<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1998
Commission File Number: 33-26767
000-24779
V-TWIN ACQUISITIONS, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
District of Columbia 52-2110338
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1707 H St. N.W. #200
Washington, DC 20006
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(703) 437-9886
- --------------------------------------------------------------------------------
(Issuer's telephone number)
Check whether the Issuer (1) filed all report required to be file by Section 13
or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
x YES NO
- ------ ------
State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practicable date: 3,000,000 common shares as of
December 31, 1998.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Financial Statements F-1
Balance Sheet as of December 31, 1998
and July 31, 1998 F-2
Statement of Operations for the
Three Months and Six Months
Ended December 31, 1998 F-3
Statement Of Stockholders' Equity F-4
Statement of Cash Flows F-5 and F-6
Notes To Financial Statements F-7 and F-8
2
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FINANCIAL STATEMENTS
In the opinion of the management of V-Twin Acquisitions, Inc. (the
Company), the accompanying unaudited interim consolidated financial
statements contain all adjustments necessary of a fair presentation of
the Company's financial condition as of December 31, 1998 and July 31,
1998, and the results of its operations and cash flows for the three
month periods ended December 31, 1998 and at July 31, 1998.
The accompanying unaudited consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally
included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to those rules and regulations, although the Company's
management believes that the disclosures and information presented are
adequate and not misleading. Reference is made to the detailed financial
statement disclosures which should be read in conjunction with this
report and are contained in the notes to consolidated financial
statements included in the Company's Form 10-SB, as amended, registration
statement. Certain items in prior period consolidated financial
statements have been reclassified, where appropriate, to conform with the
December 31, 1998 presentation.
F-1
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V-TWIN ACQUISITIONS, INC.
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 1998 AND JULY 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS 12/31/98 7/31/98
-------------- -------- -------
<S> <C> <C>
Cash and Cash Equivalents $ 26,000 $ 50,148
Marketable Securities
(available for sale or trading) 133,000 448,000
Deposit - Cycle Sport Purchase 50,000 - 0 -
Total Assets 209,000 498,148
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
12/31/98 7/31/98
-------- -------
Total Liabilities - 0 - - 0 -
----- -----
Stockholders' Equity
- --------------------
Common Stock, , $.001 par value, 25,000,000 shares
authorized, 3,000,000 issued and outstanding 3,000 1,000
Additional Paid in Capital 230,148 497,148
Retained Deficit (24,148) - 0 -
Total Stockholders' Equity 209,000 498,148
------- -------
Total Liabilities and Stockholders' Equity $ 209,000 $ 498,148
============= =============
</TABLE>
See accompanying notes to consolidated financial statements
F-2
<PAGE> 5
V-TWIN ACQUISITIONS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
12/31/98 12/31/98
-------- --------
<S> <C> <C>
Sales $ - 0 - $ - 0 -
Cost of Sales - 0 - - 0 -
Gross Profit on Sales - 0 - - 0 -
Operating Costs
- ---------------
Payroll Expense - 0 - - 0 -
Professional Fees - 0 - - 0 -
Auto, Travel and Entertainment - 0 - - 0 -
Amortization and Depreciation - 0 - - 0 -
Other 14,148 24,148
------ ------
Total Operating Costs 14,148 24,148
------ ------
Income (Loss) From Operations (14,148) (24,148)
-------- ---------
Other Income (Expense)
- ----------------------
Interest Expense - 0 - - 0 -
Minority Interest - 0 - - 0 -
Other Income (Expense)-Net - 0 - - 0 -
Total Other Income (Expense) - Net - 0 - - 0 -
----------- -----------
Income (Loss) Before Taxes (14, 148) (24,148)
Income Tax Provision (Benefit) - 0 - - 0 -
------ -----------
Net Income (Loss) $ (14,148) $(24,148)
Net Income (Loss) Available for Common Stockholders $ (14,148) $(24,148)
============ =========
Earnings (Loss) Per Share:
Basic and Diluted Earnings (Loss) Per Share $0.00 $(0.01)
===== =======
</TABLE>
See accompanying notes to consolidated financial statements
F-3
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V-TWIN ACQUISITIONS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED DECEMBER 31,1997, SEPTEMBER 30, 1998,
AND DECEMBER 31,1998
(Unaudited)
<TABLE>
<CAPTION>
V-TWIN V-TWIN V-TWIN
COMMON COMMON COMMON ADDITIONAL TREASURY RETAINED TOTAL
STOCK STOCK STOCK PAID-IN STOCK EARNINGS/ STOCKHOLDERS'
CIU CLASS A CLASS B CAPITAL CIU DEFICIT EQUITY
