended September 30, 1999.

                                     16

<PAGE>

     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               Agreement of Purchase and Sale of Assets by and
                           between Cragar Industries, Inc. and Carlisle Tire and
                           Wheel Co.

        10.2               Exclusive Field of Use License Agreement by and
                           between Cragar Industries, Inc. and Carlisle Tire and
                           Wheel Co.

        10.3               Agreement of Purchase and Sale of Assets by and
                           between Cragar Industries, Inc. and Weld Racing, Inc.

        10.4               Exclusive Field of Use License Agreement by and
                           between Cragar Industries, Inc. and Weld Racing, Inc.

        11                 Schedule of Computation of Earnings per Share

        27.1               1999 Financial Data Schedule for the Three and Nine
                           Months Ended September 30, 1999

       (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:  NOVEMBER 15, 1999                   By: /s/MICHAEL L. HARTZMARK
             -----------------                      ---------------------------
                                                 Michael L. Hartzmark
                                                 President and CEO

     Dated:  NOVEMBER 15, 1999                   By: /s/RICHARD P. FRANKE
             -----------------                      ---------------------------
                                                 Richard P. Franke
                                                 Chief Financial Officer
                                                 (Principal Financial and
                                                  Accounting Officer)


                                     17