<PAGE>
 
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended JUNE 30, 1998

                         Commission file number: 0-25620

                                  A.S.V., INC.
             (Exact name of registrant as specified in its charter)

             MINNESOTA                                  41-1459569
   ------------------------------            ----------------------------------
   State or other jurisdiction of            I.R.S. Employer Identification No.
   incorporation of organization

                   840 LILY LANE
                   P.O. BOX 5160
              GRAND RAPIDS, MN 55744                    (218) 327-3434
              ----------------------                    --------------
      Address of principal executive offices    Registrant's telephone number

     Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ]

     As of August 4, 1998, 7,607,229 shares of registrant's $.01 par value
Common Stock were outstanding.


                                    Page 1
<PAGE>
 
                         PART I - FINANCIAL INFORMATION

                          ITEM 1 - FINANCIAL STATEMENTS

                           A.S.V., INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                                          JUNE 30,  DECEMBER 31,
                                                            1998        1997
                                                        -----------  -----------
                               ASSETS                   (Unaudited)

CURRENT ASSETS
  Cash and cash equivalents............................ $ 1,482,728  $   316,599
  Short-term investments...............................     490,577    1,255,160
  Accounts receivable, net ............................   2,767,282    1,989,906
  Inventories..........................................  13,750,987   11,674,027
  Prepaid expenses and other...........................     416,607      342,896
                                                         ----------  -----------
       Total current assets............................  18,908,181   15,578,588

PROPERTY AND EQUIPMENT, net............................   4,433,428    3,636,091
                                                        -----------  -----------

       Total Assets.................................... $23,341,609  $19,214,679
                                                        ===========  ===========


                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Current portion of long-term liabilities............. $   218,114  $        --
  Accounts payable.....................................   2,760,370    1,474,701
  Accrued liabilities
    Compensation.......................................     194,497      180,349
    Interest...........................................      95,422       81,250
    Warranties.........................................     400,000      200,000
    Other..............................................     108,904       98,998
  Income taxes payable.................................     217,924      201,674
                                                        -----------  -----------
       Total current liabilities.......................   3,995,231    2,236,972
                                                        -----------  -----------

LONG-TERM LIABILITIES, less current portion............   7,447,597    7,020,608
                                                        -----------  -----------

COMMITMENTS AND CONTINGENCIES..........................          --           --

SHAREHOLDERS' EQUITY 
  Capital stock, $.01 par value:
    Preferred stock, 11,250,000 shares authorized;
      no shares outstanding ...........................          --           --
    Common stock, 33,750,000 shares authorized;
      7,540,832 shares issued and outstanding in 1998;
      7,518,310 shares issued and outstanding in 1997..      75,408       75,183
  Additional paid-in capital...........................   6,742,911    6,520,371
  Retained earnings....................................   5,080,462    3,361,545
                                                        -----------  -----------
                                                         11,898,781    9,957,099
                                                        -----------  -----------

       Total Liabilities and Shareholders' Equity       $23,341,609  $19,214,679
                                                        ===========  ===========

See notes to consolidated financial statements.

                                       2
<PAGE>
 
                           A.S.V., INC. AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                             THREE MONTHS ENDED              SIX MONTHS ENDED
                                                   JUNE 30,                      JUNE 30,
                                        ----------------------------    ----------------------------
                                            1998            1997            1998            1997
                                        ------------    ------------    ------------   -------------
<S>                                     <C>             <C>             <C>             <C>         
Net sales ...........................   $ 10,484,279    $  5,407,815    $ 19,513,117    $ 10,059,000

Cost of goods sold ..................      7,923,015       4,115,440      14,694,010       7,697,483
                                        ------------    ------------    ------------    ------------
                                        
       Gross profit .................      2,561,264       1,292,375       4,819,107       2,361,517

Operating expenses:
  Selling, general and administrative        942,703         531,348       1,750,898       1,019,405
  Research and development ..........        105,088          62,717         203,537         107,655
                                        ------------    ------------    ------------    ------------

       Operating income .............      1,513,473         698,310       2,864,672       1,234,457

Other income (expense)
  Interest expense ..................       (126,579)        (92,988)       (255,525)       (185,940)
  Other, net ........................        105,185         145,571         139,770         210,918
                                        ------------    ------------    ------------    ------------
    Income before income taxes ......      1,492,079         750,893       2,748,917       1,259,435

Provision for income taxes ..........        565,000         286,000       1,030,000         479,000
                                        ------------    ------------    ------------    ------------
     NET INCOME .....................   $    927,079    $    464,893    $  1,718,917    $    780,435
                                        ============    ============    ============    ============

Net income per common share

  Basic .............................   $        .12    $        .06    $        .23    $        .11
                                        ============    ============    ============    ============

  Diluted * .........................   $        .11    $        .06    $        .20    $        .10
                                        ============    ============    ============    ============

Weighted average number of common
  shares outstanding

  Basic .............................      7,538,225       7,247,650       7,533,479       7,243,624
                                        ============    ============    ============    ============

  Diluted * .........................      9,031,745       8,764,900       8,975,213       8,782,100
                                        ============    ============    ============    ============
</TABLE>

*  Includes add back of after-tax effect of interest expense for convertible 
   debentures.







See notes to consolidated financial statements.

                                       3
<PAGE>
 
                           A.S.V., INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>

                                                                           1998          1997
                                                                        ----------    ----------
<S>                                                                     <C>           <C>       
Cash flows from operating activities:
  Net income ........................................................   $1,718,917    $  780,435
  Adjustments to reconcile net income to net
    cash provided by (used in) operating activities:
      Depreciation ..................................................      150,000        78,000
      Interest accrued on capital lease obligation ..................       23,028        23,028
      Deferred income taxes .........................................     (100,000)      (48,000)
      Effect of warrant earned ......................................       75,600        75,600
      Changes in assets and liabilities:
         Accounts receivable ........................................     (777,376)      118,972
         Inventories ................................................   (2,076,960)   (2,320,144)
         Prepaid expenses and other .................................       26,289       (16,742)
         Accounts payable ...........................................    1,285,669     1,050,678
         Accrued expenses ...........................................      238,226       (77,759)
         Income taxes payable .......................................       16,250      (145,500)
                                                                        ----------    ----------

Net cash provided by (used in) operating activities .................      579,643      (481,432)
                                                                        ----------    ----------

