UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
MARK ONE:
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the transition period from to
Commission File No. 0-18204
AJAY SPORTS, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 39-1644025
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification NO.)
1501 E. Wisconsin Street,
Delavan, Wisconsin 53115 (414) 728-5521
- --------------------------------------- --------------------------
(Address of principal executive offices (Registrant's Telephone
including Zip Code) Number,including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /x/ No / /
Number of shares of common stock outstanding at 9/30/98 is 3,956,815.
<PAGE>
Item 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AJAY SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
September 30, 1998 December 31,
(Unaudited) 1997
------------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 20 $ 234
Marketable securities 500 -
Trade accounts receivable, net 2,823 5,060
Inventories 5,332 6,398
Prepaid expenses and other current assets 546 304
Deferred tax benefit 363 363
--------- ---------
Total current assets 9,584 12,359
Fixed assets, net 1,637 1,723
Other assets 187 106
Deferred tax benefit 756 756
Goodwill 1,632 1,670
--------- ---------
Total assets $ 13,796 $ 16,614
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to affiliates $ 100 $ 160
Notes payable to bank 195 107
Current portion of capital lease 3 4
Accounts payable 1,219 3,204
Accrued expenses 513 684
--------- ---------
Total current liabilities 2,030 4,159
Notes payable to affiliates - long term 1,587 4,212
Notes payable to banks - long term 6,416 9,017
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, 10,000,000 shares authorized,
Series B, $0.01 par value, 12,500 shares
outstanding at liquidation value 1,250 1,250
Series C, $0.01 par value, 296,170 shares
outstanding at stated value 2,962 2,962
Series D, $0.01 par value, 6,000,000 shares 60 -
Common stock, $0.01 par value 100,000,000 shares authorized,
3,956,815 shares outstanding 39 233
Additional paid-in capital 14,446 9,313
Accumulated deficit (14,994) (14,532)
---------- ---------
Total stockholders' equity 3,763 (774)
---------- ---------
Total liabilities and stockholders' equity $ 13,796 $ 16,614
========== =========
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
AJAY SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net sales $ 4,214 $ 6,854 $ 20,803 $ 24,039
Cost of sales 3,619 6,248 17,284 20,356
------ ------ ------ ------
Gross profit 595 606 3,519 3,683
Selling, general and 857 1,248 3,063 3,710
administrative expenses ------ ------ ------ ------
Operating income (loss) (262) (642) 456 (27)
Non-operating expense:
Interest expense, affiliates 69 96 245 157
Interest expense, non-affiliates 194 234 668 889
Other, net 100 24 2 44
------ ------ ------ ------
Total non-operating expense 363 354 915 1,090
------ ------ ------ ------
Loss before income taxes (625) (996) (459) (1,117)
Net loss $ (625) $ (996) $ (459) $ (1,117)
====== ====== ====== ======
Basic and diluted earnings per share* $ (0.18) $ (0.28) $ (0.19) $ (0.36)
====== ====== ====== ======
Weighted average common shares outstanding 3,920 3,879 3,892 3,879
====== ====== ====== ======
* Computed by dividing net income or loss, after reduction for undeclared,
cumulative preferred stock dividends, by the weighted average number of
common shares outstanding.