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1997 $ 1,000 ($667) $ 333
- -------------------------
==========================================================================================
BALANCE JULY 31,1998 $ 0 $ 809 $ 191 $ 497,148 $ 0 $ 498,148
- --------------------
Exchange Class B for Class A
(create one unitary class) and
Forward Split One for Three ($809) ($ 809)
(1:3) $3,000 ($191) $ 2,809
Less Par Value - $.001 per share -
of Additional 2,000,000 V-Twin
Shares Issued as a Result of
Forward Split ( $ 2,000) ($ 2,000)
Write Down of Value of CNTI Stock
($.69 per share at 9-30-98) ($ 206,500) ($206,500)
Net Loss ($10,000) ($10,000)
=====================================================================================
BALANCE SEPT. 30,1998 $ 0 $3000 $ 0 $ 288,648 $ 0 ($10,000) $ 281,648
- ---------------------
Adj. to Add. Paid in Cap. $ 50,000 $ 50,000
Write Down of CNTI Stock
($.38 per share at 12-31-98) ($ 108,500) ($ 108,500)
Net Loss ($14,148) ($ 14,148)
=====================================================================================
Balance December 31, 1998 $ 0 $3000 $ 0 $230,148 $ 0 ($24,148) $ 209,000
- -------------------------
</TABLE>
See accompanying notes to consolidated financial statements
F-4
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V-TWIN ACQUISITIONS, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND JULY 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
12/31/98 7/31/98
-------- -------
<S> <C> <C>
Cash Flows from Operating Activities:
- -------------------------------------
Cash received from customers $ - 0 - $ - 0 -
General and administrative expense (24,148) - 0 -
Interest received - 0 - - 0 -
Interest paid - 0 - - 0 -
Income taxes paid - 0 - - 0 -
Misc. receipts (payments) - 0 - - 0 -
------------ ------------
Net cash (used) for operating activities (24,148) - 0 -
-------------- ------------
Cash Flows from Investing Activities:
- -------------------------------------
Deposit on purchase of fixed assets (50,000) - 0 -
Purchases of marketable securities and investments - 0 - - 0 -
-------------- ------------
Net cash used for investing activities (50,000) - 0 -
--------------- ------------
Cash Flows from Financing Activities:
- -------------------------------------
Additional paid in capital 50,000 50,148
Preferred dividends paid - 0 - - 0 -
Receipts of (payments on) notes - 0 - - 0 -
Net advances from affiliates-stockholders - 0 - - 0 -
----------- ------------
Net cash provided by financing activities 50,000 - 0 -
----------- ------------
Net (Decrease) Increase In Cash and Cash Equivalents - 0 - - 0 -
- ----------------------------------------------------
Beginning Balance $ 50,148 $50,148
Current cash and cash equivalents $ 26,000 $ 50,148
- --------------------------------- ============== =========
Reconciliation of Net Income to Net Cash
- ----------------------------------------
Provided by Operating Activities:
- -----------------------------------
Net (Loss) Income $ (24,148) - 0 -
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization and depreciation - 0 - - 0 -
Minority interest - 0 - - 0 -
Increase in accounts receivable - 0 - - 0 -
(Increase) decrease in inventory - 0 - - 0 -
(Increase) decrease in other current assets and other assets (24,148) - 0 -
Increase (decrease) in accounts payable and accrued expenses - 0 - - 0 -
Increase (decrease) in interest and taxes payable - 0 - - 0 -
------------- --------------
Net cash used for operating activities $ (24,148)) $ - 0 -
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE> 8
V-TWIN ACQUISITIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND JULY 31, 1998
(Unaudited)
For the purpose of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
See accompanying notes to consolidated financial statements
F-6
<PAGE> 9
V-TWIN ACQUISITIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1-BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of V-Twin
Acquisitions, Inc. (the Company) have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
note disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to those rules and regulations, although the Company's
management believes that disclosures and information presented are adequate and
not misleading. Reference is made to the detailed financial statement
disclosures which should be read in conjunction with this report and are
contained in the notes to consolidated financial statements included in the
Company's Form 10-SB, as amended, filed originally in August, 1998, and
subsequent post effective amendments. Certain items in prior period consolidated
financial statements have been reclassified, where appropriate, to conform with
the December 31, 1998 presentation. The July 31, 1998 balance sheet was derived
from audited consolidated financial statements, but does not include all
disclosures required by generally accepted accounting principles.
