<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, 1999
Commission File Number: 000-24779
V-TWIN HOLDINGS, INC.
(formerly 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) 471-6990
- -------------------------------------------------------------------------------
(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: 3,700,000 common shares as of
December 31, 1999.
<PAGE> 2
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Financial Statements F-1
Balance Sheets as of December 31, 1999
and June 30, 1999 F-2
Statements of Operations for the
Three Months Ended December 31, 1999 and 1998 F-3
Statements of Operations for the
Six Months Ended December 31, 1999 and 1998 F-4
Statements of Stockholders' Equity F-5
Statements of Cash Flows
(for six months ended December 31, 1999 and 1998) F-6
Notes To Financial Statements F-7 through F-11
</TABLE>
2
<PAGE> 3
FINANCIAL STATEMENTS
In the opinion of the management of V-Twin Acquisitions, Inc. (the Company),
the accompanying unaudited interim combined financial statements contain all
adjustments necessary of a fair presentation of the Company's financial
condition as of December 31, 1999 and June 30, 1999, and the results of its
operations and cash flows for the three month and six month periods ended
December 31, 1999 and December 31, 1998.
The accompanying unaudited combined 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
combined financial statements included in the Company's Form 10-KSB filed
December 2, 1999.
F-1
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V-TWIN ACQUISITIONS, INC. AND AFFILIATE
COMBINED BALANCE SHEETS
DECEMBER 31, 1999 AND JUNE 30, 1999
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
December 31, 1999 June 30, 1999
----------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 70,395 $ 220,460
Investments 131,802 125,000
Accounts receivable, net of allowance for 62,400 61,068
doubtful accounts of $53,158 @
June 30, 1999
Inventory, net 1,982,906 1,080,733
Prepaid expenses 19,635 33,513
---------------------- ---------------------
Total current assets 2,267,138 1,520,744
Property and equipment, net 73,437 10,966
---------------------- ---------------------
Total assets $ 2,340,575 1,531,740
====================== =====================
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, 1999 June 30, 1999
------------------ -------------
<S> <C> <C>
Current liabilities:
Short-term debt $ 1,570,664 $ 927,100
Lease commitments 45,448 --
Accounts payable 281,747 127,549
Accrued expenses 53,415 67,823
Advances from Stockholders 65,000
Customer deposits 46,692 50,781
---------------------- ---------------------
Total current liabilities 2,062,966 1,173,253
====================== =====================
Commitments and contingencies -- --
Stockholders' equity:
Common stock 3,700 3,600
Additional paid-in capital 734,900 568,000
Accumulated deficit (460,991) (213,113)
---------------------- ---------------------
Total stockholders' equity 277,609 358,487
---------------------- ---------------------
Total liabilities and stockholders' equity $ 2,340,575 $ 1,531,740
====================== =====================
</TABLE>
See accompanying notes to combined financial statements
F-2
<PAGE> 5
V-TWIN ACQUISITIONS, INC. AND AFFILIATE
COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
------------------------ ---------------------------
<S> <C> <C>
Revenues:
Sales income $ 841,147 $ --
Service income 89,178 --
------------------------ ---------------------------
Total revenues 930,325 --
Cost of goods sold 616,587 --
------------------------ ---------------------------
Gross margin 313,738 --
Operating expenses (457,267) (14,148)
Operating loss (143,529) (14,148)
------------------------ ---------------------------
Other expenses:
Interest expense (12,457) --
------------------------ ---------------------------
Net loss (155,986) (14,148)
======================== ===========================
Net loss per common share:
Basic and diluted (.05) .00
Weighted average number
of outstanding common shares 3,700,000 3,000,000
</TABLE>
See accompanying notes to combined financial statements
F-3
<PAGE> 6
V-TWIN ACQUISITIONS, INC. AND AFFILIATE
COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------------- -------------------------
<S> <C> <C>
Revenues:
Sales income $ 2,251,424 $ --
Service income 184,650 --
----------------------- -------------------------
Total revenues 2,436,074 --
Cost of goods sold (1,710,782) --
----------------------- -------------------------
Gross margin 725,292 --
Operating expenses (946,626) (24,148)
Operating loss (221,334) (24,148)
----------------------- -------------------------
Other expenses:
Interest expense (26,544) --
----------------------- -------------------------
Net loss (247,878) (24,148)
======================= =========================
Net loss per common share:
Basic and diluted (.07) (.01)
Weighted average number
of outstanding common shares 3,700,000 3,000,000
</TABLE>
See accompanying notes to combined financial statements
F-4
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V-TWIN ACQUISITIONS, INC. AND AFFILIATE
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED DECEMBER 31,1999
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Add. Paid Accumulated Total Stockholders'
------------- --------- ----------- ------------------
Shares Amount in Capital Deficit Equity
------ ------ ---------- ------- ------
<S> <C> <C> <C> <C> <C>
Balance June 30, 1999 3,600,100 $ 3,600 $ 568,000 $ (213,113) $ 358,487
============================================================================================================================
Issuance of 100,000
(par $.001) common
shares at $1.67 100,000 $ 100 $ 166,900 -- $ 167,000
Net loss for the
three months ended
Sept. 30, 1999 -- -- -- $ (91,892) $ (91,892)
============================================================================================================================
Balance Sept. 30, 1999 3,700,100 $ 3,700 $ 734,900 $ (305,005) $ 433,595
============================================================================================================================
Net loss for the
three months ended
Dec. 31, 1999 -- -- -- $ (155,986) $ (155,986)
============================================================================================================================
Balance Dec. 31, 1999 3,700,100 $3,700 $734,900 $ (460,991) $ 277,609
</TABLE>
See accompanying notes to combined financial statements
F-5
<PAGE> 8
V-TWIN ACQUISITIONS, INC. AND AFFILIATE
COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (247,878) $ (24,148)
Adjustments to reconcile net loss to
net cash used in operating activities --
Depreciation 7,179 --
Changes in operating assets and liabilities:
Decrease(Increase) in:
Accounts receivable (1,332) --
Inventory (902,173)
Prepaid expenses 13,878
Accounts payable 154,198