Net loss as reported above $ (625) $ (996) $ (459) $ (1,117)
Undeclared cumulative preferred dividends (90) (99) (288) (297)
------ ------ ------ ------
Loss applicable to common stock $ (715) $ (1,095) $ (747) $ (1,414)
====== ====== ====== ======
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AJAY SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS), (UNAUDITED)
Nine Months
Ended September 30,
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (459) $ (1,117)
Adjustments to reconcile net cash flows from
operating activities:
Depreciation and amortization 273 292
Change in assets [(increase)/decrease] and
liabilities [increase/(decrease)]:
Marketable securities (500) -
Trade accounts receivable, net 2,237 (730)
Inventories 1,066 958
Prepaid expenses and other current assets (242) (418)
Other assets (81) 86
Accounts payable (1,985) 401
Accrued expenses (172) 333
------- -------
Net cash used in
operating activities 137 (195)
------- -------
Cash flows from investing activities:
Acquisitions of property, plant, equipment (153) (220)
------- -------
Net cash used in
investing activities (153) (220)
------- -------
Cash flows from financing activities:
Net reduction in bank loans (2,513) (2,500)
Increases in advances from affiliates 2,315 3,051
Dividends paid - (82)
------- -------
Net cash provided by
financing activities (198) 469
------- -------
Net increase (decrease) in cash (214) 54
Cash at beginning of period 234 64
------- -------
Cash at end of period $ 20 $ 118
======= =======
Supplemental disclosures of cash flow information:
Cash paid for interest $ 899 $ 880
======= =======
Cash paid for income tax - -
======= =======
</TABLE>
3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cautionary Statement: This report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, those statements relating to development
of new products, the financial condition of the Company, the ability to increase
distribution of the Company's products, integration of businesses the Company
has acquired, disposition of any current business of the Company, and the
Company's relationship with Williams Controls, Inc., a related company. These
forward-looking statements are subject to the business and economic risks faced
by the Company. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of the factors
described above and other factors described elsewhere in this report.
Note 1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by Ajay Sports, Inc. (the "Company") without audit and pursuant to the
rules and regulations of the Securities and Exchange Commission. In the opinion
of the Company, the financial statements reflect all adjustments, which consist
only of normal recurring adjustments, necessary to present fairly the financial
position of the Company at September 30, 1998 and the results of operations for
the three and nine-month periods ended September 30, 1998 and 1997 and the cash
flows for the same nine-month periods.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the SEC rules and regulations dealing
with interim financial statements. However, the Company believes that the
disclosures made in the condensed financial statements included herein are
adequate to make the information presented not misleading. These condensed
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.
The year-end condensed balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles.
The interim period results are not necessarily indicative of results which may
be expected for any other interim period or for the full year. Certain costs are
estimated for the full year and allocated to interim periods based on activity
associated with the interim period. Accordingly, such costs are subject to year
end adjustment.
4
<PAGE>
Note 2. INVENTORIES
The major classes of inventories (rounded to thousands) are as follows:
September 30, December 31,
1998 1997
------------- ------------
Raw Materials $ 1,261 $ 1,499
Work in Process 1,136 1,026
Finished Goods 2,935 3,873
------------- ------------
$ 5,332 $ 6,398
============= ============
Note 3. DEBT
On June 30, 1998, the Company restructured its credit facility with Wells Fargo
Bank, National Association ("Wells") to separate its credit facility from that
of Williams Controls, Inc. and its subsidiaries ("Williams"). The credit
facility as restructured provides for maximum borrowing capacity of $10,025,000,
consisting of a revolving credit facility of up to $9,500,000 and a term loan of
$525,000. As a result of this transaction, the Company no longer has joint and
several liability, cross collateral agreements or guarantees with Williams with
respect to Williams' Wells Fargo credit facility. The Company's new asset-based
credit facility from Wells provides the Company with approximately $700,000 of
increased loan availabilities and borrowing capability against inventory and
accounts receivable. The interest rate on the revolver is prime plus 1% and
prime plus 1.5% on the term loan.
In connection with the restructuring of the Wells Fargo Bank credit facility,
the Company entered into an agreement with Williams under which Williams agreed
to make certain additional advances to the Company. As a result of these
additional investments plus assumption of certain liabilities and potential
additional payments to the bank, the debt and equity investments could reach
$8,650,000 with an initial 3-year effective annual cost of 8.75% inclusive of
interest, dividends and fees. On June 30, 1998, Williams converted $5,000,000 of
this debt into 6,000,000 shares of a newly created series of preferred stock of
the Company, the Series D Cumulative Convertible Non-Voting Preferred Stock.
