Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
Commission File Number 33-8817-D
For the quarter ended September 30, 1999
NORTON MOTORCYCLES, INC.
(Exact Name of Registrant as Specified in its Charter)
COLORADO 84-1036901
------------------------------ ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6462 City West Parkway - Suite 150
Eden Prairie, MN 55344
(Address of Principal Executive Offices) (Zip Code)
(612) 837-0260
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirement for the past 90 days.
Yes X No
- -
The number of shares outstanding of Company's common stock, no par value
per share, at November 8, 1999 was approximately 7.1 million shares.
1
<PAGE>
Norton Motorcycles, Inc.
Quarterly Report on Form 10-QSB
Part 1 - Financial Information
Item 1 - Financial Statements
Norton Motorcycles, Inc.
(A Development Stage Company)
Unaudited Condensed Balance Sheet
(In Thousands, Except Per Share Data)
September 30 and March 31, 1999
March 31 September 30
1999 1999
Assets ------------ ------------
Current assets
Cash $0 $0
Other 1
------------
Total current assets 1
Property and Equipment
Assembly plant - held for sale 502
Equipment 105
------------
Total property and equipment 607
Trademarks 451
------------ ------------
Total assets $0 $1,059
============ ============
Liabilities and stockholders' equity (deficit)
Current liabilities
Accounts payable $0 $350
Bank overdraft 6
Accrued liabilities 227
Short term secured debt 150
Current maturities of debt and advances 200
------------
Total excluding debt subject to acceleration 933
Debt subject to acceleration 1,095
------------
Total including debt subject to acceleration 2,028
Advances from Genesis 423
Stockholders' equity (deficit)
Common stock, no par value, 400,000,000
shares authorized, 999,611
and 7,067,994 shares issued and
outstanding at March 31, 1999 and
September 30, 1999, respectively 296 424
Deficit accumulated during development
stage (296) (1,816)
------------ ------------
Total stockholders' (deficit) 0 (1,392)
------------ ------------
Total liabilities and stockholders' deficit $0 $1,059
============ ============
2
<PAGE>
Norton Motorcycles, Inc
(A Development Stage Company)
Unaudited Condensed Statement of Operations
(In Thousands, except per share data)
Six Months Ended September 30, 1999 and 1998
Six Month Period Cumulative
Ended September 30 amount from
---------------------- inception
1998 1999 -------------
---------- ----------
Expenses
Research and development $0 $550 $550
Administration and marketing 641 937
Stock based compensation 264 264
---------- ---------- -------------
Total expenses 0 1,455 1,751
Interest expense 65 65
---------- ---------- -------------
Loss before taxes 0 (1,520) (1,816)
Income taxes
---------- ---------- -------------
Net (loss) 0 (1,520) ($1,816)
=============
Accumulated deficit, beginning of period (296) (296)
---------- ----------
Accumulated deficit, end of period ($296) ($1,816)
========== ==========
Weighted average number of shares 999,611 6,401,067
========== ==========
Loss per share $0.00 ($0.24)
========== ==========
See accompanying notes
3
<PAGE>
Norton Motorcycles, Inc
(A Development Stage Company)
Unaudited Condensed Statement of Operations
(In Thousands, except per share data)
Three Months Ended September 30, 1999 and 1998
Three Month Period
Ended September 30
----------------------
1998 1999
---------- ----------
Expenses
Research and development $0 $304
Administration and marketing 473
Stock based compensation 86
---------- ----------
Total expenses 0 863
Interest expense 50
---------- ----------
Loss before taxes 0 (913)
Income taxes
---------- ----------
Net (loss) 0 ($913)
========== ==========
Weighted average number of shares 999,611 7,067,994
========== ==========
Loss per share $0.00 ($0.13)
========== ==========
See accompanying notes.
4
<PAGE>
<TABLE>
Norton Motorcycles, Inc.