NOTE 2- INTERIM PERIODS
In the opinion of the management of the Company, the accompanying unaudited
interim consolidated financial statements contain all adjustments (which are of
a normal recurring nature) necessary for a fair presentation of the Company's
financial condition as of a December 31, 1998 and July 31, 1998, and the results
of its operations for the three month periods and six month periods ended
December 31, 1998 and at July 31, 1998. The results of operations for the three
months and six months ended December 31,1998 are not necessarily indicative of
the results to be expected for the full year.
NOTE 3-PER SHARE DATA
Per share data was computed by dividing net income (loss) by the weighted
average number of shares outstanding during the period.
NOTE 4 - VALUE OF THE COMMON STOCK OF CENTURY INDUSTRIES, INC.
V-Twin owns 350,000 shares of the common stock of Century Industries, Inc., a
public company, SEC File No. 0-9969. Century Industries has common shares
registered under the Securities and Exchange Act of 1934, and quarterly and
annual information on Century Industries can be found at the website of the
Securities and Exchange Commission at www.sec.gov. The price per share of the
Century Industries common stock owned by V-Twin was $.38 per share at December
31, 1998. The value of these shares was $133,000, which resulted in an
additional write down of $108,500 for the quarter ended December 31, 1998.
NOTE 5 - EXCHANGE TO ONE CLASS AND FORWARD SPLIT
At the Company's annual meeting on August 31, 1998, the shareholders agreed to
authorize the Board of Directors to, within their discretion, abolish the
existence of the existing two classes of stock and to forward split the common
stock of the Company on a one for three basis (1:3). On November 27, 1998, the
Board of Directors voted unanimously to abolish the Company's Class B shares and
to have only one class of voting stock. It voted to re-issue a singular unitary
class of shares, with equal voting rights of one vote per share, to the previous
Class B shareholders and the Class A shareholders and to forward
F-7
<PAGE> 10
split the stock as directed by the shareholders of the Company. The previous
Class B shares had one vote for every 100 shares.
NOTE 6 - ADJUSTMENT TO ADDITIONAL PAID IN CAPITAL
During the 4th quarter 1998, Ted Schwartzbeck and Jay Pignatello, the President
and Secretary, respectively, of the Company, paid in additional capital in the
amount of $50,000 to place the necessary $50,000 deposit with the attorney for
the seller of Cycle Sport Unlimited, Inc.
F-8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following information should be read in conjunction with the notes to
financial statements. The Company has had no revenue from operations in each of
the last two fiscal years, and has developed the below listed Plan of Operation
on a go-forward basis.
The fiscal year of the Registrant is June 30.
The Registrant had its Form 10-SB registration statement become effective
through lapse of time on October 9, 1998. The Registrant files this Form 10-QSB
in compliance with its Securities Exchange Act of 1934 requirements as a fully
reporting public company.
Results of Operations
The Company had minimal operations during the quarter ended December 31, 1998.
The only operations the Company experienced was the payment of expenses
incurred, specifically the $100 per month rent at 1707 H Street, NW (totaling
$300 for the quarter ended September 30, 1998), and professional fees
associated with the filing of the aforementioned Form 10-SB registration
statement and related exhibits. These professional fees were expenses from
Klipfel & Associates, LLC stemming from the restated audit for the Form 10-SB,
as amended, and questions from the Securities and Exchange Commission Staff
arising therefrom. Legal expenses were also incurred as a result of the
restated Form 10-SB, as amended, and questions from the Securities and Exchange
Commission Staff arising therefrom. The Company had expenses from Bowne of
Washington, the company which provides EDGAR filing compliance for V-Twin, in
association with the filing of the restated audit for the Form 10-SB, as
amended, and questions from the Securities and Exchange Commission Staff
arising therefrom. The Company also experienced costs associated with mail,
courier fees and telephone bills. These mail, courier fees and telephone costs
increased because of the increased communication with the franchises (Yamaha,
Suzuki, Kawasaki and Triumph franchises) and floor plan financing companies
(Deutsche Financial Services for Suzuki and Yamaha, Transamerica for Triumph,
and Kawasaki Motors Finance Corp. for Kawasaki), as V-Twin placed its official
applications for transfer of these agreements from Cycle Sport Unlimited, Inc.
to V-Twin.