Series D is convertible into the Company's common stock at the rate of 0.55556
common shares for each preferred share. The Company delivered a promissory note
to Williams for the unconverted portion of the debt. This note is secured by a
lien on the Company's assets which is junior to the liens held by the Company's
bank lenders. Williams continues to own approximately 17.3% of the outstanding
common stock of the Company and holds options to purchase an additional
1,851,667 shares of common stock. Williams also continues to have rights, which
were negotiated in 1994, to utilize for a fair market fee, excess floor space
and related resources in the Company's manufacturing facilities in Wisconsin and
Mexico.
The Company believes that the combination of the Wells and Williams refinancing
agreements will result in an improved working capital position enabling the
Company to pay down past due accounts payable. It also has increased liquidity,
providing the Company with additional availability under its bank credit
facility and strengthened the Company's capital structure by increasing equity.
5
<PAGE>
Note 4. BUSINESS SEGMENT REPORTING
The relative contributions to net sales, operating profit and identifiable
assets of the Company's industry segments for the quarter and nine months ended
September 30, 1998 and 1997 (unaudited) are as follows (in thousands):
- ------------------------------------------------------------------------------
Quarter Ended September 30, 1998
- ------------------------------------------------------------------------------
GOLF
----------------------
Mass Specialty
-------- ----------
Furniture Merchant Golf Stores Corporate Consolidated
--------- -------- ----------- --------- ------------
Net Sales $ 285 $ 3,795 $ 134 $ - $ 4,214
Operating Profit/(Loss) (286) 211 (104) (83) (262)
Total Assets 1,875 9,879 2,043 - 13,797
Depreciation/Amortization 24 57 11 - 92
Capital Expenditures 40 38 - - 78
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Quarter Ended September 30, 1997
- ------------------------------------------------------------------------------
GOLF
--------------------
Mass Specialty
-------- -----------
Furniture Merchant Golf Stores Corporate Consolidated
--------- -------- ----------- --------- ------------
Net Sales $ 403 $ 5,424 $ 1,027 $ - $ 6,854
Operating Profit/(Loss) (340) 200 (374) (128) (642)
Total Assets 2,365 11,981 4,367 - 18,713
Depreciation/Amortization 31 54 14 - 99
Capital Expenditures 47 72 2 - 121
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Nine Months Ended September 30, 1998
- ------------------------------------------------------------------------------
GOLF
-------------------
Mass Specialty
-------- ---------
Furniture Merchant Golf Stores Corporate Consolidated
--------- -------- ----------- --------- ------------
Net Sales $ 3,235 $ 16,442 $ 1,126 $ - $ 20,803
Operating Profit/(Loss) (27) 1,229 (344) (402) 456
Total Assets 1,875 9,879 2,043 - 13,797
Depreciation/Amortization 73 167 33 - 273
Capital Expenditures 102 51 - - 153
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Nine Months Ended September 30, 1997
- ------------------------------------------------------------------------------
GOLF
------------------
Mass Specialty
-------- ----------
Furniture Merchant Golf Stores Corporate Consolidated
--------- -------- ----------- --------- ------------
Net Sales $ 3,764 $ 16,755 $ 3,520 $ - $ 24,039
Operating Profit/(Loss) 103 833 (726) (237) (27)
Total Assets 2,365 11,981 4,367 - 18,713
Depreciation/Amortization 67 167 58 - 292
Capital Expenditures 102 105 13 - 220
- ------------------------------------------------------------------------------
The year-on-year $2.3 million reduction in total assets in the specialty golf
store segment results from the Company closing its California golf club
manufacturing and office facility and reducing its golf club receivables and
inventories. Year-to-date nine-months sales are off by $2.4 million in the
specialty golf store channel due to de-emphasizing golf club sales.