(A Development Stage Company)
Unaudited Condensed Statement of Cash Flows
(In Thousands)
Six Months Ended September 30, 1999 and 1998
<CAPTION>
Six Month Period Cumulative
Ended September 30 amount from
1998 1999 inception
---------- ---------- -------------
<S> <C> <C> <C>
Cash (used by) operating activities
Net loss $0 ($1,520)
Adjustments to reconcile net loss to cash (used by)
operations
Stock based compensation and interest expense 287
Change in accounts payable and accrued liabilities 428
----------
Cash (used by) operations (805) ($1,077)
Cash (used in) investing activities
Addition to trademark (51) (51)
Other (8) (8)
---------- -------------
Cash (used in) investing activities (59) (59)
Cash from (used by) financing activities
Proceeds from issuing common stock 272
Proceeds from Bridge Loan financing 695 695
Proceeds from Genesis advances 523 523
Proceeds from short term debt 75 75
Repayment of short term debt (75) (75)
Payment of accounts payable liabilities assumed (354) (354)
---------- -------------
Net cash from financing activities 864 1,136
---------- ---------- -------------
Net increase in cash 0 0 0
Cash at beginning of period 0 0
---------- ---------- -------------
Cash at end of period $0 $0 $0
========== ========== =============
See accompanying notes
</TABLE>
5
<PAGE>
Norton Motorcycles, Inc.
(A Development Stage Enterprise)
Notes to Unaudited Financial Statements
September 30, 1999
1. The Company, Liquidity, Going Concern Considerations and Recent
Developments
Norton Motorcycles, Inc. (Norton or the Company), a development stage
enterprise, was organized in 1986 for the purpose of evaluating and seeking
merger candidates. Through March 1999, the Company had no operations other
than management had been seeking merger or other business opportunities.
As discussed in Note 3, in April 1999 the Company acquired the trade name
Norton and certain assets that were being used to develop a line of high
performance motorcycles (the Asset Purchase). Also in April 1999 the
Company's name was changed to Norton Motorcycles, Inc. from Hallmark
Properties, Inc.
On October 1, 1999 the Company commenced proceedings in the English High
Court against its former engineering consultants, MCD, for relief including
delivery up of prototype motorcycles and design drawings. MCD is defending
that claim and has indicated that it intends to pursue a claim to ownership
of the designs and/or prototypes and a claim for substantial damages that
it has estimated to be in excess of $1.7 million. Although the outcome of
this dispute is uncertain, the Company's English solicitors have advised
the Company that they believe that it is unlikely that MCD's claims to the
designs and prototypes and to damages sought will be sustained.
Since the commencement of these proceedings the Company has received advice
that places in question previous assessments as to the development and
viability of the designs previously provided to the Company. Based on such
advice the Company now believes that it is unlikely that it will complete
the development of its previously announced motorcycle product line. The
Company is seeking an independent third party evaluation of the designs and
prototypes and it will be in a position to provide further details upon
receipt of that evaluation. The Company may have to make further
application to the English Court in order to secure such an inspection.
Consequently, management is in discussions with various high quality engine
and component suppliers about an alternative product line. Although
management believes that it can introduce a successful line of Norton
branded motorcycles into the marketplace, it cannot predict when such line
will be introduced. Additionally, the introduction of such motorcycle line
will require that the Company obtain significant additional capital
resources in amounts not yet quantified.
In June 1999, NMI Investments, LLP (NMI Investments) agreed to provide a $1
million Bridge Loan facility to the Company and to acquire $4 million of a
previously contemplated preferred stock offering. As of November 8, 1999
NMI Investments had advanced approximately $695 thousand under such Bridge
Loan facility. In response to the Company's assessment that it may not
complete the development of its previously announced product line, NMI
Investments has informed the Company that a substantial change in the
business and the operations of the Company has occurred, and that
therefore, it is withholding any additional funding under the Bridge Loan
and it has withdrawn its previously contemplated $4 million funding
commitment
As of September 30, 1999 the Company's current liabilities aggregated
approximately $933 thousand excluding $1.1 million of debt for which
payment may be accelerated. The maturity of the debt may be accelerated
because the Company has not made contractual interest payments. As of
6
<PAGE>
November 8, 1999, the Company had no significant cash resources available.
The Company is currently seeking to obtain short-term financing to fund the
Company's operations until longer-term financing is secured. The Company
requires additional cash resources in the immediate future to continue as a
going concern and to continue its efforts to introduce a line of high
performance motorcycles into the marketplace. There can be no assurance
that any such additional financing can or will be obtained on terms and
conditions favorable, or acceptable, to the Company, or at all. In the
event the Company is unable to secure additional immediate short-term
capital, there is substantial doubt about the Company's ability to continue
as a going concern.
.
Norton is a development stage enterprise with no revenue base. The Company
faces various significant risks and uncertainties, including, but not
limited to: the Company's ability to raise short-term and long-term
capital; the Company's ability to create product and brand name awareness;
the level of consumer acceptance of the Company's products; the Company's
ability to design, develop and market its products on a cost-effective
basis; economic trends; industry competition; the financial impacts of
changes in currency exchange rates; the outcome of existing litigation; as
well as various other risks and uncertainties, including all risks
associated with the Company being a development-stage company with limited
assets and no existing revenue base.