Accrued expenses (14,408) (24,148)
Customer deposits (4,089) --
---------------------- ---------------------
Net cash used in operating activities (994,625) (24,148)
---------------------- ---------------------
Cash flows from investing activities:
Additions to property and equipment (69,650) --
Deposit on purchase of fixed assets (50,000)
Investments purchased (6,802) --
---------------------- ---------------------
Net cash used in investing activities (76,452) (50,000)
---------------------- ---------------------
Cash flows from financing activities:
Repayments of short-term debt 689,012
Proceeds from Stockholder Loan 65,000
Proceeds from sale of common stock 100 --
Proceeds from additional paid in capital 166,900 50,000
---------------------- ---------------------
Net cash provided by financing
activities 921,012 50,000
---------------------- ---------------------
Net increase (decrease) in cash (150,065) (24,148)
Cash at beginning of period 220,460 50,148
---------------------- ---------------------
Cash at end of period $ 70,395 $ 26,000
====================== =====================
</TABLE>
See accompanying notes to combined financial statements
F-6
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V-TWIN ACQUISITIONS, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS
(Unaudited)
1. Organization
V-Twin Acquisitions, Inc. (the "Company"), was organized under the laws of the
District of Columbia on July 10, 1998. On July 10, 1998, the Company completed
a merger with Commercial Indemnity Underwriters, Inc. ("CIU") with the Company
as the surviving entity. CIU, formerly known as American Solid Fuel, Inc.
("ASFI"), was an inactive company until its merger with the Company. ASFI was
formed in August, 1988, and successfully completed a public offering through an
S-18 registration. CIU had no assets, liabilities, income or expenditures from
operations and accordingly, there was no historical carry-over basis.
V-Twin Acquisitions, Inc. of Virginia (the "Affiliate") is a privately-held
corporation organized under the laws of Virginia on March 30, 1999 to own and
operate motorcycle dealerships in Virginia.
The Company intends to acquire independent motorcycle dealerships and create a
nationwide marketing, distribution and retail organization that leverages
multiple sources of sales and sales leads, including internet commerce, direct
marketing, retail sales and service.
2. Summary of Significant Accounting Policies
Basis of Presentation - The combined financial statements of the Company
include the accounts of its affiliate, V-Twin Acquisitions, Inc. of Virginia.
All significant intercompany balances and transactions have been eliminated.
Accounting Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the associated amounts
of revenues and expenses during the period reported. Actual results could
differ from the estimates.
Allowance for Doubtful Accounts - The Company uses the allowance method of
recognizing bad debts. Specifically identified uncorrectable accounts are
charged against the allowance.
Inventory Valuation - Inventory is valued at the lower of cost or market using
the average cost method. Obsolete or damaged goods are reduced to estimated net
realizable values.
Cash Equivalents - For purposes of the combined 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.
Concentrations of Credit Risk - Financial instruments that potentially subject
the Company to a concentration of credit risk consist principally of temporary
cash investments and accounts receivable. The Company has cash investment
policies that restrict placement of these investments to financial institutions
that are evaluated as highly creditworthy. The carrying amount of accounts
receivable approximate their net realizable value.
Property and Equipment - Property and equipment are recorded at cost.
Depreciation expense of property and equipment is determined using the
straight-line method over the estimated useful lives of the assets, as follows:
Computer equipment................................... 5 years
Machinery and equipment.............................. 7 years
Maintenance and repairs are charged to expense as incurred; major renewals and
improvements are capitalized. When items of property or equipment are sold or
retired, the related cost and accumulated depreciation are removed from the
accounts and any gain or loss is included in the results of operations.
Income Taxes - Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted taxes expected to apply to taxable
income in the years in which those temporary
F-7
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differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Dividend Policy - The Company has not paid any dividends since its inception.
Management does not anticipate declaring dividends in the foreseeable future.
Earnings Per Share - Basic earnings per share is computed by dividing net
income by the weighted average number of shares outstanding for the period.
Diluted earnings per share include the dilutive effect of stock options,
warrants and contingent shares.
New Accounting Standards - In April 1998, the Accounting Standards Executive
Committee (AcSEC) issued Statement of Position (SOP) 98-5, "Reporting on the
Costs of Start-Up Activities." This SOP is effective for fiscal year 2000 and
requires that start-up costs and organizational costs be expensed as incurred
and that such costs capitalized previously be expensed as a cumulative effect
of change in accounting principle. The Company does not believe that SOP 98-5
will have a material impact on its financial position or results of operations
when such statement is adopted.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" for fiscal years
beginning after June 15, 1999. SFAS No. 133 requires the recognition of all
derivatives in the consolidated and combined balance sheet as either assets or
liabilities measured at fair value. The Company will adopt SFAS No. 133
effective for the 2000 calendar year end. Additionally, the Company does not
expect the adoption of SFAS No. 133 to have a material impact on its financial
position or results of operations since it does not engage in hedging
activities or hold derivatives.
3. Acquisitions
In April 1999, the Affiliate began its strategic acquisition program by
purchasing the ongoing operations plus certain assets and liabilities of a
retail motorcycle dealership located in Herndon, Va. The acquisition was
accounted for as a purchase, and accordingly, the operating results of the
acquired company have been included in the accompanying combined financial
statements since the date of acquisition. The aggregate purchase price was
approximately $300,000 and has been allocated to the assets and liabilities
acquired based upon their respective fair market values. No good will was
recognized in connection with this transaction.