As of December 31, 1998, the Company had total assets of $26,000 in cash, and
$133,000 of marketable securities. The Company had no liabilities at December
31, 1998. Additionally, the Company placed a $50,000 cash deposit in an escrow
account with the attorney for the seller of Cycle Sport Unlimited, Inc., of
Herndon and Springfield, Virginia. Mr. Schwartzbeck and Mr. Pignatello paid in
additional capital to place the cash deposit with the seller's attorney.
V-Twin owns 350,000 shares of the common stock of Century Industries, Inc., a
public company trading on the Philadelphia Stock Exchange and the NASDAQ
Bulletin Board, SEC File No. 0-9969. Century Industries has common shares
registered under the Securities and Exchange Act of 1934, and quarterly and
annual information on Century Industries can be found at the website of the
Securities and Exchange Commission at www.sec.gov. The price per share of the
Century Industries common stock owned by V-Twin was $.38 per share at December
31, 1998. The value of these shares was $133,000, which resulted in a write down
of $108,500 for the quarter from September 30, 1998.
Plan of Operation
V-Twin Acquisitions, Inc. ("V-Twin Acquisitions" or the "Company") is a holding
company whose intended subsidiaries will function in retail sales of several
well known brands of motorcycles, personal watercraft, all terrain vehicles
("ATVs") and related parts and accessories. The Company's intended subsidiaries
will also provide service for new and used motorcycles, all terrain vehicles and
Jet Ski type watercraft. In its present development stage, the Company intends
to focus its principal attention on the retail motorcycle market and to acquire,
consolidate and operate additional motorcycle retail subsidiaries. As of the
date of this filing, no other publicly traded company conducts business in this
market, to the Issuer's knowledge.
The Registrant, as a development stage company, believes it has sufficient funds
to satisfy its cash requirements for the next 12 months, including its intended
purchase of the assets and liabilities of Cycle Sport, Inc., its first intended
3
<PAGE> 12
subsidiary. Management has reached an agreement with the Seller to purchase
those assets and liabilities, on a bulk sale basis, for $300,000.
To date, the Company has been deemed a development stage company primarily
engaged in the research required in connection with the acquisition of
franchised motorcycle dealerships. The Company has no sales revenues and has had
no income from any operations. Its only actions have been to complete its
initial capitalization, and to enter into an agreement to purchase with the
owners of its first proposed acquisition - the assets and liabilities of Cycle
Sport, Inc. The Contract for the Bulk Sale and Purchase of Assets between the
Registrant and Cycle Sport is incorporated by reference in Exhibit 10 to the
previously filed amended Form 10-SB registration statements.
The Company deposited $50,000 with the Seller's attorney as a good faith deposit
concurrent with the signing of a letter of intent. V-Twin, during the fourth
quarter, 1998, finalized its Contract for Sale and Purchase of Assets with Cycle
Sport, Inc., on a Bulk Sale basis pursuant to the UCC and the applicable
Virginia Code. The Company is still in the process of complying with the Bulk
Sale Agreement with the Seller and counsel for Cycle Sport, Inc. and is moving
towards settlement.
As of December 31, 1998, the Registrant had completed its requests for transfer
of floor plan financing arrangements and franchise, and awaits approval from all
related manufacturers. All indications from the financing companies and the
manufacturers are that the transfers will be completed.
The most important conditions of the bulk sale purchase of Cycle Sport which
have not yet been satisfied are the transfer of the manufacturers' franchise
agreements and the secured floor plan financing arrangements through the
manufacturers. Without these transfers, the bulk purchase can not be
consummated. It should be noted that the technique to effectuate this
transaction is a "bulk sale" agreement under the Uniform Commercial Code ("UCC")
and the VA Code. This Bulk Sale is the purchase of assets and the assumption of
liabilities of the assets of a division of a going concern, with the intent of
the parties being that the purchaser will continue in the same business that the
seller operated, but as a new business. The Registrant is not purchasing any
income nor earnings, but will rely on the historical income numbers. No
undisclosed liabilities can surface, and no tax liabilities carry forward.