2. Significant Accounting Policies
The Company's fiscal year-end is March 31. The financial statements are
presented in accordance with United States generally accepted accounting
principles and are stated in United States dollars.
The September 30, 1999 condensed balance sheet and related condensed
statements of operations and cash flows for each of the periods presented
are unaudited. In the opinion of management all adjustments (consisting of
normal recurring adjustments) necessary to the fair presentation of
financial position and results of operations for the periods presented have
been made. The results of operations for the period ended September 30,
1999 are not necessarily indicative of results of operations of the results
of operations for fiscal year 2000 or of any other future period. Certain
information normally included in financial statements prepared in
accordance with generally accepted accounting principles has been omitted.
The Company had no operating activities and incurred no expenses or earned
no revenues during fiscal year 1999. The costs incurred prior to fiscal
year 2000 pertain to seeking merger candidates and business opportunities.
During fiscal year 1999 there were no changes in stockholders' equity. On
April 30, 1999 the Company's common stock was reverse split on a 1 share
for 42 shares basis which immediately became effective. Unless otherwise
indicated, all of the share and per share disclosure amounts are presented
as if the reverse stock split had occurred prior to the beginning of the
periods presented.
Research and development costs are expensed as incurred.
3. Asset Purchase
The Company entered into an asset purchase agreement dated April 16, 1999
to acquire substantially all of the assets of Norton Acquisition
Corporation (NAC) in exchange for newly issued common stock, the assumption
by the Company of approximately $500 thousand of trade accounts payable,
the assumption of $650 thousand of debt and the payment of $25 thousand in
cash (the Asset Purchase). On April 20, 1999 the board of directors of
Norton authorized the issuance of the restricted common shares to NAC.
After the impact of the 1 share for 42 shares reverse stock spilt, NAC
owned 6 million shares out of 7 million Norton common shares then
7
<PAGE>
outstanding. NAC had recently acquired substantially all of the assets of
Norton Motors International, Inc. (NMI) in exchange for all of NAC's
outstanding common stock. NMI is a development stage enterprise that was
engaged in the development of a line of high performance motorcycles. The
assets acquired by the Company include all trademarks, a largely idle
assembly plant in Shenstone, England and all motorcycle designs and
prototypes. The Company has decided to offer the Shenstone assembly plant
for sale. The long term debt assumed by the Company carries an 8% interest
rate, is collateralized by the assembly plant and intellectual property and
is payable as follows: $100 thousand in April 2000, $150 thousand in April
2001 and $250 thousand in April 2002. The maturity of this debt may be
subject to acceleration because contractual interest payments have not been
made.
The Asset Purchase has been accounted for as an acquisition of assets. The
acquired assets were recorded on the basis of the historical cost to NMI.
Under generally accepted accounting principles in the United States,
research and development costs are expensed as incurred. Through December
31 ,1998, NMI had invested approximately $4 million in design, development
and testing of high performance motorcycles and had raised approximately $5
million cash through debt and equity offerings. As of December 31, 1998,
NMI had an unaudited accumulated deficit of approximately $15 million. The
Company did not assume a substantial majority of the NMI debt and other NMI
liabilities. The NMI debt not assumed and other NMI liabilities not
assumed are not included in the September 30, 1999 balance sheet of the
Company.
4. Funding Agreements
On April 9. 1999 Genesis Capital Group (Genesis) of Minneapolis agreed to
lend $1 million to the Company. The $1 million was to have been advanced
on or before May 30, 1999. The Company had indicated its intention to
exercise its contractual right to convert all amounts advanced by Genesis
into common stock at $4 per share. As of September 30, 1999 Genesis had
advanced approximately $525 thousand to the Company. In October 1999
Genesis advanced another $300 thousand to the Company, bringing the total
amount advanced to approximately $825 thousand (out of the $1 million
committed). In October 1999 the Company advised Genesis that it was in
default on the final extension of its funding commitment and that the
Company would not accept additional amounts from Genesis. In October 1999
an attorney retained by Genesis advised the Company that that the Company
was not authorized to convert into equity any previous advances from
Genesis and that Genesis was evaluating unspecified remedies related to
unspecified "changes in circumstances, factual discrepancies and absences
of material factual information in connection with" the Genesis financing.
The advances from Genesis have been classified as a liability in the
September 30, 1999 unuaudited balance sheet.