4. Investments
Investments consist of four certificates of deposit which serve as security for
four letters of credit required to obtain inventory floorplan financing. These
investments bear interest at 4.05% with one year terms and are expected to be
held to maturity. The carrying amounts reported in the combined balance sheet
for these financial instruments are at cost, which approximates fair market
value.
5. Inventory
Inventory consists of the following:
<TABLE>
<CAPTION>
Dec. 31, 1999 June 30, 1999
--------------- ------------------
<S> <C> <C>
Motorcycles and other vehicles .............. $ 1,657,264 858,630
Parts and accessories ....................... 325,642 222,103
--------------- ------------------
$ 1,982,906 1,080,733
=============== ==================
</TABLE>
F-8
<PAGE> 11
6. Property and Equipment
Property and equipment consists of the following:
<TABLE>
<CAPTION>
Dec. 31, 1999 June 30, 1999
---------------- ----------------
<S> <C> <C>
Computer equipment .............................. $ 28,153 $ 6,662
Machinery and equipment ........................ 52,945 4,657
---------------- ----------------
81,098 11,319
Less: accumulated depreciation ............... (7,661) (353)
---------------- ----------------
$ 73,437 $ 10,966
================ ================
</TABLE>
Depreciation expense for property and equipment was $ 7,661 for the six months
ended December 31, 1999 and was $ 353 for the period from inception (July
10, 1998) to June 30, 1999.
7. Short-term Debt
The Affiliate finances its motorcycle inventory through floorplan financing
arrangements that are secured by the underlying motorcycle inventory and the
assets of the Affiliate. Investments held by the Affiliate have been pledged as
additional security to the finance companies along with personal guarantee's of
two officers and directors of the Affiliate. Finance terms range from prime to
prime plus five depending upon the number of days outstanding from the
inception date of the financing. Typically, the finance companies provide a 60
or 90 day grace period before interest is charged or accrued.
8. Commitments and Contingencies
Lease Commitments
The Affiliate entered into a ten year lease agreement beginning May 1, 1999,
for office and retail space in Herndon, VA at an initial monthly rate of
$8,850. In November, 1999, the Affiliate also placed a security deposit of
$7,850 to move its Springfield location. This location is currently under
zoning approval and refurbishment by its landlord.
The Affiliate also assumed a lease for retail space in Springfield, VA, which
expired on June 30, 1999. Subsequent to the expiration of this lease agreement,
the Affiliate entered into a month to month lease agreement at $4,800 per
month. Future minimum lease payments as of June 30, 1999 under all operating
leases greater than one year are as follows:
<TABLE>
<CAPTION>
Year ended June 30,
-----------------------------------
<S> <C>
2000 .................................. $ 108,210
2001 .................................. 120,462
2002 .................................. 130,148
2003 .................................. 136,602
2004 .................................. 142,805
Thereafter ................................... 752,657
---------------
$ 1,390,884
===============
</TABLE>
Rent expense for the three months ended December 31, 1999 was $ 41,652 and for
the period from inception (July 10, 1998) to June 30, 1999 was $28,729.
F-9
<PAGE> 12
9. Stockholders' Equity
Stockholders' equity is comprised of the following:
<TABLE>
<CAPTION>
Common stock 12-31-99 6-30-99
------------ -------------
<S> <C> <C>
Company - .001 par; 25,000,000 shares authorized; 3,700,000
shares issued and outstanding ......................................... $ 3,700 $ 3,600
Affiliate - .001 par - 100 shares, authorized, issued and
outstanding............................................................ - -
------------ -------------
Total common stock ............................................... $ 3,700 $ 3,600
============ =============
Additional paid in capital
Company.................................................................... 734,800 567,900
Affiliate.................................................................. 100 100
------------ -------------
Total additional paid in capital.................................. $ 734,900 $ 568,000
============ =============
Accumulated deficit
Company.................................................................... (97,774) (29,980)
Affiliate.................................................................. (363,217) (183,133)
------------ -------------
Total accumulated deficit ........................................ $ (460,991) $ (213,113)
============ =============
</TABLE>
Common Stock - In July, 1998, the Company merged with Commercial Indemnity
Underwriters, Inc. (CIU). In connection with this merger, all outstanding
shares of CIU were exchanged for 808,727 Class A shares and 191,273 Class B
shares. In August 1998, the Company's shareholders approved a one for three
(1:3) forward stock split and the abolishment of the existing two classes of
common stock resulting in a singular unitary class of common stock. At
September 30, 1999, the Company had 25,000,000 common shares authorized and
3,700,000 common shares issued and outstanding at a par value of .001 per
share.
In April, 1999, the Affiliate was incorporated in the state of Virginia. 100
shares of common stock were authorized and issued at par value of .001 per
share. In August, 1999, 100,000 warrants were exercised for $167,000 in cash,
resulting in the issuance of 100,000 restricted common shares.
Warrants - In March 1999, the Company issued 600,000 shares of restricted
common stock and warrants to purchase 600,000 additional shares of restricted
common stock. The warrants are exercisable at $1.67 per share for a period of
54 months in consideration for $400,000 in cash received. In August, 1999,
100,000 of these warrants were exercised for $167,000 in cash.
Additional Paid in Capital - During the period ended June 30, 1999, the Company
received cash consideration of $170,500 as additional paid-in-capital from
certain officers and directors of the Company.
10. Earnings Per Share
See Exhibit 11.
11. Related Party Transactions
Two officers and directors of the Affiliate also serve as officers and
directors of the Company. The two officers and directors of the Affiliate,
owning collectively 100% of the outstanding common stock of the Affiliate, have
agreed to pledge their shares pursuant to a trust agreement dated April 15,
1999, in consideration for the purchase of key man life insurance.