Cash flows from investing activities:
  Purchase of property and equipment ................................     (299,543)     (728,646)
  Purchase of short-term investments ................................           --    (1,497,087)
  Redemption of short-term investments ..............................      764,583            --
                                                                        ----------    ----------

Net cash provided by (used in) investing activities .................      465,040    (2,225,733)
                                                                        ----------    ----------

Cash flows from financing activities:
  Principal payments on long-term liabilities .......................      (25,719)       (3,158)
  Exercise of stock options .........................................       57,165        57,209
  Tax benefit related to exercise of stock options ..................       90,000       241,000
                                                                        ----------    ----------

Net cash provided by financing activities ...........................      121,446       295,051
                                                                        ----------    ----------

Net increase (decrease) in cash and cash equivalents ................    1,166,129    (2,412,114)

Cash and cash equivalents at beginning of period ....................      316,599     3,042,494
                                                                        ----------    ----------

Cash and cash equivalents at end of period ..........................   $1,482,728    $  630,380
                                                                        ==========    ==========


Supplemental disclosure of cash flow information:
  Cash paid for interest ............................................   $  241,353    $  160,447
  Cash paid for income taxes ........................................    1,023,750       431,500

Supplemental disclosure of non-cash investing and financing activity:
  Assets acquired by incurring long-term liabilities ................   $  647,794    $       --
</TABLE>


See notes to consolidated financial statements.

                                       4
<PAGE>
 
                           A.S.V., INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 1998

                                   (UNAUDITED)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM FINANCIAL INFORMATION

     The accompanying unaudited, consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal,
recurring adjustments) considered necessary for a fair presentation have been
included. Results for the interim periods are not necessarily indicative of the
results for an entire year.

NOTE 2.  LINE OF CREDIT

     During the second quarter of 1998, the Company amended its line of credit
agreement with its primary bank. The amended line of credit provides for
borrowings up to $5,000,000 at an interest rate of prime minus1/2% (8% at June
30, 1998). All other major terms and conditions remain the same.

NOTE 3.  STOCK SPLIT

     On May 15, 1998, the Company completed a three-for-two stock split. All
share and per share information has been restated to reflect this stock split.

                                       5
<PAGE>
 
                                     ITEM 2.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

     The following table sets forth certain Statement of Earnings data as a
percentage of net sales:
<TABLE>
<CAPTION>

                                                    Three Months Ended June 30,  Six Months Ended June 30,
                                                         1998         1997          1998         1997
                                                         ----         ----          ----         ----
<S>                                                     <C>          <C>           <C>          <C>   
   Net sales..........................................  100.0%       100.0%        100.0%       100.0%
   Cost of goods sold.................................   75.6         76.1          75.3         76.5
   Gross profit.......................................   24.4         23.9          24.7         23.5
   Selling, general and administrative................    9.0          9.8           9.0         10.1
   Operating income...................................   14.4         12.9          14.7         12.3
   Interest expense...................................   (1.2)        (1.7)         (1.3)        (1.8)
   Net income.........................................    8.8          8.6           8.8          7.8
</TABLE>

FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997.

     NET SALES. Net sales increased 94%, or approximately $5,076,000, to
approximately $10,484,000 for the three months ended June 30, 1998 compared with
the same period in 1997. The increase was due primarily to sales of the
Company's Posi-Track vehicle and related accessories increasing 104% over 1997.
The growth in Posi-Track sales was due to increased demand for the Company's HD
series Posi-Track which was introduced in fourth quarter 1997 and accounted for
nearly all unit volume in second quarter 1998. The HD series Posi-Track features
a maintenance-free suspension which minimizes operator maintenance on the
vehicle, as well as offering a more powerful engine and greater lifting
capabilities than the Company's original model MD-70 Posi-Track. The Company
will offer this same maintenance-free suspension under the MD-70 chassis as a
new series of Posi-Tracks, the MD series. Sales of the new MD series are
expected to start in third quarter 1998. Sales of parts, used equipment and
other items increased 35% for the three month period ended June 30, 1998
compared with the same period in 1997. This increase was primarily due to parts
sales increasing as the number of vehicles in the field continues to increase.

     In connection with the expansion of its manufacturing facility and increase
in the models in its product lines, the Company is anticipating continued growth
in its net sales in excess of 50% for the next twelve months.

     GROSS PROFIT. Gross profit for the three months ended June 30, 1998
increased to approximately $2,561,000, or 24.4% of net sales, compared with
$1,292,000, or 23.9% of net sales, in 1997. The increased gross profit was
attributable to increased sales volume in 1998. The increased gross profit
percentage was attributable to greater efficiencies in the production process
from the Company's increased production levels and additional margin obtained
from the sale of higher priced products.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased from 9.8% of net sales in second quarter 1997,
to 9.0% of net sales in second quarter 1998. The increased dollar volume was due
to increased advertising costs including costs to promote the Company's HD
series Posi-Track as well as increased compensation costs as sales and
administrative personnel have been added to support expanded sales and customer
service roles. The decreased percentage of selling, general and administrative
expenses was due to the Company closely managing its costs.

     RESEARCH AND DEVELOPMENT. Research and development expenses increased from
approximately $63,000 in second quarter 1997 to approximately $105,000 in 1998.
The increase was due mainly to the development of the Company's new model
Posi-Track, the MD series, continuing improvements to the Company's existing
models and exploration of future product alternatives.

                                       6
<PAGE>
 
     In order to maintain its competitive advantage over other manufacturers of
similar products, the Company believes it will increase the level of spending on
research and development activities. It is expected the main thrust of these
activities will be directed towards extensions of the Company's current product
lines and improvements of existing products.

     INTEREST EXPENSE. Interest expense increased from approximately $93,000 for
the second quarter of 1997 to approximately $127,000 for the second quarter of
1998. The increase was due to the additional debt related to the completion of
the Company's facility expansion and the additional debt incurred in January
1998 for the acquisition of land and buildings for storage and to house research
and development activities.

     NET INCOME. Net income for the second quarter of 1998 was approximately
$927,000, compared with approximately $465,000 for the second quarter of 1997.
The increase in 1998 resulted primarily from additional gross profit on
increased sales, offset in part by increased operating costs and interest
expense.

FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997.

     NET SALES. Net sales for the six months ended June 30, 1998 increased 94%,
or approximately $9,454,000, to $19,513,000. The increase was due primarily to
the increased sales of the Company's Posi-Track vehicle, particularly the HD
series Posi-Track, which was introduced in fourth quarter 1997. Posi-Track
related sales increased 106% due to the increased demand, sales of two new
Posi-Track models in 1998 and new dealers added in the past twelve months. Sales
of parts, used equipment and other items increased approximately 37% due
primarily to an increase in the sale of parts as a greater number of machines
are in service in 1998.