In June 1999 Mr. John Tastad loaned the Company $75 thousand at 10%
interest and received warrants to purchase 18,750 shares of common stock at
$4.00 per share. The warrants are exercisable for two years. In August
1999 the $75 thousand loan was repaid out of the proceeds of the Bridge
Loan financing discussed below.
On June 30, 1999 the Company entered into agreements (the June 30, 1999
Agreements) that contain commitments for cash investments in the Company by
NMI Investments, an entity primarily owned by Messrs. Tastad and
Kilpatrick. The initial cash advance to Norton was to have been provided in
the form of a $1 million US dollar Bridge Loan facility provided by NMI
Investments. The Bridge Loan carries a 12 percent interest rate and has a
twelve-month term renewable at the option of the Company for a further
twelve-month term on the payment of $10 thousand. The entire principal
amount will be payable on the last day of the term. The debt maturity may
be subject to acceleration because contractual interest payments have not
been made. NMI Investments received 12,500 warrants to purchase common
stock of the Company at $4.00 per share. These warrants are exercisable
for two years. The Bridge Loan is secured by motorcycle designs and
8
<PAGE>
prototypes and the Norton trademarks. As of November 8, 1999 approximately
$695 thousand of the Bridge Loan had been funded. Additionally, NMI
Investments committed in the June 30, 1999 Agreements to provide an
additional $4 million of equity financing to Norton. The June 30, 1999
Agreements also provide that Messrs. Kilpatrick and Tastad will serve as
Norton's Chief Executive Officer and President, respectively. As is
discussed in Note 1, in response to the Company's assessment that it may
not complete the development of its previously announced product line, NMI
Investments has informed the Company that a substantial change in the
business and the operations of the Company has occurred, and that
therefore, it is withholding any additional funding under the Bridge Loan
and it has withdrawn its previously contemplated $4 million funding
commitment.
5. Stock Options
As of March 31, 1999 no stock options were outstanding. During the quarter
ended June 30, 1999 the Company granted 737,500 options to acquire common
stock to officers, directors and a consulting firm. The options are
exercisable at $4.00 per share. The options granted to the consulting firm
and to a non-employee director were estimated at the date of grant to have
an aggregate fair value of $264 thousand which was charged to operating
expense as follows: $178 thousand during the quarter ended June 30, 1999
and $86 thousand during the quarter ended September 30, 1999. Also, the
June 30, 1999 Agreements discussed above provide that Messrs. Kilpatrick
and Tastad will be collectively awarded stock options to purchase up to
925,000 additional common shares at options prices ranging from $4.00 to
$12.00 per share over two years; the number of options awarded is
conditional on the achievement of contractually specified goals. No
options have yet been earned under the June 30, 1999 Agreements. The
financial accounting for options provided for in the June 30, 1999
Agreements has not yet been determined. Also, Messrs. Kilpatrick and
Tastad have informed the Company that as a condition of their employment
they were each promised additional grants of 215,000 options to purchase
common stock exercisable at $4.00 per share; the Board of Directors has not
yet acted on this matter.
6. Trademark Agreement
In July 1999 Norton entered into a license and distribution agreement with
Norton Motors Deutschland (NMD), a Munich based distributor of classic
Norton parts and holder of certain Norton trademarks in Europe. The
agreement, which requires Norton to pay royalties based on sales in certain
European countries, provides Norton with a five-year exclusive trademark
license and purchase options. In addition, NMD has been appointed the
distributor of Norton products in Germany.
7. Litigation
See note 1 for a discussion of litigation that commenced in November 1999.
In July 1999, Robert E. Cieslukowski commenced a lawsuit against Norton and
NMI alleging among other things that the transfer of assets from NMI to
Norton was without reasonable consideration and with the intent to defraud
the creditors of NMI. The complaint also alleges that the aforementioned
transfer amounted to a consolidation or merger of NMI and Norton and
therefore Norton is merely a continuation of NMI. The lawsuit seeks
recovery from Norton and NMI of $545 thousand indebtedness of NMI plus
interest. Norton and NMI deny these allegations and filed their response
with the District Court in August 1999. Although any litigation is subject
to uncertainty, NMI and Norton believe that the transfer of assets was in
consideration for fair value received and hence the transfer was proper.
Additionally, the transfer of assets was in the best interest of the NMI
creditors. The aforementioned indebtedness of NMI is not reflected in the
September 30, 1999 unaudited balance sheet of the Company.