In April, 1999 the Company loaned the Affiliate $400,000 for purchase of
certain assets and liabilities of a motorcycle dealership and to provide
working capital. The loan evidenced via a promissory note is unsecured and is
due and payable in five years. Interest accrues at an annual rate of 10%. In
August, 1999, the Company loaned the Affiliate $167,000 for purchase of certain
assets and liabilities of a motorcycle dealership and to provide working
capital. The loan evidenced via a promissory note is unsecured and is due and
payable in five years. Interest accrues at an annual rate of 10%.
12. Supplemental Information to Statements of Cash Flows
Interest paid during the six month period ended December 31, 1999 was $ 26,544,
and from inception (July 10, 1998) to June 30, 1999 was $14,641. No federal or
state income taxes have been paid.
F-10
<PAGE> 13
In May, 1999, the Affiliate acquired motorcycle inventory with a cost basis of
$927,100 and assumed a corresponding financing liability of the same amount. At
December 31, 1999, the Affiliate had motorcycle inventory with a cost basis of
$1,657,264 and a corresponding financing liability of $1,570,664, with the
difference attributed to used motorcycles owned by the Affiliate.
In connection with the one for three (1:3) forward stock split and abolishment
of the existing two classes of common stock, $2,000 was reclassified from
additional paid-in-capital to common stock at June 30, 1999.
F-11
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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 audited
beginning financial statements and notes appearing elsewhere in this Form
10-QSB, as well as those relating to the Form 10-KSB filed on December 2, 1999.
The Company had no revenue from operations in each of the last two fiscal
years. The Company had expenses with regards to its business development and
additional costs related to its requirements as a public company.
The Company is primarily engaged in the research required in connection with
the acquisition of independent motorcycle dealerships and related businesses.
The Company itself has no sales revenues and has had no income from any
operations. The Company's only actions have been to complete the Company's
initial capitalization and to conduct the necessary SEC filings to achieve
public status. The Virginia entity sells motorcycles and related service, parts
and accessories. The Virginia entity initiated operations on May 1, 1999.
In combination with the Virginia entity, the total assets of the Company at
June 30, 1999 were $1,531,740, and at December 31, 1999 were $2,340,575, net of
an allowance for doubtful accounts of $53,158, at December 31, 1999 and June
30, 1999, which represents a shortfall in the purchase of the assets of a
motorcycle dealership undertaken by the Virginia entity in May, 1999. The
increase in the assets is due to the new 2000 model year motorcycle and ATV
units taken into inventory by the Virginia entity during the period. Total
capital in consolidation was $358,487 at June 30, 1999, and at December 31,
1999 was $277,609. In November, 1999, the Virginia entity placed a $25,000
letter of credit to secure an increase in a floor plan line to support one of
its motorcycle lines.
Total revenues for the three month period ending December 31, 1998 were $ -0-,
and were $930,325 for the three month period in 1999, and gross profit for the
three month period ending December 31, 1998 was $ -0- and for the same period
in 1999 was $313,738. In combination, the Company had a net loss for the three
month period ended December 31, 1999 of ($155,986) or ($0.05) per share in
1999, and the net loss for the same period in 1998 was ($14,148), or ($0.00)
per share.
Total revenues for the six month period ending December 31, 1998 were $ -0-,
and were $2,436,074 for the same period in 1999, and gross profit for the six
month period ending December 31, 1998 was $ -0- and for the same period in 1999
was $725,292. In combination, the Company had a net loss for the six month
period ended December 31, 1999 of ($247,878) or ($0.07) per share in 1999, and
the net loss for the same period in 1998 was ($24,148), or ($0.01) per share.
Management attributes the net loss incurred by the Company for the three and
six month periods to both the colder winter months which adversely affect
motorcycle and related parts, accessory and service sales in the Virginia
entity, and the ongoing expenses related to its requirements as a public
company.
The Company and the Virginia entity note that their financial statements are
combined pursuant to a Trust Agreement, incorporated by reference in the
previously filed Form 10-KSB filed December 2, 1999, and certain accounting
rules regarding combination, while both entities remain, and shall always
remain, separate legal entities.
3
<PAGE> 15
Plan of Operation
The Company has sufficient funds to satisfy its cash requirements for the next
12 months, and would raise funds only to acquire additional independent
dealerships. The Virginia entity expects to have sufficient funds resulting
from continuing operations to satisfy its operating cash requirements for the
next 12 months.
To the extent necessary, Mr. Schwartzbeck, CEO of V-Twin Holdings, Inc. and the
Virginia entity, Mr. Paone, President of V-Twin Holdings, Inc., and Mr.
Pignatello, Secretary of V-Twin Holdings, Inc. and the Virginia entity, are
willing to provide any and all working capital necessary for V-Twin Holdings,
Inc. and the Virginia entity for the next twelve months, should there be any
shortfall of working capital in V-Twin Holdings, Inc. and the Virginia entity.
Effective May 1, 1999, the Virginia entity purchased the assets of a two store
motorcycle dealership in the DC metropolitan area named Cycle Sport Unlimited,
Inc. It should be noted that the technique to effectuate that transaction was a
"bulk sale" agreement under the Uniform Commercial Code ("UCC") and the
Virginia Code. A Bulk Sale is the purchase of assets and the assumption of
liabilities 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 Virginia entity did not purchase any
income or earnings. As a result of the bulk purchase, no material undisclosed
liabilities surfaced, and no tax liabilities were carried forward. More
information regarding the acquisition made by the Virginia entity is
incorporated by reference herein in the Form 10-KSB filing completed on
December 2, 1999, and the subsequent Form 10-QSB filing completed on December
10, 1999.