     GROSS PROFIT. Gross profit increased for the six months ended June 30, 1998
to approximately $4,819,000, or 24.7% of net sales, from $2,362,000, or 23.5% of
net sales, for the six months ended June 30, 1997. The increased gross profit
was due to increased sales while the increased gross profit percentage was due
to the increased efficiencies obtained from the Company's increased production
volume and additional margin obtained from the sale of higher priced products.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased from 10.1% of net sales for the six months
ended June 30, 1997 to 9.0% of net sales for the six months ended June 30, 1998.
The increased dollar amount of approximately $731,000 was due to increased sales
and marketing costs and increased costs for administrative personnel hired to
support increased sales volumes. The decreased percentage of selling, general
and administrative expenses was due to the Company closely managing its costs.

     RESEARCH AND DEVELOPMENT. Research and development expenses increased from
approximately $108,000 in 1997 to approximately $204,000 in 1998. The increase
was due mainly to the development of the Company's new model Posi-Track, the MD
series, in 1998, continuing improvements to the Company's existing models and
exploration of additional models.

     INTEREST EXPENSE. Interest expense increased from approximately $186,000
for the six months ended June 30, 1997 to approximately $256,000 for the same
period in 1998. The increase was due to the additional debt related to the
completion of the Company's facility expansion and the additional debt incurred
in January 1998 for the acquisition of land and buildings for storage and to
house research and development activities.

     NET INCOME. Net income for the six months ended June 30, 1998 increased to
approximately $1,719,000 from approximately $780,000 for 1997. The increase is
due to increased sales and gross profit, offset in part by increased operating
expenses and interest expense.

LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 1998, the Company had working capital of approximately
$14,913,000 compared with working capital of approximately $11,033,000 at June
30, 1997, an increase of approximately $3,880,000. The major components of this
increase are as follows: Inventories increased approximately $6,270,000 due to
the introduction of two new Posi-Track models in 1997 and one new Posi-Track
model in 1998 along with increased sales; Accounts receivable increased
approximately $1,625,000 due to increased sales; Cash and short-term investments
decreased approximately $2,424,000 as the Company built inventory levels and
equipped its expanded manufacturing facility; Current liabilities increased
approximately $1,742,000 due to the overall increase in the Company's volume and
profitability.

                                       7
<PAGE>
 
     The Company's working capital position at June 30, 1998 increased
approximately $1,571,000 when compared with December 31, 1997. Major components
of this increase are as follows. Inventories increased approximately $2,077,000
and accounts payable increased approximately $1,286,000 due to the increase in
the Company's production levels and additional parts required to manufacture new
models. Accounts receivables increased approximately $777,000 due to increased
sales volume. Cash and short-term investments increased approximately $402,000
due to increased profitability. In addition, the current portion of long-term
liabilities increased approximately $218,000 due to the additional debt incurred
for the Company's facility expansion and the acquisition of land and buildings
for storage and to house the Company's research and development activities.

     During the second quarter of 1998, the Company amended its line of credit
agreement with its primary bank. The amended line of credit provides for
borrowings up to $5,000,000 at an interest rate of prime minus 1/2% (8% at June
30, 1998). All other major terms and conditions remain the same. The Company
believes its existing cash and investments, together with cash expected to be
provided by operations and available, unused credit lines, will satisfy the
Company's projected working capital needs and other cash requirements at least
through the end of June 1999.

     The Company has increased its number of employees by approximately 50% in
the last 12 months. In order to meet its anticipated sales levels for the next
twelve months, the Company expects it will increase its number of employees by
approximately 20% over the next twelve months. It is anticipated that nearly all
the additional employees will be in the production area. The Company believes
the local work force is sufficient to hire the additional employees.

     In order to maintain its competitive advantage over other manufacturers of
similar products, the Company believes it will increase the level of spending on
research and development activities. It is expected the main thrust of these
activities will be directed towards extensions of the Company's current product
lines and improvements of existing products.

     IMPACT OF THE YEAR 2000 ISSUE. The Year 2000 issue is the result of
computer programs being written using two digits rather than four to define the
applicable year. Some of the Company's computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process critical business transactions including recording of
sales, manufacture of products, inventory management and distribution,
preparation of invoices and collection of accounts receivables and many other
normal business activities.

     The Company has begun to identify all relevant software that may affect the
Company's operations through surveys and examinations. Based on risk assessments
that have been completed for the majority of the Company's operations, the
Company must upgrade some of its existing software to ensure that the computer
systems will properly utilize dates beyond December 31, 1999. The Company
expects to convert its business operations to new Year 2000 compatible software
by the end of 1998. The cost of these conversions is not expected to have a
material impact on the Company. However, there can be no guarantee the software
of other companies on which the Company's systems rely will be timely converted,
or that a failure to convert by another company, or a conversion that is
incompatible with the Company's systems, would not have a material adverse
effect on the Company.

     The statements set forth above under "Liquidity and Capital Resources" and
elsewhere in this Form 10-Q which are not historical facts are forward-looking
statements and involve risks and uncertainties, many of which are outside the
Company's control and, accordingly, actual results may differ materially.
Factors that might cause such a difference include, but are not limited to, lack
of market acceptance of new or existing products, inability to attract new
dealers for the Company's products, unexpected delays in obtaining raw
materials, unexpected delays in the manufacturing process, unexpected additional
expenses or operating losses or the activities of competitors. Any
forward-looking statements provided from time-to-time by the Company represent
only management's then-best current estimate of future results or trends.


                           PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

        None

                                       8
<PAGE>
 
ITEM 2. CHANGES IN SECURITIES

        None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

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

        The annual meeting of shareholders of A.S.V., Inc. was held on June 19,
        1998. Matters submitted at the meeting for vote by the shareholders were
        as follows:

        (a)     Election of Directors.

                The following directors were elected at the Annual Meeting, each
                with the following votes:

                                                     For           Against
                                                     ---           -------
                     Philip C. Smaby              7,160,723        114,285
                     Gary D. Lemke                7,160,769        114,239
                     Edgar E. Hetteen             7,163,145        111,862
                     Jerome T. Miner              7,160,146        114,861
                     Karlin S. Symons             7,162,693        112,314
                     Leland T. Lynch              7,163,143        111,864
                     James H. Dahl                7,160,145        114,862
                     R. E. "Teddy" Turner, IV     7,158,519        116,488

        (b)     Amendment of the 1996 Incentive and Stock Option Plan to
                increase the number of shares of Common Stock authorized for
                issuance thereunder.