6
<PAGE>
Note 5. DIVIDENDS
Dividends on Series B and C Convertible Preferred Stock have not been declared
for 1997 or 1998 due to unavailability of funds. Dividends are in arrears on
Series B in the amount of $981,500 and on Series C in the amount of $508,620.
Dividends are permitted to be paid under the Wells bank credit agreement when
sufficient funds become available.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
See "Cautionary Statement" at the beginning of the "Notes to Consolidated
Financial Statements".
FINANCIAL CONDITION AND LIQUIDITY - At September 30, 1998 the Company had
working capital of $7,554,000 as compared with $8,200,000 at December 31, 1997.
The ratio of current assets to current liabilities at September 30, 1998 was 4.7
to 1, as compared to 3.0 to 1 at December 31, 1997. During the combined second
and third quarters of 1998, the Company was able to reduce its borrowings by
$5.2 million from levels existing at December 31, 1997. The reductions were
effected through a restructuring agreement between the Company and Williams
Controls, Inc. under which Williams converted $5 million of debt into preferred
stock on June 30, 1998. Williams advanced to the Company an additional $1
million during the quarter ended June 30, 1998 and $1 million during the current
quarter. It has advanced a total of $6,512,000, converted $5,000,000 of this to
equity and Williams could be obligated to pay up to $2.0 million owed to U.S.
Bank under an intercreditor agreement with U.S. Bank. The funds advanced in
the current quarter include $500,000 of marketable securities which may be
converted to cash as needed in future periods. Williams has no further legal
obligation to advance funds to the Company and the Company does not anticipate
that Williams will make additional advances to the Company. In conjunction with
the Company's restructuring of its debt to Williams, the Company and Wells Fargo
Bank entered into a new credit agreement as of June 30, 1998. The new credit
agreement provides for more favorable asset based lending availabilities. The
Williams debt restructuring and the new credit agreement has added to the short
term liquidity of the Company, allowing the Company to bring its vendors current
and begin operating more efficiently through improved production scheduling,
consistent material flows and improved vendor relations.
During the first nine months of the year, the operating cash flow was $137,000
due to seasonal decreases in trade receivables of $2.2 million partially offset
by a reduction of $2.0 million in liabilities to trade creditors. Liquidity was
adequate during the current quarter with excess borrowing capacity under the
bank loan of $565,000 at September 30, 1998. In accordance with the
restructuring agreement between the Company and Williams, Williams advanced
$500,000 in cash to the Company and issued $500,000 of marketable securities
during the 3rd quarter. The marketable securities are anticipated to be
liquidated in the fourth quarter of 1998 and the first quarter of 1999 to
supplement liquidity as needed. The Company has sufficient long-term liquidity
as a result of the cash advances from Williams, the marketable securities to be
liquidated and cash flow from future operations. There are no foreseen
unfundable commitments for fixed capital as future needs are expected to
primarily consist of working capital. It is expected that the company can
generate sufficient cash flow from operations over the next 12 months and into
the future through cost reductions in purchased materials and overhead expenses,
improved labor utilization, increased sales of higher margin specialty products,
new products and increased furniture exports.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Cont'd)
RESULTS OF OPERATIONS - During the quarter ended September 30, 1998, the Company
had net sales of $4,214,000, compared to $6,854,000 for the same quarter of
1997. The sales decrease of $2,640,000 was primarily due to the following
reasons. Outdoor furniture sales were off $118,000 primarily due to less exports
to Asian markets. Sales in the mass merchant golf segment were off $1,629,000.
This shortfall was made up of two components: The first of these accounts for
approximately $600,000 of the shortfall as a result of retailers being
overstocked on golf product inventory at the end of the second quarter due to
lower than anticipated sales levels in that quarter. The second factor is
estimated at $900,000 due to Ajay's major customer buying competing and
replacement products direct from Asia. It is believed that this situation is due
to a cost element enhanced by currency devaluation and recession in several
Asian economies. Sales in the specialty golf store segment were off $893,000 as
a result of de-emphasizing new golf club sales.