The Company's goal is to purchase the assets and liabilities of independent
motorcycle dealerships across the country and develop an integrated, national
marketing effort that leverages retail sales, direct marketing and the
Internet.
Growth in the Motorcycle Industry
The Company found from research that the entire motorcycle industry is growing
considerably. Several sources cite information from the Motorcycle Industry
Council in supporting the statement that motorcycles are "a rising industry
growing by 20% annually". These authoritative sources include information from
the Motorcycle Industry Council, Cycle News, Harley Davidson's Securities and
Exchange Commission filings on Form 10-K, various press releases disseminated
by Reuters, Polaris Industries, Excelsior Henderson Motorcycle Co., Harley
Davidson, and the regional sales statistics from the Yamaha Motorcycle Division
of Yamaha Industries.
For more information regarding industry growth, please see the Form 10-SB/A-3
filed on February 19, 1999 at pages 7 through 9, and exhibits 99.2, 99.3, and
99.5 incorporated by reference in the Form 10-KSB filed December 2, 1999.
Liquidity and Capital Resources
The Company anticipates meeting its working capital needs during the 2000
fiscal year from capital raised through the common stock already sold to its
control
4
<PAGE> 16
shareholders. It is also investigating the possibility of other financing to
provide additional acquisition capital and to further its acquisition program.
Although it has not made any arrangements or definitive agreements, it is
contemplating both the private placements of securities and/or a public
offering.
In the opinion of management, inflation has not had a material effect on the
operations of the Company.
PRODUCTS AND MARKETS
The Virginia entity is primarily engaged in retail sales of several well-known
brands of motorcycles, as well as ATV's and personal watercraft, related parts
and accessories, and the service of these products.
As recreational products, motorcycles, ATV's and personal watercraft 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.
The motorcycle industry is large and very fragmented. This is supported by
industry data, primarily the 1998 Motorcycle Statistical Annual Report issued
by the Motorcycle Industry Council. This report states that $6.4 billion in
retail sales were generated by over 12,581 franchised and non-franchised
motorcycle retail outlets. Please see Exhibit 99.10 incorporated by reference
in the Form 10-KSB filed December 2, 1999.
There are several factors and changes in the motorcycle retailing industry
which the Company believes provide attractive consolidation opportunities for
groups with significant equity capital and managers experienced in identifying,
acquiring and professionally managing dealerships. The primary factor that the
Company believes provides a consolidation opportunity is that the motorcycle
retailing industry is very fragmented, with over 12,581 retail outlets in 1998.
The majority of these dealerships are privately owned and operated. Dealership
costs are growing as capital costs of opening new dealerships are increasing
and franchising costs require a dealer to carry substantial inventories. For
many dealers there are few alternative exit strategies other than selling to a
growing dealership group, especially for larger dealerships and dealership
owners nearing retirement. The Company believes that these factors may provide
attractive consolidation opportunities.
More information regarding the control of motorcycle manufacturers over
acquisitions and dealers under the headings "Manufacturers' Consent to
Acquisitions and Market Expansion" and "Motorcycle Manufacturers' Control Over
Dealers".
MANUFACTURERS' CONSENT TO ACQUISITIONS AND MARKET EXPANSION
Motorcycle manufacturers yield considerable control over the dealerships that
carry their brands through franchise agreements. If there is a change of
control in the dealership, the New Dealer must obtain consent from each
manufacturer to continue to carry that manufacturer's brand of motorcycle. In
determining whether to approve changes of control, manufacturers may consider
5
<PAGE> 17
any number of subjective factors. These may include the financial condition
and ownership structure of the New Dealer. The manufacturers may impose
conditions to the change of control, including limiting the number of such
manufacturers' franchised dealers that may be acquired by the New Dealer. The
manufacturers are under no obligation to approve changes in control or
acquisitions, to disclose their reasons for accepting or rejecting an
acquisition or by abiding by objective and publicly disclosed measurements by
which they approve changes in control.
The ability of a future subsidiary and/or affiliate corporation 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. The Company can make 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 includes acquiring non-franchised and/or
independent motorcycle dealerships that are not restrained by manufacturers'
dealer agreements.
MOTORCYCLE MANUFACTURERS' CONTROL OVER DEALERS
The major motorcycle manufacturers exercise significant control over the
operations of their franchised dealerships. In addition to yielding control
over changes in dealer ownership, many manufacturers control the dealer's
geographic selling area. In these cases, the dealer has an exclusive right to
sell the franchised manufacturers' products within a given protected
geographical area. The dealer may not promote or sell its products to customers
residing outside of its geographical area. The manufacturers also impose
customer satisfaction and market share goals. If a dealer fails the
requirements of its dealer agreement, then the manufacturer may (i) impose
additional conditions in subsequent dealer agreements; (ii) terminate its
dealer agreement (iii) limit allocations of inventory; (iv) reduce
reimbursement rates for warranty work performed by the dealer; and/or (v) deny
approval of future acquisitions.
COMPETITION
V-Twin, as a proposed consolidator of independent motorcycle dealerships, has
no direct competition. V-Twin is a public company which proposes to purchase
independent motorcycle dealerships that are traditionally held by private
owners. The Company's knows of no other publicly traded company that conducts
business in acquiring and/or consolidating the retail motorcycle market. While
the vast majority of motorcycle dealers are single store operations that are
family owned style dealership, there are several privately-owned dealerships
that own multiple retail locations and seek to acquire additional locations.
Increased competition for acquisition candidates may increase purchase prices
for acquisitions to levels beyond the Company's financial capability or to
levels that would not result in the desired returns.
V-Twin's competitive position within the industry will be largely determined by
its ability to offer competitive motorcycle brands and models, and its ability
6
<PAGE> 18
to offer value and service to its customers, both in the factory replacement
parts retail sector and in the service sector.