                Shareholders approved the amendment to the 1996 Incentive and
                Stock Option Plan with a vote of 4,642,809 votes for, 231,733
                votes against, 100,795 shares abstaining and 2,299,669 broker
                non-votes.

        (c)     Adoption of the 1998 Non-Employee Director Stock Option Plan

                Shareholders adopted the 1998 Non-Employee Director Stock Option
                Plan with a vote of 4,642,561 votes for, 296,272 votes against,
                54,504 shares abstaining and 2,299,669 broker non-votes.

        (d)     Ratification of Appointment of Independent Public Accountants.

                Shareholders ratified the appointment of Grant Thornton LLP as
                the Company's independent public accountants for the fiscal year
                ending December 31, 1998, with a vote of 7,249,582 votes for,
                1,348 votes against and 24,076 shares abstaining.

ITEM 5. OTHER INFORMATION

        None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (A)     EXHIBITS

         Exhibit
         Number   Description
         ------   -----------
           3.1    Second Restated Articles of Incorporation of the Company (a)

                                       9
<PAGE>
 
           3.1a   Amendment to Second Restated Articles of Incorporation of the
                  Company filed January 6, 1997 (e)

           3.1b   Amendment to Second Restated Articles of Incorporation of the 
                  Company filed May 4, 1998

           3.2    Bylaws of the Company (a)

           4.1    Specimen form of the Company's Common Stock Certificate (a)

           4.2*   1987 Stock Option Plan (a)
 
           4.3*   1994 Long-Term Incentive and Stock Option Plan (a)

           4.4    Form of Warrant issued to Summit Investment Corporation (b)

           4.5    Form of Debenture issued October 1996 (d)

           4.6    Warrant issued to Leo Partners, Inc. on December 1, 1996 (e)

           4.7*   1996 Incentive and Stock Option Plan (f)

           4.8*   1996 Incentive and Stock Option Plan, as amended (g)

           4.9*   1998 Non-Employee Director Stock Option Plan (g)

          10.1    Development Agreement dated July 14, 1994 among the Iron Range
                  Resources and Rehabilitation Board ("IRRRB"), the Grand Rapids
                  Economic Development Agency ("EDA") and the Company (b)

          10.2    Lease and Option Agreement dated July 14, 1994 between the EDA
                  and the Company (b)

          10.3    Option Agreement dated July 14, 1994 between the EDA and the 
                  Company (b)

          10.4    Grant Contract dated July 1, 1994 between the Company and 
                  the IRRRB (b)

          10.5    Letter Credit Agreement dated June 15, 1994 between the 
                  Security State Bank of Hibbing and the Company (a)

          10.6    Supplemental Lease Agreement dated April 18, 1997 between 
                  the EDA and the Company (f)

          10.7    Supplemental Development Agreement dated April 18, 1997 
                  between the EDA and the Company (f)

          10.8    Line of Credit dated May 22, 1997 between Norwest Bank 
                  Minnesota North, N.A. and the Company (f)

          10.9*   Employment Agreement dated October 17, 1994 between the 
                  Company and Thomas R. Karges (c)

          10.10   Consulting Agreement between the Company and Leo 
                  Partners, Inc. dated December 1, 1996 (e)
 
          10.11   Extension of Lease Agreement dated May 13, 1998 between 
                  the EDA and the Company

          10.12   First Amendment to Credit Agreement dated June 30, 1998 
                  between Norwest Bank Minnesota North, N.A. and the Company

            11    Statement re: Computation of Per Share Earnings

            22    List of Subsidiaries (a)

            27    Financial Data Schedule for the six months ended June 30, 1998

                                       10
<PAGE>
 
                  (a) Incorporated by reference to the Company's Registration 
                      Statement on Form SB-2 (File No. 33-61284C) filed 
                      July 7, 1994.

                  (b) Incorporated by reference to the Company's Post-Effective
                      Amendment No. 1 to Registration Statement on Form SB-2 
                      (File No. 33-61284C) filed August 3, 1994.

                  (c) Incorporated by reference to the Company's Quarterly 
                      Report on Form 10-QSB for the quarter ended 
                      September 30, 1994 (File No. 33-61284C) filed 
                      November 11, 1994.

                  (d) Incorporated by reference to the Company's Quarterly 
                      Report on Form 10-QSB for the quarter ended 
                      September 30, 1996 (File No. 0-25620) filed electronically
                      November 13, 1996.

                  (e) Incorporated by reference to the Company's Annual Report 
                      on Form 10-KSB for the year ended December 31, 1996 
                      (File No. 0-25620) filed electronically March 28, 1997.

                  (f) Incorporated by reference to the Company's Quarterly 
                      Report on Form 10-QSB for the quarter ended June 30, 1997
                      (File No. 0-25620) filed electronically August 13, 1997.

                  (g) Incorporated by reference to the Company's Definitive 
                      Proxy Statement for the year ended December 31, 1997 
                      (File No. 0-25620) filed electronically April 28, 1998.

                  *   Indicates management contract or compensation plan or 
                      arrangement.

        (B) REPORTS ON FORM 8-K

             No reports on Form 8-K were filed during the quarter
        ended June 30, 1998.



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

                                   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.


                                   A.S.V., INC.