There will be continuity of the basic components of the company after the Bulk
Sale and Purchase of Assets of Cycle Sport is finalized. However, there are
factors outside of the control of either party (V-Twin, the buyer, and Cycle
Sport, the seller) which affect the closing of the Bulk Sale and Purchase of
Assets of Cycle Sport. Namely, these factors, as delineated in the amended Form
10-SB, Exhibit 10, Schedule D, and incorporated by reference herein, are the
transfer of the franchise or authorized dealer agreements with the motorcycle
manufacturers. Any change in control (such as the one contemplated in V-Twin's
agreement with Cycle Sport) must be accepted by these entities, and, if not
approved, then the Bulk Sale and Purchase of Cycle Sport will not be consummated
(see amended Form 10-SB, Exhibit 10, Page 13, Section 4.7 of Contract for Sale
and Purchase of Assets). This transfer/change in control provision can be seen
in the amended Form 10-SB, Exhibit 10, Schedule D, Yamaha Dealer Agreement, Page
5, Section 6 (Termination), paragraph (c), which deals with change in control.
This also can be seen in amended Form 10-SB, Exhibit 10, Schedule D, Suzuki
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Products Dealer Agreement, page 12, Section 9 (Termination), paragraph 9.2 (6).
Again, this can be seen in the amended Form 10-SB, Exhibit 10, Schedule D,
Kawasaki Authorized Watercraft Dealer Sales and Service Agreement, Section 25,
paragraph A and in the amended Form 10-SB, Exhibit 10, Schedule D, Kawasaki
Authorized Dealer Sales and Service Agreement, Section 25, paragraph A. This
also can be seen in the amended Form 10-SB, Exhibit 10, Schedule D, Triumph
Authorized Dealership Agreement, page 20, Section 19. All of these sections can
be summarized in that any change in control from Cycle Sport to V-Twin needs to
be approved by the manufacturers, or there will be no change in control and the
franchise agreement would be terminated, which, ultimately, would result in the
termination of the Agreement between Cycle Sport and V-Twin. The aforementioned
exhibits is incorporated by reference in previously filed amended Form 10-SB
registration statements.
Management's goal is to purchase Cycle Sport's assets, liabilities and major
motorcycle, Jet Ski and ATV franchises as a going business in its two locations
in Herndon and Springfield, VA, and to recapitalize and advertise the
dealership's products in order to bring the dealership back to the profitability
it enjoyed for its first 24 years of operations.
The total acquisition cost for Cycle Sport will be $300,000. The Company has a
deposit in escrow with Seller's counsel of $50,000, applicable to the purchase
price.
The Company functions as a development stage holding company, and proposes to
acquire certain operating subsidiaries, without any operations of its own, other
than its research and its related acquisition, legal, accounting, stock transfer
agent, and shareholder related record keeping responsibilities and concomitant
management costs on behalf of its subsidiaries, which will be defrayed through
management fees charged to its subsidiaries. The operations of the proposed
subsidiaries will be consolidated with the Company as a public parent, if the
acquisitions contemplated are consummated. The Company proposes that each
separate dealership will be a separate subsidiary corporation.
Liquidity and Capital Resources
The Company anticipates meeting its working capital needs during the current
fiscal year from capital raised through the common stock already sold to its
control shareholders. The Company is also investigating the possibility of other
financing to provide additional acquisition capital and to further its
acquisition program. Although management has not made any arrangements or
definitive agreements, the Company is contemplating both the private placement
of securities and/or a public offering.
The purchase of Cycle Sport Unlimited, Inc. by the Company will necessitate an
additional $250,000 in cash. Both Mr. Schwartzbeck and Mr. Pignatello have
committed to paying in additional capital to V-Twin to cover the purchase price
of Cycle Sport Unlimited, Inc.
In the opinion of Management, inflation has not had a material effect on the
operations of the Company.
Products and Markets
The Company's first proposed subsidiary is primarily engaged in retail sales of
several well known brands: Yamaha, Kawasaki, Suzuki and Triumph motorcycles,
ATVs and Jet Skis (personal watercraft), related parts and accessories, and the
service of these products.