DISTRIBUTION
The majority of the Virginia entity's motorcycles were purchased and shipped
directly to its stores from their franchise manufacturers. In addition to
motorcycles, the Virginia entity purchases for resale after market parts and
accessories, such as side cars, wearing apparel, helmets, saddlebags, custom
exhausts, seats, handle bars, light bars, sissy bars, and touring luggage.
The Virginia entity operates pursuant to franchise agreements between each
motorcycle manufacturer or their authorized distributor. The Virginia entity is
significantly dependent on its relationship with such manufacturers for
distribution (and subsequent sales) of motorcycles and related products. The
manufacturers control many aspects of a dealer's business, as described in the
above section entitled "MOTORCYCLE MANUFACTURERS' CONTROL OVER DEALERS".
OPERATIONS
Many phases of the Virginia entity's operations are subject to influences
outside its control. Any singular factor, or combination of factors, could
materially affect its results. These factors include: the cost of goods,
competitive pressures, inflation, consumer debt levels, currency exchange
fluctuations, trade restrictions, changes in tariff and freight rates, interest
rate fluctuations and other capital market conditions.
Forward-looking statements that are made, or others make on its behalf, are
based on knowledge of the Company's business and the environment in which it
operates. However, because of the factors listed herein, actual results may
differ from those in the forward-looking statements. Consequently, all of the
forward-looking statements made are qualified by these and other cautionary
statements. The Company can make no assurance that the actual results or
developments it anticipates will be realized or, even if substantially
realized, that they will have the expected consequences to or effects on the
Company or its business or operations.
SEASONALITY
The Virginia entity will experience significant seasonal fluctuations in
motorcycle sales. Summer sales are generally twice as great as winter sales.
Weather conditions, specifically a harsh and long winter season, is likely to
adversely affect sales.
GOVERNMENT REGULATION
Motorcycle sales are subject to certain government regulations. Motorcycles are
subject to the emissions and noise standards of the U.S. Environmental
Protection Agency and the more stringent emissions standards of various State
agencies. Motorcycles are also subject to the National Traffic and Motor
Vehicle Safety Act and the rules promulgated thereunder by the National Highway
Traffic Safety Administration. Federal, state and local authorities have
adopted various standards relating to air, water, helmet rules and noise
pollution. Additionally, the Federal Trade Commission applies regulations over
franchised
7
<PAGE> 19
businesses and dealerships. Any of these regulations may affect the Company's
operations as well as those of the motorcycle manufacturers. The Virginia
entity's facilities comply with all such regulations and standards, and that
current production levels of motorcycles will continue in line with the
increasing interest in motorcycles, ATVs and personal watercraft. Finally, the
Virginia entity is subject to the laws of Department of Motor Vehicle for the
Commonwealth of Virginia regarding motorcycle dealerships.
EMPLOYEES
As of December 31, 1999, the Company itself had no full-time employees. The
Holding Company anticipates adding home office supervisory, marketing and
administrative staff as the Company furthers its business. The Virginia entity
had approximately 30 employees in sales, service and administration, and the
Virginia entity provides those employees with health insurance. The Virginia
entity is not subject to any collective bargaining agreements.
CUSTOMER BASE
The Virginia entity is not dependent on any one major or any few select
customers. The Virginia entity's sales are the result of comprehensive
advertising campaigns, referrals and re-sales to old customers. The Virginia
entity enjoys the benefit of its customers who have purchased various items
from the previous owner for the past 27 years.
RESEARCH AND DEVELOPMENT
The Company has conducted specific research required in connection with the
acquisition of independent motorcycle dealerships. Research and development is
limited to a study of the retail motorcycle industry, and finding, evaluating
and negotiating the purchase of independent motorcycle dealerships to be
acquired. Research and development is a critical factor to the Company's
success. Sound business decisions in finding and closing the purchase of
acquisitions in the unconsolidated motorcycle dealership market will lead to
success for V-Twin and its shareholders.
GROWTH STRATEGY
The Company intends to acquire independent motorcycle dealerships throughout
the United States. The Company intends to initially acquire several dealerships
that will serve as regional bases of operations. The Company seeks to acquire
dealerships that have superior operating and financial managers and benefit
from their market knowledge, customer base and local reputation. By acquiring
additional dealerships the Company will increase its total consolidated sales
and profits. These acquisitions should produce opportunities for additional
operating efficiencies, promote increased name recognition and provide the
Company's affiliates and itself with better opportunities for repeat and
referral business.
Once an acquisition or asset purchase has been completed, the Company intends
to review and potentially reorganize business operations, corporate
infrastructure and systems, and financial controls. Unforeseen expenses,
difficulties, and delays frequently encountered in connection with rapid
expansion through
8
<PAGE> 20
acquisitions could inhibit the Company's growth and negatively impact
profitability.
While V-Twin feels that certain segments of the motorcycle industry may be
available for consolidation, there are several factors which are inherently
problematic in acquiring independent motorcycle dealerships. Some of these
inherent problems are the fact that, typically, motorcycle dealerships have
substandard accounting practices and controls, and are typically not audited.
V-Twin, as a proposed consolidator of independent dealerships, will sustain
such problems and expenses as it conducts its assets purchases and/or
acquisitions to make such new affiliates and/or subsidiaries able to comply
with standard accounting practices.
The Company can make no assurance that suitable acquisition candidates will be
identified, that acquisitions of such candidates will be consummated, or that
the operations of any acquired businesses will be successfully integrated into
the Company's operations and managed profitably without substantial costs,
delays, or other operational or financial difficulties.