Dated:  August 13, 1998            By /s/ Gary Lemke
                                   ----------------------------
                                   Gary Lemke
                                   President


Dated:  August 13, 1998            By /s/ Thomas R. Karges
                                   ----------------------------
                                   Thomas R. Karges
                                   Chief Financial Officer
                                   (principal financial and accounting officer)

                                       11
<PAGE>
  
                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

   EXHIBIT                                                                          METHOD OF FILING
   -------                                                                          ----------------

    <S>      <C>                                                              <C>     
     3.1b    Amendment to Second Restated Articles of Incorporation .......   Filed herewith electronically

    10.11    Extension of Lease Agreement..................................   Filed herewith electronically

    10.12    First Amendment to Credit Agreement ..........................   Filed herewith electronically

       11    Statement re: Computation of Per Share Earnings...............   Filed herewith electronically

       27    Financial Data Schedule.......................................   Filed herewith electronically
</TABLE>

                                       12
[{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q", "secsgml_size_bytes": 37986}]
{"company-data": {"conformed-name": "ASV INC /MN/", "cik": "0000926763", "assigned-sic": "3531", "irs-number": "411459569", "state-of-incorporation": "MN", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-25620", "film-number": "98683140"}, "business-address": {"street1": "P O BOX 5160", "city": "GRAND RAPIDS", "state": "MN", "zip": "55744-5160", "phone": "2183273434"}, "mail-address": {"street1": "PO BOX 5160", "city": "GRAND RAPIDS", "state": "MN", "zip": "55744-5160"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended JUNE 30, 1998

                         Commission file number: 0-25620

                                  A.S.V., INC.
             (Exact name of registrant as specified in its charter)

             MINNESOTA                                  41-1459569
   ------------------------------            ----------------------------------
   State or other jurisdiction of            I.R.S. Employer Identification No.
   incorporation of organization

                   840 LILY LANE
                   P.O. BOX 5160
              GRAND RAPIDS, MN 55744                    (218) 327-3434
              ----------------------                    --------------
      Address of principal executive offices    Registrant's telephone number

     Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ]

     As of August 4, 1998, 7,607,229 shares of registrant's $.01 par value
Common Stock were outstanding.

                                    Page 1
PART I - FINANCIAL INFORMATION

                          ITEM 1 - FINANCIAL STATEMENTS

                           A.S.V., INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                                          JUNE 30,  DECEMBER 31,
                                                            1998        1997
                                                        -----------  -----------
                               ASSETS                   (Unaudited)

CURRENT ASSETS
  Cash and cash equivalents............................ $ 1,482,728  $   316,599
  Short-term investments...............................     490,577    1,255,160
  Accounts receivable, net ............................   2,767,282    1,989,906
  Inventories..........................................  13,750,987   11,674,027
  Prepaid expenses and other...........................     416,607      342,896
                                                         ----------  -----------
       Total current assets............................  18,908,181   15,578,588

PROPERTY AND EQUIPMENT, net............................   4,433,428    3,636,091
                                                        -----------  -----------

       Total Assets.................................... $23,341,609  $19,214,679
                                                        ===========  ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Current portion of long-term liabilities............. $   218,114  $        --
  Accounts payable.....................................   2,760,370    1,474,701
  Accrued liabilities
    Compensation.......................................     194,497      180,349
    Interest...........................................      95,422       81,250
    Warranties.........................................     400,000      200,000
    Other..............................................     108,904       98,998
  Income taxes payable.................................     217,924      201,674
                                                        -----------  -----------
       Total current liabilities.......................   3,995,231    2,236,972
                                                        -----------  -----------

LONG-TERM LIABILITIES, less current portion............   7,447,597    7,020,608
                                                        -----------  -----------

COMMITMENTS AND CONTINGENCIES..........................          --           --

SHAREHOLDERS' EQUITY 
  Capital stock, $.01 par value:
    Preferred stock, 11,250,000 shares authorized;
      no shares outstanding ...........................          --           --
    Common stock, 33,750,000 shares authorized;
      7,540,832 shares issued and outstanding in 1998;
      7,518,310 shares issued and outstanding in 1997..      75,408       75,183
  Additional paid-in capital...........................   6,742,911    6,520,371
  Retained earnings....................................   5,080,462    3,361,545
                                                        -----------  -----------
                                                         11,898,781    9,957,099
                                                        -----------  -----------

       Total Liabilities and Shareholders' Equity       $23,341,609  $19,214,679
                                                        ===========  ===========

See notes to consolidated financial statements.

                                       2
A.S.V., INC. AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)
THREE MONTHS ENDED              SIX MONTHS ENDED
                                                   JUNE 30,                      JUNE 30,
                                        ----------------------------    ----------------------------
                                            1998            1997            1998            1997
                                        ------------    ------------    ------------   -------------
Net sales ...........................   $ 10,484,279    $  5,407,815    $ 19,513,117    $ 10,059,000

Cost of goods sold ..................      7,923,015       4,115,440      14,694,010       7,697,483
                                        ------------    ------------    ------------    ------------
                                        
       Gross profit .................      2,561,264       1,292,375       4,819,107       2,361,517

Operating expenses:
  Selling, general and administrative        942,703         531,348       1,750,898       1,019,405
  Research and development ..........        105,088          62,717         203,537         107,655
                                        ------------    ------------    ------------    ------------

       Operating income .............      1,513,473         698,310       2,864,672       1,234,457

Other income (expense)
  Interest expense ..................       (126,579)        (92,988)       (255,525)       (185,940)
  Other, net ........................        105,185         145,571         139,770         210,918
                                        ------------    ------------    ------------    ------------
    Income before income taxes ......      1,492,079         750,893       2,748,917       1,259,435

Provision for income taxes ..........        565,000         286,000       1,030,000         479,000
                                        ------------    ------------    ------------    ------------
     NET INCOME .....................   $    927,079    $    464,893    $  1,718,917    $    780,435
                                        ============    ============    ============    ============

Net income per common share

  Basic .............................   $        .12    $        .06    $        .23    $        .11
                                        ============    ============    ============    ============

  Diluted * .........................   $        .11    $        .06    $        .20    $        .10
                                        ============    ============    ============    ============

Weighted average number of common
  shares outstanding

  Basic .............................      7,538,225       7,247,650       7,533,479       7,243,624
                                        ============    ============    ============    ============

  Diluted * .........................      9,031,745       8,764,900       8,975,213       8,782,100
                                        ============    ============    ============    ============
*  Includes add back of after-tax effect of interest expense for convertible 
   debentures.

See notes to consolidated financial statements.