For the nine-month period ended September 30, 1998, overall sales were off
$3,236,000 or 13% when compared to the same nine-month period of the prior year.
The same factors described above have contributed to the shortfall in sales for
the nine-month period.
Gross profit for the three months ended September 30, 1998 was $595,000 or 14.1%
of sales, compared to $606,000 and 8.8% of sales for the same period of the
prior year. Two primary factors contributed to maintaining gross profit amount
and improving gross profit as a % of sales. The first of these is that the
Company de-emphasized golf club sales during the year 1998 and thereby
eliminated approximately $900,000 of sales during the current quarter which had
generated a gross profit loss in the comparable quarter of the prior year. The
second factor resulting in gross profit improvement was a result of improvements
in manufacturing cost and efficiency which contributed to the balance of the
improvement in gross profit percentage from 8.8% to 14.1%. Of this improvement
in efficiency, approximately half was achieved in furniture manufacturing and
the other half in golf product manufacturing. The main sources for these savings
were improved liquidity, quality improvements from changes in furniture
manufacturing and improved labor utilization throughout all production areas.
Gross profit for the nine-months ended September 30, 1998 was $3,519,000 or
16.9% of sales which compares to $3,683,000 or 15.3% of sales for the same
period of the prior year. The percentage improvement in gross profit is a result
of those items mentioned above and the overall dollar decrease in gross profit
is due to reduced sales volume.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Cont'd)
Selling, general and administrative expenses were $857,000 and 20.3% of sales
for the current quarter as compared to $1,248,000 and 18.2% of sales for the
same quarter of the prior year. On a year to date basis, SG&A was $3,063,000 and
14.7% of sales as compared to $3,710,000 and 15.4% of sales for the same period
in the prior year.
On a quarter and year-to-date basis, the single major contributing factor in
reducing the amount of SG&A was the closing of the golf club manufacturing
facility in California in November of 1997 and consolidating its remaining
functions into Ajay's manufacturing facility in Wisconsin. This contributed to a
reduction in SG&A for the quarter of $190,000 and for the year- to-date of
$537,000. The additional $200,000 reduction during the quarter was a result of
lower commissions and lower costs associated with warranty, advertising, bad
debts and other selling expenses, all related to reduced volume.
Operating income for the current quarter of 1998 was a loss of ($262,000) versus
a loss of ($642,000) for the same quarter of the prior year. Traditionally, the
third quarter of the year is the lowest volume and operating income quarter for
the Company. On a year to date basis, operating income is $456,000 versus a
prior year operating loss of ($27,000).
Interest expense for the current quarter is $263,000 versus a prior year of
$330,000 for the equivalent quarter. On a year to date basis, interest expense
is $913,000 versus a prior year of $1,046,000. Interest expense on a quarter and
year to date basis is lower than the prior year due to better utilization of
assets on a nine months basis and lower sales volume levels for the quarter. The
$76,000 increase in Non-operating Expense - Other is a result of reclassifying
year-to-date bank fees from selling, general and administrative expense.
The net loss for the quarter was ($625,000) versus a same quarter prior year of
($996,000). On a nine months basis, net loss is ($459,000) versus a prior year
nine months net loss of ($1,117,000). The year-to-date improvement of $658,000
is attributable primarily to de-emphasizing golf club manufacture and sale and
consolidating these operations into the Wisconsin facility.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Cont'd)
Since 1983, Ajay has held a license from Spalding Sports Worldwide to utilize
the Spalding trademark in conjunction with the sale and distribution of golf
bags, golf gloves, hand-pulled golf carts and certain other golf accessories in
the U. S. The Spalding license has been amended numerous times since 1983 and
formally expired on June 30, 1998. Under Wisconsin law, these licenses have the
effect of continuing in perpetuity whether formally renewed or not, if the
Company performs without defaulting and without providing good cause for
termination. The Company and Spalding have not yet decided changes in terms and
conditions that would lead to a formal renewal of the license. The Company has
formally requested an amendment to the Licensing Agreement which would reduce
royalty costs in future years. The Company and Spalding have not reached
agreement on this formal request.