ANTI-TAKEOVER EFFECT OF ARTICLES AND BYLAW PROVISIONS
The Company's Articles of Incorporation provide that up to 50,000,000 shares of
common stock and 2,000,000 shares of preferred stock may be issued by the
Company from time to time in one or more series. On November 27, 1998, the
Board, authorized by the shareholders, merged these classes into one unitary
class with one vote per share.
V-Twin's Articles of Incorporation authorize the Board of Directors with
various rights, including the rights to (i) determine the rights, preferences,
privileges and restrictions granted to and imposed upon any unissued series of
preferred stock; (ii) fix the number of shares of any series of preferred stock
and the designation of any such series, without any vote or action by the
Company's stockholders; (iii) authorize and issue preferred stock with voting
or conversion rights that could adversely affect the voting power or other
rights of the holders of Common Stock; (iv) issue preferred stock that could
have the effect of delaying, deferring or preventing a change in control of the
Company; and (v) fix the number of directors in the Bylaws with no minimum or
maximum number of directors required. The effect of these provisions may be to
delay or prevent a tender offer or takeover attempt that a stockholder might
consider to be in his best interest, including attempts that might result in a
premium over the market price for the shares held by the stockholders.
CHANGES IN CONSUMER SPENDING, ECONOMIC CONDITIONS OR TAX LAWS
The Virginia entity's operations depend upon a number of factors relating to or
affecting consumer spending for discretionary goods such as motorcycles. The
Virginia entity's operations may be adversely affected by economic developments
that reduce consumer spending in its markets. In an economic downturn, consumer
discretionary spending levels generally decline. Rising interest rates could
have a negative impact on consumers' ability or willingness to finance
motorcycle purchases. Local influences, such as corporate downsizing and
military base closings, could adversely affect the Company's operations in
certain markets. Changes in federal and state tax laws, such as an imposition
of luxury taxes on leisure time products, also could influence consumers'
decisions
9
<PAGE> 21
to purchase products offered by the Virginia entity. These factors could
adversely affect the ability of the Virginia entity or future affiliates and/or
subsidiaries to sell its products. There can be no assurance that the Company
could maintain its profitability during any such period of adverse economic
conditions or low consumer confidence could have a negative effect on the
Company's sales.
DILUTION THROUGH ISSUANCE OF STOCK
The Company's operating results may fluctuate substantially from quarter to
quarter due to the size, timing, and integration of any future acquisitions.
Consequently, operating results for any quarter may not be indicative of the
results that may be achieved for any subsequent quarter or for a full fiscal
year. These fluctuations could adversely affect the market price of the Common
Stock.
The Company's ability to grow by acquiring additional dealers will depend upon
several factors. These include (i) the availability of suitable acquisition
candidates at attractive purchase prices; (ii) its ability to compete
effectively for available acquisition opportunities; (iii) the availability of
funds or the market price of the Company's common stock; (iv) its ability to
obtain the requisite government licensing approvals; and (v) its ability to
obtain the necessary franchising agreements with manufacturers. Additionally,
one or more manufacturers may attempt to impose further restrictions on us in
connection with their approval of acquisitions.
FUTURE CAPITAL NEEDS; DEBT SERVICE REQUIREMENTS; POSSIBLE DILUTION THROUGH
ISSUANCE OF STOCK
The Company's future capital requirements will depend upon the size, timing,
and structure of future acquisitions and its working capital and general
corporate needs. To the extent that future acquisitions are wholly are
partially financed through common stock or securities convertible into or
exercisable into common stock, the voting power of existing stockholders will
be diluted and earnings per share could be reduced. The extent to which the
Company will be able or willing to use common stock for acquisitions will
depend on the market value of V-Twin's common stock from time to time. It will
also depend on the willingness of potential sellers of dealerships to accept
common stock as full or partial consideration. The Company's growth could be
materially limited if the Company is unable to use V-Twin's common stock as
consideration in acquisitions, to generate cash from operations, or to obtain
additional debt or equity financing.
Any borrowings made to finance future acquisitions or for operations could make
the Company more vulnerable to a downturn in its operating results, a downturn
in economic conditions, or increases in interest rates on borrowings that are
subject to interest rate fluctuations. If the Virginia entity's cash flow from
operations is insufficient to meet its debt service requirements, the Company
could be required to sell additional equity securities, refinance its
obligations, or dispose of assets in order to meet its debt service
requirements.
Additionally, it is likely that the Virginia entity and future affiliates must
comply with financial and operational covenants of their current or future
10
<PAGE> 22
credit arrangements. These covenants are likely to include limitations on both
capital expenditures and increases in indebtedness.
There can be no assurance that such financing will be available if and when
needed or will be available on terms acceptable to V-Twin, the Virginia entity
or future affiliates and/or subsidiaries. The failure to obtain sufficient
financing on favorable terms and conditions could have a material adverse
effect on the Company's growth prospects and its business, financial condition,
and results of operations.
YEAR 2000 COMPLIANCE
As of the date of this filing, the Company and the Virginia entity did not
experience any material problems, either internal or regarding any third party,
concerning the Year 2000 issue.
V-Twin has determined that Year 2000 issues will not have a material effect on
its business. V-Twin's computer system comprises one stand-alone computer
operating Windows NT as an operating system. Embedded technology and
microcontrollers are not a part of the Company's operations. The Company, by
itself, is currently Year 2000 compliant.
Given the worldwide effect of Year 2000 problems, it is likely that some
disruption in relationship with vendors, suppliers and customers will occur,
even if such entities are Year 2000 compliant. At present, V-Twin does not feel
that the Year 2000 problem will be material to business, results of operations
and financial condition.
The Virginia entity is dependent upon its point-of-sale ("POS") software and
began the remediation process for Y2K in June, 1999 by upgrading its POS system
and accounting software to which it interfaces, namely Comptron and RealWorld,
respectively. It installed the new software and hardware upgrades provided by
these vendors in mid-December, 1999.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are, at present, no legal proceedings in which the Company is involved,
either as plaintiff or defendant.