                                       3
A.S.V., INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997
1998          1997
                                                                        ----------    ----------
Cash flows from operating activities:
  Net income ........................................................   $1,718,917    $  780,435
  Adjustments to reconcile net income to net
    cash provided by (used in) operating activities:
      Depreciation ..................................................      150,000        78,000
      Interest accrued on capital lease obligation ..................       23,028        23,028
      Deferred income taxes .........................................     (100,000)      (48,000)
      Effect of warrant earned ......................................       75,600        75,600
      Changes in assets and liabilities:
         Accounts receivable ........................................     (777,376)      118,972
         Inventories ................................................   (2,076,960)   (2,320,144)
         Prepaid expenses and other .................................       26,289       (16,742)
         Accounts payable ...........................................    1,285,669     1,050,678
         Accrued expenses ...........................................      238,226       (77,759)
         Income taxes payable .......................................       16,250      (145,500)
                                                                        ----------    ----------

Net cash provided by (used in) operating activities .................      579,643      (481,432)
                                                                        ----------    ----------

Cash flows from investing activities:
  Purchase of property and equipment ................................     (299,543)     (728,646)
  Purchase of short-term investments ................................           --    (1,497,087)
  Redemption of short-term investments ..............................      764,583            --
                                                                        ----------    ----------

Net cash provided by (used in) investing activities .................      465,040    (2,225,733)
                                                                        ----------    ----------

Cash flows from financing activities:
  Principal payments on long-term liabilities .......................      (25,719)       (3,158)
  Exercise of stock options .........................................       57,165        57,209
  Tax benefit related to exercise of stock options ..................       90,000       241,000
                                                                        ----------    ----------

Net cash provided by financing activities ...........................      121,446       295,051
                                                                        ----------    ----------

Net increase (decrease) in cash and cash equivalents ................    1,166,129    (2,412,114)

Cash and cash equivalents at beginning of period ....................      316,599     3,042,494
                                                                        ----------    ----------

Cash and cash equivalents at end of period ..........................   $1,482,728    $  630,380
                                                                        ==========    ==========

Supplemental disclosure of cash flow information:
  Cash paid for interest ............................................   $  241,353    $  160,447
  Cash paid for income taxes ........................................    1,023,750       431,500

Supplemental disclosure of non-cash investing and financing activity:
  Assets acquired by incurring long-term liabilities ................   $  647,794    $       --
See notes to consolidated financial statements.

                                       4
A.S.V., INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 1998

                                   (UNAUDITED)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM FINANCIAL INFORMATION

     The accompanying unaudited, consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal,
recurring adjustments) considered necessary for a fair presentation have been
included. Results for the interim periods are not necessarily indicative of the
results for an entire year.

NOTE 2.  LINE OF CREDIT

     During the second quarter of 1998, the Company amended its line of credit
agreement with its primary bank. The amended line of credit provides for
borrowings up to $5,000,000 at an interest rate of prime minus1/2% (8% at June
30, 1998). All other major terms and conditions remain the same.

NOTE 3.  STOCK SPLIT

     On May 15, 1998, the Company completed a three-for-two stock split. All
share and per share information has been restated to reflect this stock split.

                                       5
ITEM 2.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

     The following table sets forth certain Statement of Earnings data as a
percentage of net sales:
Three Months Ended June 30,  Six Months Ended June 30,
                                                         1998         1997          1998         1997
                                                         ----         ----          ----         ----
Net sales..........................................  100.0%       100.0%        100.0%       100.0%
   Cost of goods sold.................................   75.6         76.1          75.3         76.5
   Gross profit.......................................   24.4         23.9          24.7         23.5
   Selling, general and administrative................    9.0          9.8           9.0         10.1
   Operating income...................................   14.4         12.9          14.7         12.3
   Interest expense...................................   (1.2)        (1.7)         (1.3)        (1.8)
   Net income.........................................    8.8          8.6           8.8          7.8
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997.

     NET SALES. Net sales increased 94%, or approximately $5,076,000, to
approximately $10,484,000 for the three months ended June 30, 1998 compared with
the same period in 1997. The increase was due primarily to sales of the
Company's Posi-Track vehicle and related accessories increasing 104% over 1997.
The growth in Posi-Track sales was due to increased demand for the Company's HD
series Posi-Track which was introduced in fourth quarter 1997 and accounted for
nearly all unit volume in second quarter 1998. The HD series Posi-Track features
a maintenance-free suspension which minimizes operator maintenance on the
vehicle, as well as offering a more powerful engine and greater lifting
capabilities than the Company's original model MD-70 Posi-Track. The Company
will offer this same maintenance-free suspension under the MD-70 chassis as a
new series of Posi-Tracks, the MD series. Sales of the new MD series are
expected to start in third quarter 1998. Sales of parts, used equipment and
other items increased 35% for the three month period ended June 30, 1998
compared with the same period in 1997. This increase was primarily due to parts
sales increasing as the number of vehicles in the field continues to increase.

     In connection with the expansion of its manufacturing facility and increase
in the models in its product lines, the Company is anticipating continued growth
in its net sales in excess of 50% for the next twelve months.

     GROSS PROFIT. Gross profit for the three months ended June 30, 1998
increased to approximately $2,561,000, or 24.4% of net sales, compared with
$1,292,000, or 23.9% of net sales, in 1997. The increased gross profit was
attributable to increased sales volume in 1998. The increased gross profit
percentage was attributable to greater efficiencies in the production process
from the Company's increased production levels and additional margin obtained
from the sale of higher priced products.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased from 9.8% of net sales in second quarter 1997,
to 9.0% of net sales in second quarter 1998. The increased dollar volume was due
to increased advertising costs including costs to promote the Company's HD
series Posi-Track as well as increased compensation costs as sales and
administrative personnel have been added to support expanded sales and customer
service roles. The decreased percentage of selling, general and administrative
expenses was due to the Company closely managing its costs.

     RESEARCH AND DEVELOPMENT. Research and development expenses increased from
approximately $63,000 in second quarter 1997 to approximately $105,000 in 1998.
The increase was due mainly to the development of the Company's new model
Posi-Track, the MD series, continuing improvements to the Company's existing
models and exploration of future product alternatives.

                                       6
In order to maintain its competitive advantage over other manufacturers of
similar products, the Company believes it will increase the level of spending on
research and development activities. It is expected the main thrust of these
activities will be directed towards extensions of the Company's current product
lines and improvements of existing products.

     INTEREST EXPENSE. Interest expense increased from approximately $93,000 for
the second quarter of 1997 to approximately $127,000 for the second quarter of
1998. The increase was due to the additional debt related to the completion of
the Company's facility expansion and the additional debt incurred in January
1998 for the acquisition of land and buildings for storage and to house research
and development activities.

     NET INCOME. Net income for the second quarter of 1998 was approximately
$927,000, compared with approximately $465,000 for the second quarter of 1997.
The increase in 1998 resulted primarily from additional gross profit on
increased sales, offset in part by increased operating costs and interest
expense.

FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997.