5
<PAGE> 14
Once the proposed acquisition of the Cycle Sport assets and liabilities are
completed, the Company's general market will be the retail motorcycle, ATV and
Jet Ski market, and related parts, accessories and service.
As recreational products, Cycle Sports Kawasaki, Yamaha, Suzuki and Triumph
motorcycles, and Yamaha and Kawasaki ATVs and Jet Skis and related parts and
accessories are products enjoying a rising consumer market. According to U.S.
Government reports, from 1992 through 1995 spending on recreational products
grew at over five percent per year and from 1994 through 1997 grew at three
times the rate of overall consumer spending.
Based on industry information, the Company believes that the typical customer
for heavyweight American touring and cruiser motorcycles is a male between the
ages of 35 and 65, with a household income of approximately $65,000. These
customers are generally experienced motorcycle riders who purchase motorcycles
for recreational purposes rather than for transportation. According to U.S.
Department of Commerce demographic surveys, the number of Americans that will
fall into the targeted age bracket is projected to increase by approximately 11%
over the next five years and by 19% over the next ten years. The 35 to 65 year
old age group also leads all age groups in annual spending per consumer on
recreational products and generally has greater disposable income than other age
groups.
The Company believes that an opportunity exists for dealership groups with
significant equity capital and experience in identifying, acquiring and
professionally managing dealerships, to acquire additional dealerships and
capitalize on changes in the motorcycle retailing industry. Motorcycle retailing
is a rapidly growing consumer retail market in the United States. The industry
ownership today is highly fragmented, with the majority of dealerships being
privately owned and operated. The Company believes that these factors, together
with increasing capital costs of opening new motorcycle dealerships, franchising
costs which require substantial inventories, the lack of alternative exit
strategies (especially for larger dealerships) and the aging of many dealership
owners provide attractive consolidation opportunities.
In 1992, the Motorcycle Industry Council recorded that 31 million people rode a
motorcycle, scooter or ATV that year. With the variety of vehicles growing at a
significant rate, popularity is increasing. In comparison to other leisure
activities, motorcycling is surprisingly popular. In 1992, motorcycling was
enjoyed by 31 million people; golf had 23 million aficionados; fishing 41
million, and camping 47 million.
According to the Motorcycle Industry Council, motorcycle sales are up 20% across
the board, including a surprise in the playbike and competition/off road
segments, which increased 26%. Please see exhibits 99.1 through 99.6 of the
previously filed Form 10-SB and related amendments.
Manufacturers' Consent to Acquisitions and Market Expansion
Dealer agreements with each proposed acquisition by its terms will require the
dealer to obtain consent from the Manufacturers of the franchised dealers'
motorcycles to any change in the ownership of the dealer. In determining whether
to approve acquisitions, manufacturers may consider many factors, including the
financial condition and ownership structure of the Company. Further,
6
<PAGE> 15
manufacturers may impose conditions on granting their approvals for
acquisitions, including a limitation on the number of such manufacturers'
dealers that may be acquired by the Company. The Company's ability to meet
manufacturers' requirements for approving future acquisitions will have a direct
bearing on the Company's ability to complete acquisitions and effect its growth
strategy. There can be no assurance that a manufacturer will not terminate its
dealer agreement, refuse to renew its dealer agreement, refuse to approve future
acquisitions, or take other action that could have a material adverse effect on
the Company's acquisition program.
The Company's growth strategy also entails expanding its product line and
geographic scope by obtaining additional distribution rights from its existing
and new manufacturers. While the Company believes it will be successful in
obtaining such distribution rights, there can be no assurance that such
distribution rights will be granted to the Company or that it can obtain
suitable alternative sources of supply if the Company is unable to obtain such
distribution rights.
Motorcycle Manufacturers' Control Over Dealers
Historically, motorcycle manufacturers have exercised significant control over
their dealers, restricted them to specified geographic areas, and retained
approval rights over changes in ownership. The continuation of the Company's
dealer franchise agreements with certain manufacturers is contingent upon
several factors. Failure to meet the customer satisfaction and market share
goals set forth in any dealer agreement could result in the imposition of
additional conditions in subsequent dealer agreements, termination of such
dealer agreement by the manufacturer, limitations on inventory allocations,
reductions in reimbursement rates for warranty work performed by the dealer, or
denial of approval of future acquisitions. The Company's dealer agreements with
manufacturers give the Company the exclusive right to sell those manufacturers'
products within a given protected geographical area. Accordingly, a competing
manufacturer selling a different brand could authorize another dealer to start a
new dealership in proximity to one or more of the Company's locations, or an
existing competing dealer selling competing brands could move a dealership to a
location that would be directly competitive with the Company. Such an event
could have a material adverse effect on the Company and its operations; however,
Kawasaki, Yamaha, Suzuki and Honda Motorcycles currently own 62% of the retail
motorcycle sales market in the USA, and they protect their dealers' territories.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are, at present, nor during the fourth quarter, 1998, any legal
proceedings in which the Company is involved, either as plaintiff or defendant.