ITEM 2. CHANGES IN SECURITIES
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. The Board of Directors
instituted this change at a Board meeting in November, 1998. 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 was also done at a Board meeting in
November, 1998.
11
<PAGE> 23
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.
Information regarding the sales of equity securities to private accredited
investors under the 4(2) exemption can be found in the Form 10-KSB filed
December 2, 1999 at page 4 and in the Notes to Financial Statements thereto
under paragraph 14 "Subsequent Events", and in this filing under footnote 9 on
page F-9. No underwriter was utilized in that transaction.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Matters were submitted to a vote of security holders during the period covered
by this report, through the solicitation of an information statement. This
information statement is incorporated by reference in the Form 10-KSB filed
December 2, 1999 as Exhibit 99.11.
The Company's annual meeting occurred on August 31, 1999. All Directors
continued their service on the Board of Directors. The Registrant did not
solicit proxies. This Board of Directors was previously reported to the
Commission and was re-elected in its entirety. The shareholders at the meeting
also confirmed the Board's decision to utilize the services of Kaufman Davis,
PC for the audit for the period of inception through June 30, 1999.
ITEM 5. OTHER INFORMATION
At a meeting of the Board of Directors on December 4, 1999, the Board elected
to change the name of the Company to V-Twin Holdings, Inc. The Board
anticipates this name change to be ratified by the shareholders of the
corporation at the next shareholders' meeting, scheduled to take place on
August 31, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS. The following exhibits are filed or incorporated by
reference as part of this report.
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession.(1)
(3) Articles of Incorporation and by-laws.(1)
(10) Material contracts.(1)
(11) Statement re computation of per share earnings. Attached hereto.
(21) Subsidiaries/Affiliates of the Registrant. Attached hereto.
(27) Financial data schedule. Attached hereto.
12
<PAGE> 24
(99) Additional Exhibits.(1)
(99.1) American Solid Fuel, Inc. S-18 effective notice
dated August 2, 1989 and Prospectus.(1)
(99.2) "The Motorcycle Industry" by Mike Paschke.(1)
(99.3) Reuters News Release-"Harley Rides Out US Motorcycle
Boom".(1)
(99.4) Antitrust Law and Economic Review by Charles E.
Mueller.(1)
(99.5) Cycle News - "In the Wind".(1)
(99.6) 1998 Yamaha Industry Comparison Data.(1)
(99.7) V-Twin control shareholders letters re: additional
paid in capital.(1)
(99.8) Form D - Notice of Sale of Securities Pursuant to
Regulation D, Section 4(6), and/or Uniform Limited
Offering Exemption.(1)
(99.9) Trust Agreement.(2)
(99.10) Motorcycle Industry Council 1998 Annual Report
(selected pages). (2)
(99.11) Information Statement.(2)
(1) Previously filed as an exhibit to V-Twin's Form 10-SB and amendments
thereto filed on November 12, 1998 and February 19, 1999.
(2) Previously filed as an exhibit to V-Twin's Form 10-KSB filed on
December 2, 1999.
(B) No reports on Form 8-K were filed during the quarter for which this
report is filed.
13
<PAGE> 25
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 14, 2000
V-Twin Holdings, Inc.
/s/ Richard Paone
- -----------------
Richard Paone, President and Director
/s/ Ted Schwartzbeck
- --------------------
Ted Schwartzbeck, CEO and Director
/s/ Jay Pignatello
- ------------------
Jay Pignatello, Secretary and Director
14
<PAGE> 1
EXHIBIT 11
V-TWIN HOLDINGS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Three Months
Ended Dec. 31, Dec. 31,
1999 1998
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares Outstanding......................................... 3,700,000 3,000,000
Weighted average shares outstanding........................ 3,700,000 3,000,000
Net Income (Loss).......................................... $ (155,986) $ (14,148)
Total Net Income (Loss) Available for Common Stockholders' $ (155,986) $ (14,148)
=========== ==========
Basic and Diluted Earnings (Loss) Per Share:
Earnings (Loss) Per Share $(0.05) $0.00
------- =====
</TABLE>
V-TWIN HOLDINGS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Six Months
Ended Dec. 31, Dec. 31,
1999 1998
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares Outstanding......................................... 3,700,000 3,000,000
Weighted average shares outstanding........................ 3,700,000 3,000,000
Net Income (Loss)........................................... $(247,878) $ (24,148)
Total Net Income (Loss) Available for Common Stockholders' $(247,878) $ (24,148)
=========== ==========
Basic and Diluted Earnings (Loss) Per Share:
Earnings (Loss) Per Share $(0.07) $(0.01)
======= =======
</TABLE>
<PAGE> 1
(21) Subsidiaries/Affiliates of the Registrant.
V-Twin Acquisitions, Inc. of Virginia - Affiliate
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 70,395
<SECURITIES> 0
<RECEIVABLES> 62,400
<ALLOWANCES> 53,158
<INVENTORY> 1,982,906
<CURRENT-ASSETS> 2,267,138
<PP&E> 73,437
<DEPRECIATION> 7,661
<TOTAL-ASSETS> 2,340,575
<CURRENT-LIABILITIES> 2,062,966
<BONDS> 0
0
0
<COMMON> 3,700
<OTHER-SE> 734,900
<TOTAL-LIABILITY-AND-EQUITY> 2,340,575
<SALES> 841,147
<TOTAL-REVENUES> 930,325
<CGS> 616,587
<TOTAL-COSTS> 457,267
<OTHER-EXPENSES> 12,457
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 155,986
<INCOME-TAX> 0
<INCOME-CONTINUING> 155,986
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 155,986
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