9
<PAGE>
Item 2. Management's discussion and analysis of financial condition and
results of operations
Information provided throughout this quarterly report may contain "forward-
looking" information. These cautionary statements are made with the
objective of obtaining the benefits of safe harbor provisions of applicable
legislation. The Company cautions investors that any forward-looking
statements made by the Company are not guarantees of future performance and
actual results may differ materially from those in the forward-looking
statements as a result of various significant risk factors including but
not limited to the development stage nature of the Company.
Results of Operations and Norton Motorcycle Product Line
The Company reported a net loss of $1.5 million for the six months ended
September 30, 1999. The Company's expenses pertain to research and
development, administration and marketing and stock based compensation.
The Company incurred administration and marketing expenses primarily for
personnel, outside consulting, legal fees. travel and promotional
activities. The reported non-cash stock based compensation expense is
related to stock options awarded to a consulting firm and to an outside
director.
On October 1, 1999 the Company commenced proceedings in the English High
Court against its former engineering consultants, MCD, for relief including
delivery up of prototype motorcycles and design drawings. MCD is defending
that claim and has indicated that it intends to pursue a claim to ownership
of the designs and/or prototypes and a claim for substantial damages that
it has estimated to be in excess of $1.7 million. Although the outcome of
this dispute is uncertain, the Company's English solicitors have advised
the Company that they believe that it is unlikely that MCD's claims to the
designs and prototypes and to damages sought will be sustained.
Since the commencement of these proceedings the Company has received advice
that places in question previous assessments as to the development and
viability of the designs previously provided to the Company. Based on such
advice the Company now believes that it is unlikely that it will complete
the development of its previously announced motorcycle product line. The
Company is seeking an independent third party evaluation of the designs and
prototypes and it will be in a position to provide further details upon
receipt of that evaluation. The Company may have to make further
application to the English Court in order to secure such an inspection.
Consequently, management is in discussions with various high quality engine
and component suppliers about an alternative product line. Although
management believes that it can introduce a successful line of Norton
branded motorcycles into the marketplace, it cannot predict when such line
will be introduced. Additionally, the introduction of such motorcycle line
will require that the Company obtain significant additional capital
resources in amounts not yet quantified and from sources not yet
identified.
Liquidity and Capital Resources
In June 1999, NMI Investments, LLP (NMI Investments) agreed to provide a $1
million Bridge Loan facility to the Company and to acquire $4 million of a
previously contemplated preferred stock offering. As of November 8, 1999
NMI Investments had advanced approximately $695 thousand under such bridge
loan facility. In response to the Company's assessment that it may not
complete the development of its previously announced product line, NMI
Investments has informed the Company that a substantial change in the
business and the operations of the Company has occurred, and that
therefore, it is withholding any additional funding under the Bridge Loan
and it has withdrawn its previously contemplated $4 million funding
commitment.
10
<PAGE>
As of September 30, 1999 the Company's current liabilities aggregated
approximately $933 thousand excluding $1.1 million of debt for which
payment may be accelerated. The maturity of the debt may be accelerated
because the Company has not made contractual interest payments. As of
November 8, 1999, the Company had no significant cash resources available.
The Company is currently seeking to obtain short-term financing to fund the
Company's operations until longer-term financing is secured. The Company
requires additional cash resources in the immediate future to continue as a
going concern and to continue its efforts to introduce a premium line of
high performance motorcycles into the marketplace. There can be no
assurance that any such additional financing can or will be obtained on
terms and conditions favorable, or acceptable, to the Company, or at all.
In the event the Company is unable to secure additional immediate short-
term capital, there is substantial doubt about the Company's ability to
continue as a going concern.
.
Norton is a development stage enterprise with no revenue base. The Company
faces various significant risks and uncertainties, including, but not
limited to: the Company's ability to raise short-term and long-term
capital; the Company's ability to create product and brand name awareness;
the level of consumer acceptance of the Company's products; the Company's
ability to design, develop and market its products on a cost-effective
basis; economic trends; industry competition; the outcome of existing
litigation; the financial impacts of changes in currency exchange rates; as
well as various other risks and uncertainties, including all risks
associated with the Company being a development-stage company with limited
assets and no existing revenues. In the event the Company is unable to
secure additional immediate short-term capital, there is substantial doubt
about the Company's ability to continue as a going concern. Additionally,
the introduction of a motorcycle product line will require that the Company
obtain significant additional long-term capital resources in amounts not
yet quantified and from sources not yet identified.