     NET SALES. Net sales for the six months ended June 30, 1998 increased 94%,
or approximately $9,454,000, to $19,513,000. The increase was due primarily to
the increased sales of the Company's Posi-Track vehicle, particularly the HD
series Posi-Track, which was introduced in fourth quarter 1997. Posi-Track
related sales increased 106% due to the increased demand, sales of two new
Posi-Track models in 1998 and new dealers added in the past twelve months. Sales
of parts, used equipment and other items increased approximately 37% due
primarily to an increase in the sale of parts as a greater number of machines
are in service in 1998.

     GROSS PROFIT. Gross profit increased for the six months ended June 30, 1998
to approximately $4,819,000, or 24.7% of net sales, from $2,362,000, or 23.5% of
net sales, for the six months ended June 30, 1997. The increased gross profit
was due to increased sales while the increased gross profit percentage was due
to the increased efficiencies obtained from the Company's increased production
volume and additional margin obtained from the sale of higher priced products.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased from 10.1% of net sales for the six months
ended June 30, 1997 to 9.0% of net sales for the six months ended June 30, 1998.
The increased dollar amount of approximately $731,000 was due to increased sales
and marketing costs and increased costs for administrative personnel hired to
support increased sales volumes. The decreased percentage of selling, general
and administrative expenses was due to the Company closely managing its costs.

     RESEARCH AND DEVELOPMENT. Research and development expenses increased from
approximately $108,000 in 1997 to approximately $204,000 in 1998. The increase
was due mainly to the development of the Company's new model Posi-Track, the MD
series, in 1998, continuing improvements to the Company's existing models and
exploration of additional models.

     INTEREST EXPENSE. Interest expense increased from approximately $186,000
for the six months ended June 30, 1997 to approximately $256,000 for the same
period in 1998. The increase was due to the additional debt related to the
completion of the Company's facility expansion and the additional debt incurred
in January 1998 for the acquisition of land and buildings for storage and to
house research and development activities.

     NET INCOME. Net income for the six months ended June 30, 1998 increased to
approximately $1,719,000 from approximately $780,000 for 1997. The increase is
due to increased sales and gross profit, offset in part by increased operating
expenses and interest expense.

LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 1998, the Company had working capital of approximately
$14,913,000 compared with working capital of approximately $11,033,000 at June
30, 1997, an increase of approximately $3,880,000. The major components of this
increase are as follows: Inventories increased approximately $6,270,000 due to
the introduction of two new Posi-Track models in 1997 and one new Posi-Track
model in 1998 along with increased sales; Accounts receivable increased
approximately $1,625,000 due to increased sales; Cash and short-term investments
decreased approximately $2,424,000 as the Company built inventory levels and
equipped its expanded manufacturing facility; Current liabilities increased
approximately $1,742,000 due to the overall increase in the Company's volume and
profitability.

                                       7
The Company's working capital position at June 30, 1998 increased
approximately $1,571,000 when compared with December 31, 1997. Major components
of this increase are as follows. Inventories increased approximately $2,077,000
and accounts payable increased approximately $1,286,000 due to the increase in
the Company's production levels and additional parts required to manufacture new
models. Accounts receivables increased approximately $777,000 due to increased
sales volume. Cash and short-term investments increased approximately $402,000
due to increased profitability. In addition, the current portion of long-term
liabilities increased approximately $218,000 due to the additional debt incurred
for the Company's facility expansion and the acquisition of land and buildings
for storage and to house the Company's research and development activities.

     During the second quarter of 1998, the Company amended its line of credit
agreement with its primary bank. The amended line of credit provides for
borrowings up to $5,000,000 at an interest rate of prime minus 1/2% (8% at June
30, 1998). All other major terms and conditions remain the same. The Company
believes its existing cash and investments, together with cash expected to be
provided by operations and available, unused credit lines, will satisfy the
Company's projected working capital needs and other cash requirements at least
through the end of June 1999.

     The Company has increased its number of employees by approximately 50% in
the last 12 months. In order to meet its anticipated sales levels for the next
twelve months, the Company expects it will increase its number of employees by
approximately 20% over the next twelve months. It is anticipated that nearly all
the additional employees will be in the production area. The Company believes
the local work force is sufficient to hire the additional employees.

     In order to maintain its competitive advantage over other manufacturers of
similar products, the Company believes it will increase the level of spending on
research and development activities. It is expected the main thrust of these
activities will be directed towards extensions of the Company's current product
lines and improvements of existing products.

     IMPACT OF THE YEAR 2000 ISSUE. The Year 2000 issue is the result of
computer programs being written using two digits rather than four to define the
applicable year. Some of the Company's computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process critical business transactions including recording of
sales, manufacture of products, inventory management and distribution,
preparation of invoices and collection of accounts receivables and many other
normal business activities.

     The Company has begun to identify all relevant software that may affect the
Company's operations through surveys and examinations. Based on risk assessments
that have been completed for the majority of the Company's operations, the
Company must upgrade some of its existing software to ensure that the computer
systems will properly utilize dates beyond December 31, 1999. The Company
expects to convert its business operations to new Year 2000 compatible software
by the end of 1998. The cost of these conversions is not expected to have a
material impact on the Company. However, there can be no guarantee the software
of other companies on which the Company's systems rely will be timely converted,
or that a failure to convert by another company, or a conversion that is
incompatible with the Company's systems, would not have a material adverse
effect on the Company.

     The statements set forth above under "Liquidity and Capital Resources" and
elsewhere in this Form 10-Q which are not historical facts are forward-looking
statements and involve risks and uncertainties, many of which are outside the
Company's control and, accordingly, actual results may differ materially.
Factors that might cause such a difference include, but are not limited to, lack
of market acceptance of new or existing products, inability to attract new
dealers for the Company's products, unexpected delays in obtaining raw
materials, unexpected delays in the manufacturing process, unexpected additional
expenses or operating losses or the activities of competitors. Any
forward-looking statements provided from time-to-time by the Company represent
only management's then-best current estimate of future results or trends.

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        None

                                       8
ITEM 2. CHANGES IN SECURITIES

        None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

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

        The annual meeting of shareholders of A.S.V., Inc. was held on June 19,
        1998. Matters submitted at the meeting for vote by the shareholders were
        as follows:

        (a)     Election of Directors.