ITEM 2. CHANGES IN SECURITIES
(A) At the Company's annual meeting on August 31, 1998, the shareholders agreed
to authorize the Board of Directors to, within their discretion, abolish the
existence of the existing two classes of stock. On November 27, 1998, the Board
7
<PAGE> 16
of Directors voted unanimously to abolish the Company's Class B shares and to
have only one class of voting stock. It voted to re-issue a singular unitary
class of shares, with equal voting rights of one vote per share, to the previous
Class B shareholders and the Class A shareholders. The previous Class B shares
had one vote for every 100 shares. Also, a one for three (1:3) forward split in
the common stock of the Company was authorized by the shareholders of the
corporation at the annual meeting, and this forward split, as authorized by the
shareholders, could be instituted by the Board of Directors at its discretion,
which it did at the November 27, 1998 Board meeting. This change in securities
can also be found in the amended Form 10-SB registration statement incorporated
by reference herein.
(B) The rights evidenced by any class of registered securities have not been
materially limited or qualified by the issuance or modification of any other
class of securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(A) There has not been any material default in the payment of principal,
interest, a sinking or purchase fund installment, or any other material default
not cured within 30 days, with respect to any indebtedness of the Issuer
exceeding 5 percent of the total assets of the issuer.
(B) There has not been any material arrearage in the payment of dividends nor
any other material delinquency not cured within 30 days with respect to any
class of preferred stock of the Registrant which is registered or which ranks
prior to any class of registered securities, or with respect to any class of
preferred stock of any significant subsidiary of the Registrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the period covered
by this report, through the solicitation of proxies or otherwise. However, at
the Company's annual meeting on August 31, 1998, the shareholders agreed to
authorize the Board of Directors to, within their discretion, abolish the
existence of the existing two classes of stock, and to forward split the common
stock of the Company on a one for three basis (1:3). The Board of Directors is
authorized to institute this change at a future Board meeting. This change in
securities can also be found in the amended Form 10-SB registration statement
incorporated by reference herein.
Additionally, Mr. Schwartzbeck, Mr. Pignatello, Ms. Mongold and Mr. Settle were
voted by the shareholders to continue their service on the Board of Directors.
Also, the shareholders voted to create and enforce an Employee Stock Option
Plan, so that the Company may attract and retain competent executives to
effectuate its go forward business plan, although implementation of the plan
must await further shareholder review.
ITEM 5. OTHER INFORMATION
At the Company's annual meeting on August 31, 1998, the shareholders agreed to
authorize the Board of Directors to, within their discretion, abolish the
existence of the existing two classes of stock and to forward split the common
8
<PAGE> 17
stock of the Company on a one for three basis (1:3). On November 27, 1998, the
Board of Directors voted unanimously to abolish the Company's Class B shares and
to have only one class of voting stock. It voted to re-issue a singular unitary
class of shares, with equal voting rights of one vote per share, to the previous
Class B shareholders and the Class A shareholders and to forward split the stock
as directed by the shareholders of the Company. The previous Class B shares had
one vote for every 100 shares. This change in securities can also be found in
the amended Form 10-SB registration statement incorporated by reference herein.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) The exhibits required by Item 601 of Regulation S-B are incorporated by
reference through previously filed and effective through lapse of time Form
10-SB registration statements and amendments thereto.
(B) No reports on Form 8-K were filed during the fourth quarter of 1998.
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
February 17, 1999
V-Twin Acquisitions, Inc.
/s/ Ted L. Schwartzbeck
- -------------------------------------
Ted L. Schwartzbeck, Chairman and CEO
/s/ A. Jay Pignatello
- -------------------------------------
A. Jay Pignatello, Director and Secretary
9
<PAGE> 18
The following Exhibits are attached as required by Small Business Issuers:
(l) Underwriting agreement. Not applicable.