Part II - OTHER INFORMATION
Item 1. Legal proceedings
On July 13, 1999, Robert E. Cieslukowski commenced a lawsuit against
Norton. The case is venued in United States District Court, District of
Minnesota. Also, named, as defendants in this action are Norton Motors
International, Inc. (NMI), Norton Acquisition Corporation, Myron Calof and
Mark Osterberg. In his complaint, Mr. Cieslukowski, claims that NMI
breached the Repayment Agreement between himself and NMI dated February 27,
1999. Mr. Cieslukowski claims that debt obligations of NMI aggregating
approximately $ 550 thousand are delinquent.
Mr. Cieslukowski has named Norton as a defendant in this matter arguing
that it is also liable for the above indebtedness under alternative
theories of Fraudulent Transfer and Successor Liability. Specifically, the
complaint alleges that the transfer of assets from NMI to Norton was made
without reasonable consideration and with the intent to defraud NMI's
creditors. The complaint also alleges that the aforementioned transfer
amounted to a consolidation or merger of NMI and Norton and therefore
Norton is merely a continuation of NMI.
Norton and NMI deny these allegations and have filed their response with
the District Court in August 1999. Although any litigation is subject to
uncertainty, NMI and Norton believe that the transfer of assets was in
consideration for fair value received and hence the transfer was proper.
Additionally, the transfer of assets was in the best interest of the NMI
creditors.
11
<PAGE>
On October 1, 1999 the Company commenced proceedings in the English High
Court against its former engineering consultants, MCD, for relief including
delivery up of prototype motorcycles and design drawings. MCD is defending
that claim and has indicated that it intends to pursue a claim to ownership
of the designs and/or prototypes and a claim for substantial damages that
it has estimated to be in excess of $1.7 million. Although the outcome of
this dispute is uncertain, the Company's English solicitors have advised
the Company that they believe that it is unlikely that MCD's claims to the
designs and prototypes and to damages sought will be sustained
Item 2. Changes in securities: None
Item 3. Defaults on senior securities
The Company did not make the scheduled $18 thousand October 15, 1999
interest payment pursuant to the mortgage on its assembly facility located
in Shenstone England. Pursuant to its terms, the $500 thousand mortgage
becomes due and payable in the event of a default of interest payment with
or without demand by the holder.
The Company has not made the monthly payments of interest provided for in
the Bridge Loan facility. This would be an event of default, and the $695
thousand loan could become immediately due and payable, if the Company
receives written notice of a default in the payment of interest.
Item 4. Submission of matters to a vote of security holders: None
Item 5. Other information
In April 1999 Mr. Miles Wynn, the former Chief Executive Officer of the
Company, engaged American Securities Transfer Agency (American Securities)
to be the Company's common stock transfer agent. American Securities is
located in Bainbridge, Washington and is owed by Mr. John Wachsmith.
Shortly after the Asset Purchase the Company's new management informed
American Securities that the Company would be changing to another transfer
agent and the Company requested that American Securities provide the
Company will a shareholder listing and an accounting for all stock
certificates. American Securities has provided the Company and its new
transfer agent with a shareholder listing; however such listing indicates
that American Securities issued approximately 68 thousand unauthorized
common shares. Additionally, American Securities has been unable to
provide the Company with an accounting for stock certificates.
Additionally, American Securities has been unable to provide the Company
with assurance that the unauthorized common shares issued by American
Securities did not exceed the 68 thousand unauthorized shares previously
discussed. The Company is presently investigating this matter.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits: Not applicable.
(b) A Current Report on Form 8-K dated July 22, 1999 was filed reporting on
new senior officers, additional financing, an increase in the Board of
Directors, a trademark license agreement and recent litigation.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Norton Motorcycles, Inc.
Dated November 10, 1999 By /s/ ROBERT KILPATRICK
----------------- ---------------------
Robert Kilpatrick
Chief Executive Officer
Dated November 10, 1999 By /s/ MARK OSTERBERG
----------------- ---------------------
Mark Osterberg
Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE
NORTON MOTORCYCLES, INC. FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000802203
<NAME> NORTON MOTORCYCLES, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1
<PP&E> 607
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<TOTAL-ASSETS> 1,059
<CURRENT-LIABILITIES> 2,028
<BONDS> 0
0
0
<COMMON> 424
<OTHER-SE> (1,816)
<TOTAL-LIABILITY-AND-EQUITY> 1,059
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,455
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 65
<INCOME-PRETAX> (1,520)
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<INCOME-CONTINUING> (1,520)
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</TABLE>