                The following directors were elected at the Annual Meeting, each
                with the following votes:

                                                     For           Against
                                                     ---           -------
                     Philip C. Smaby              7,160,723        114,285
                     Gary D. Lemke                7,160,769        114,239
                     Edgar E. Hetteen             7,163,145        111,862
                     Jerome T. Miner              7,160,146        114,861
                     Karlin S. Symons             7,162,693        112,314
                     Leland T. Lynch              7,163,143        111,864
                     James H. Dahl                7,160,145        114,862
                     R. E. "Teddy" Turner, IV     7,158,519        116,488

        (b)     Amendment of the 1996 Incentive and Stock Option Plan to
                increase the number of shares of Common Stock authorized for
                issuance thereunder.

                Shareholders approved the amendment to the 1996 Incentive and
                Stock Option Plan with a vote of 4,642,809 votes for, 231,733
                votes against, 100,795 shares abstaining and 2,299,669 broker
                non-votes.

        (c)     Adoption of the 1998 Non-Employee Director Stock Option Plan

                Shareholders adopted the 1998 Non-Employee Director Stock Option
                Plan with a vote of 4,642,561 votes for, 296,272 votes against,
                54,504 shares abstaining and 2,299,669 broker non-votes.

        (d)     Ratification of Appointment of Independent Public Accountants.

                Shareholders ratified the appointment of Grant Thornton LLP as
                the Company's independent public accountants for the fiscal year
                ending December 31, 1998, with a vote of 7,249,582 votes for,
                1,348 votes against and 24,076 shares abstaining.

ITEM 5. OTHER INFORMATION

        None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (A)     EXHIBITS

         Exhibit
         Number   Description
         ------   -----------
           3.1    Second Restated Articles of Incorporation of the Company (a)

                                       9
3.1a   Amendment to Second Restated Articles of Incorporation of the
                  Company filed January 6, 1997 (e)

           3.1b   Amendment to Second Restated Articles of Incorporation of the 
                  Company filed May 4, 1998

           3.2    Bylaws of the Company (a)

           4.1    Specimen form of the Company's Common Stock Certificate (a)

           4.2*   1987 Stock Option Plan (a)
 
           4.3*   1994 Long-Term Incentive and Stock Option Plan (a)

           4.4    Form of Warrant issued to Summit Investment Corporation (b)

           4.5    Form of Debenture issued October 1996 (d)

           4.6    Warrant issued to Leo Partners, Inc. on December 1, 1996 (e)

           4.7*   1996 Incentive and Stock Option Plan (f)

           4.8*   1996 Incentive and Stock Option Plan, as amended (g)

           4.9*   1998 Non-Employee Director Stock Option Plan (g)

          10.1    Development Agreement dated July 14, 1994 among the Iron Range
                  Resources and Rehabilitation Board ("IRRRB"), the Grand Rapids
                  Economic Development Agency ("EDA") and the Company (b)

          10.2    Lease and Option Agreement dated July 14, 1994 between the EDA
                  and the Company (b)

          10.3    Option Agreement dated July 14, 1994 between the EDA and the 
                  Company (b)

          10.4    Grant Contract dated July 1, 1994 between the Company and 
                  the IRRRB (b)

          10.5    Letter Credit Agreement dated June 15, 1994 between the 
                  Security State Bank of Hibbing and the Company (a)

          10.6    Supplemental Lease Agreement dated April 18, 1997 between 
                  the EDA and the Company (f)

          10.7    Supplemental Development Agreement dated April 18, 1997 
                  between the EDA and the Company (f)

          10.8    Line of Credit dated May 22, 1997 between Norwest Bank 
                  Minnesota North, N.A. and the Company (f)

          10.9*   Employment Agreement dated October 17, 1994 between the 
                  Company and Thomas R. Karges (c)

          10.10   Consulting Agreement between the Company and Leo 
                  Partners, Inc. dated December 1, 1996 (e)
 
          10.11   Extension of Lease Agreement dated May 13, 1998 between 
                  the EDA and the Company

          10.12   First Amendment to Credit Agreement dated June 30, 1998 
                  between Norwest Bank Minnesota North, N.A. and the Company

            11    Statement re: Computation of Per Share Earnings

            22    List of Subsidiaries (a)

            27    Financial Data Schedule for the six months ended June 30, 1998

                                       10
(a) Incorporated by reference to the Company's Registration 
                      Statement on Form SB-2 (File No. 33-61284C) filed 
                      July 7, 1994.

                  (b) Incorporated by reference to the Company's Post-Effective
                      Amendment No. 1 to Registration Statement on Form SB-2 
                      (File No. 33-61284C) filed August 3, 1994.

                  (c) Incorporated by reference to the Company's Quarterly 
                      Report on Form 10-QSB for the quarter ended 
                      September 30, 1994 (File No. 33-61284C) filed 
                      November 11, 1994.

                  (d) Incorporated by reference to the Company's Quarterly 
                      Report on Form 10-QSB for the quarter ended 
                      September 30, 1996 (File No. 0-25620) filed electronically
                      November 13, 1996.

                  (e) Incorporated by reference to the Company's Annual Report 
                      on Form 10-KSB for the year ended December 31, 1996 
                      (File No. 0-25620) filed electronically March 28, 1997.

                  (f) Incorporated by reference to the Company's Quarterly 
                      Report on Form 10-QSB for the quarter ended June 30, 1997
                      (File No. 0-25620) filed electronically August 13, 1997.

                  (g) Incorporated by reference to the Company's Definitive 
                      Proxy Statement for the year ended December 31, 1997 
                      (File No. 0-25620) filed electronically April 28, 1998.

                  *   Indicates management contract or compensation plan or 
                      arrangement.

        (B) REPORTS ON FORM 8-K

             No reports on Form 8-K were filed during the quarter
        ended June 30, 1998.

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

                                   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.

                                   A.S.V., INC.

Dated:  August 13, 1998            By /s/ Gary Lemke
                                   ----------------------------
                                   Gary Lemke
                                   President

Dated:  August 13, 1998            By /s/ Thomas R. Karges
                                   ----------------------------
                                   Thomas R. Karges
                                   Chief Financial Officer
                                   (principal financial and accounting officer)

                                       11
EXHIBIT INDEX
EXHIBIT                                                                          METHOD OF FILING
   -------                                                                          ----------------
3.1b    Amendment to Second Restated Articles of Incorporation .......   Filed herewith electronically

    10.11    Extension of Lease Agreement..................................   Filed herewith electronically

    10.12    First Amendment to Credit Agreement ..........................   Filed herewith electronically

       11    Statement re: Computation of Per Share Earnings...............   Filed herewith electronically

       27    Financial Data Schedule.......................................   Filed herewith electronically
12