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession. Incorporated by reference through effective Form 10-SB
registration statement and amendments thereto.
(3) Articles of Incorporation and by-laws. Incorporated by reference through
effective Form 10-SB registration statement and amendments thereto.
(4) Instruments defining rights of holders. Not applicable.
(5) Opinion re legality. Not applicable.
(6) No Exhibit required.
(7) Opinion re liquidation preference. Not applicable.
(8) Opinion re tax matters. Not applicable.
(9) Voting trust agreement. Not applicable.
(10) Material contracts. Incorporated by reference through effective Form 10-SB
registration statement and amendments thereto.
(11) Statement re computation of per share earnings. Attached hereto.
(12) No Exhibit required.
(13) Annual or quarterly reports, Form 10-Q or quarterly report to security
holders. Not applicable.
(14) Material foreign patents. Not applicable.
(15) Letter on unaudited interim financial information. Not applicable.
(16) Letter on change in certifying accountant. Not applicable.
(17) Letter on director resignation. Not applicable.
(18) Letter re change in accounting principles. Not applicable.
(19) Report furnished to security holders. Not applicable.
(20) Other documents or statements to security holders. Not applicable.
(21) Subsidiaries of the registrant. Not applicable.
(22) Published report regarding matters submitted to vote of security holders.
Not applicable.
(23) Consents of experts and counsel. Not applicable.
10
<PAGE> 19
(24) Power of attorney. Not applicable.
(25) Statement of eligibility of trustee. Not applicable.
(26) Invitations for competitive bids. Not applicable.
(27) Financial data schedule. Attached hereto.
(28) Information from reports furnished to state insurance authorities. Not
applicable.
(29) Through (98) [RESERVED]
(99) Additional Exhibits. All below listed exhibits are incorporated by
reference through effective Form 10-SB registration statement and
amendments thereto.
(99.1) American Solid Fuel, Inc. S-18 effective notice dated August 2, 1989
and Prospectus
(99.2) "The Motorcycle Industry" by Mike Paschke
(99.3) Reuters News Release - "Harley Rides Out US Motorcycle Boom"
(99.4) Antitrust Law and Economic Review by Charles E. Mueller
(99.5) Cycle News - "In the Wind"
(99.6) 1998 Yamaha Industry Comparison Data
(99.7) V-Twin control shareholders letters re: additional paid in capital
(99.8) Form D - Notice of Sale of Securities Pursuant to Regulation D,
Section 4(6), and/or Uniform Limited Offering Exemption for V-Twin
Acquisitions Exchange Offering
11
<PAGE> 1
EXHIBIT 11
V-TWIN ACQUISITIONS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
FOR THE THREE MONTHS ENDED DECEMBER 31, 1998 AND JULY 31, 1998
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Three Months
Ended Dec. 31, July 31,
1998 1998
----------------------------------------------------------------------------------------------
<S> <C> <C>
Shares Outstanding.............................. 3,000,000 1,000,000
Weighted average shares outstanding............. 3,000,000 1,000,000
Net Income (Loss)............................... $ ( 14,148) $ - 0 -
Total Net Income (Loss) Available for Common Stockholders' $ ( 14, 148) $ - 0 -
============ =========
Basic and Diluted Earnings (Loss) Per Share:
Earnings (Loss) Per Share $0.00 $0.00
---- -----
</TABLE>
V-TWIN ACQUISITIONS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND JULY 31, 1998
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Six Months
Ended Dec. 31, July 31,
1998 1998
----------------------------------------------------------------------------------------------
<S> <C> <C>
Shares Outstanding............................. 3,000,000 1,000,000
Weighted average shares outstanding............ 3,000,000 1,000,000
Net Income (Loss).............................. $( 24,148) $ - 0 -
Total Net Income (Loss) Available for Common Stockholders' $( 24, 148) $ - 0 -
============ =========
Basic and Diluted Earnings (Loss) Per Share:
Earnings (Loss) Per Share $(0.01) $0.00
------ -----
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 26,000
<SECURITIES> 133,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 209,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 209,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 3,000
<OTHER-SE> 230,148
<TOTAL-LIABILITY-AND-EQUITY> 209,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,148
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (14,148)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,148)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,148)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