Approximately 57% of the Company's 1997 and 1998 sales were Spalding products.
For the contract period, July 1, 1997 through June 30, 1998, the Company paid
Spalding directly $781,000 and indirectly spent an additional $373,000 on
promoting the Spalding name for a total of $1,154,000. For the prior contract
year, the total expended was $964,000. If, for any reason, the Company decides
not to sell under the Spalding name in the future, these amounts would be
savings that would offset potential loss of sales under the Spalding brand.
Although there may be a short term interruption of sales if the Spalding brand
is discontinued, the Company expects to recoup those sales through satisfactory
replacement brands. Ajay is evaluating the alternatives of further developing
its own brands over the next two years or continuing with the Spalding royalty
agreement at a lower cost if agreement can be reached. The Company presently
sells under other names such as: Palm Springs(R), Pro Classic(R), Pro USA(R) and
other private label brand names. The Company continues to work with Spalding to
resolve the licensing issue.
Year 2000 Compliance
- --------------------
The Company does not anticipate the Year 2000 compliance requirements will have
a material effect on earnings. Year 2000 expenditures have reached $40,000 and
it is anticipated an additional $25,000 is yet to be spent. The Company has
surveyed its vendor's readiness to be Year 2000 compliant and has been assured
in excess of 70% and continues to follow up in this area. The Company has
upgraded its hardware and operating system software to Year 2000 - ready
versions. These upgrades were completed in August, 1998. Application software
has been evaluated, a Year 2000 conversion schedule is in place, and
reprogramming has progressed well since starting that phase in August, 1997. It
is anticipated that the hardware and software compliance target completion date
of March 31, 1999 can be met.
10
<PAGE>
PART II. OTHER INFORMATION
Item 5. OTHER INFORMATION.
On February 23, 1998 new, increasingly stringent rules for continued
listing of shares on the NASDAQ Small Cap market went into effect. In
spite of the Company using its reasonable best efforts to maintain its
listing for its common stock on the NASDAQ SmallCap Market, the
Company's stock price fell below the new $1.00 minimum standard and the
Company's common stock was delisted on September 4, 1998. The common
stock now trades on the OTC Bulletin Board. The Company is in the
process of appealing this decision to a NASDAQ listing hearing panel.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
A) Exhibits:
27 Financial Data Schedule.
B) Forms 8-K:
1) The Company filed a Form 8-K dated August 14, 1998 reporting under
Item 5 its common stock reverse split.
2) The Company filed a Form 8-K dated September 9, 1998 reporting under
Item 5 that its common stock would cease NASDAQ Small Cap trading
and begin trading on the OTC Bulletin Board.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AJAY SPORTS, INC.
By: /s/Robert R. Hebard
------------------------
Its: Corporate Secretary
By: /s/Duane R. Stiverson
--------------------------
Its: Chief Financial Officer
Date: November 13, 1998
----------------------
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000854858
<NAME> Ajay Sports, Inc.
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 20
<SECURITIES> 500
<RECEIVABLES> 2,823
<ALLOWANCES> 0
<INVENTORY> 5,332
<CURRENT-ASSETS> 9,584
<PP&E> 2,879
<DEPRECIATION> 1,242
<TOTAL-ASSETS> 13,796
<CURRENT-LIABILITIES> 2,030
<BONDS> 0
2,962
1,250
<COMMON> 39
<OTHER-SE> 3,763
<TOTAL-LIABILITY-AND-EQUITY> 13,796
<SALES> 4,214
<TOTAL-REVENUES> 6,854
<CGS> 3,619
<TOTAL-COSTS> 857
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 263
<INCOME-PRETAX> (625)
<INCOME-TAX> 0
<INCOME-CONTINUING> (625)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (625)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
