<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934. For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934. For the transition period from ___________ to ____________.
Commission File No. 0-15501
BIKERS DREAM, INC.
Exact name of Registrant as specified in its charter)
California 33-0140149
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
11631 Sterling Avenue Riverside, California 92503
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909)-343-1883
Indicate by check mark whether Registrant (1) 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
requirements for the past 90 days. Yes [X] No [ ]
As of June 30, 1998, there were 2,814,108 shares of the Registrant's common
stock outstanding, 3 shares of the Registrant's Series A Preferred Stock
outstanding, 4,717,331 shares of the Registrant's Series B Preferred Stock
outstanding, and 155 shares of the Registrant's Series C Preferred Stock
outstanding.
Transitional Small Business Disclosure Format Yes [ ] No [X]
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
BIKERS DREAM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June, 1998 and 1997
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
1998 1997
---- ----
<S> <C> <C>
A S S E T S:
Current Assets:
Cash and cash equivalents $ 2,761,596 $ 279,336
Accounts receivable, net 2,077,143 648,977
Inventories 6,047,430 3,165,769
Notes receivable - Related Party -- 546,335
Prepaid expenses and other current assets 239,251 489,849
------------ ------------
Total current assets 11,125,420 5,130,266
Property, equipment and capitalized leases, net 1,012,330 1,086,749
Goodwill - net of amortization 3,452,503 3,217,971
Deposits and other assets 250,528 37,570
------------ ------------
Total assets $ 15,840,781 $ 9,472,556
============ ============
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y:
Current liabilities:
Accounts payable $ 173,453 $ 1,339,421
Other accrued expenses 958,812 1,207,559
Current portion of long-term debt 103,411 85,589
Current portion of notes payable 8,962 3,625,238
Notes payable to shareholders 12,000 36,000
------------ ------------
Total current liabilities 1,256,638 6,293,807
Deferred rent 61,892 68,097
Notes payable, less current portion 4,826,522 2,781,840
Long-term debt, less current portion -- 326,852
Notes payable to shareholders -- 24,000
------------ ------------
Total liabilities 6,145,052 9,494,596
Shareholders' equity:
Convertible preferred stock, Series A, no
par value 30 shares authorized, 3 shares
issued and outstanding at June 30, 1998 and
10,000,000 shares authorized and 3 shares
issued and outstanding at June 30, 1997 402,500 1,102,500
Convertible preferred stock, Series B, no
par value 8,000,000 shares authorized,
4,717,331 shares issued and outstanding at
June 30, 1998 102,194 --
Convertible preferred stock, Series C, no
par value 280 shares authorized, 155 shares
issued and outstanding at June 30, 1998 3,875,000 --
Common stock, no par value 25,000,000 shares
authorized at June 30, 1998; 2,814,108 and
1,760,936* issued and outstanding at June
30, 1998 and June 30, 1997 17,746,686 7,736,167
Accumulated deficit (12,430,651) (8,860,707)
------------ ------------
Total shareholders equity 9,695,729 (22,040)
------------ ------------
Total liabilities and shareholders'
equity $ 15,840,781 $ 9,472,556
============ ============
</TABLE>
See the accompanying notes to these financial statements
* Adjusted for the Company's 1 for 5 reverse stock split of February 1998
2
<PAGE> 3
BIKERS DREAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Quarters Ended June 30, 1998, and 1997
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
1998 1997
---- ----
<S> <C> <C>
REVENUES $ 8,121,021 $ 4,469,249
COST OF GOODS SOLD 6,593,827 4,089,219
----------- -----------
GROSS PROFIT 1,527,194 380,030
OPERATING EXPENSES
Selling, general and administrative
expenses 1,090,832 1,709,332
Depreciation and amortization 141,070 102,403
----------- -----------
Total expenses 1,231,902 1,811,735
----------- -----------
OPERATING INCOME (LOSS) 295,292 (1,431,705)
----------- -----------
OTHER EXPENSE
Interest Expense 104,506 162,222
Other expense, net -- 14,436
----------- -----------
Total other expense 104,506 176,658
----------- -----------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES 190,786 (1,608,363)
PROVISION FOR INCOME TAX -- --
----------- -----------
NET INCOME (LOSS) $ 190,786 $(1,608,363)
=========== ===========
EARNINGS PER COMMON SHARE:
Basic $ 0.07 $ (0.91)
=========== ===========
Diluted $ 0.04 $ (0.91)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 2,734,169 1,760,936(*)
=========== ===========
Diluted 4,423,573 1,760,936(*)
=========== ===========
</TABLE>
See the accompanying notes to these financial statements
*Adjusted for the Company's 1 for 5 reverse stock split of February 1998
3
<PAGE> 4
BIKERS DREAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Six Months Ended June 30, 1998, and 1997
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
1998 1997
---- ----
<S> <C> <C>
REVENUES $ 13,113,809 $ 7,648,917
COST OF GOODS SOLD 10,866,251 6,578,646
------------ ------------
GROSS PROFIT 2,247,558 1,070,271
OPERATING EXPENSES
Selling, general and administrative expenses 2,209,478 2,891,063
Depreciation and amortization 271,703 160,646
------------ ------------
Total expenses 2,481,181 3,051,709
------------ ------------
OPERATING LOSS (233,623) (1,981,438)
------------ ------------
OTHER EXPENSE
Interest Expense 206,432 271,667
Other expense, net -- 23,410
------------ ------------
Total other expense 206,432 295,077
------------ ------------
LOSS BEFORE PROVISION FOR INCOME TAXES (440,055) (2,276,515)
PROVISION FOR INCOME TAX -- --
------------ ------------
NET LOSS $ (440,055) $ (2,276,515)
============ ============
LOSS PER COMMON SHARE:
Basic $ (0.17) $ (1.29)
============ ============
Diluted $ (0.17) $ (1.29)
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 2,636,656 1,760,936(*)
============ ============
Diluted 2,636,656 1,760,936(*)
============ ============
</TABLE>
See the accompanying notes to these financial statements
*Adjusted for the Company's 1 for 5 reverse stock split of February 1998
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Six Months Ended June 30, 1998, and 1997
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (440,055) $(2,276,515)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 141,070 160,246
(Increase) decrease in:
Accounts receivable (1,115,873) (506,850)
Inventories (1,593,339) (1,723,343)
Prepaid expenses and other current assets (139,491) (957,070)
Increase (decrease) in:
Accounts payable (497,343) 898,489
Other accrued expenses (438,815) 178,655
----------- -----------
Net cash from operating activities (4,083,846) (4,226,388)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in deposits 53,341 8,062
Decrease in Marketable Securities 220,332 --
(Increase) decrease in property, plant and equipment (176,114) 488,846
Increase (decrease) in deferred rent (3,018) (560)
Investment - Joint Venture -- 1,508,855
Goodwill - Ultra Acquisition Corporation -- (3,217,791)
Other 30,038 (446,542)
----------- -----------
Net cash used in investing activities 124,579 (1,659,130)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 2,093,707 6,258,425
Principal payments made on long-term debt and
capitalized leases (21,567) (258,254)
Proceeds from issuance of preferred stock 3,875,000 --
Redemption of outstanding warrants 132,500 --
Proceeds from issuance of convertible notes
payable 800,000 --
Principal payments made on notes payable (802,035) --
Payments made on notes payable to shareholders (24,000) (12,000)
Preferred dividend accrual -- (71,208)
----------- -----------
Net cash provided by financing
activities 6,053,605 5,916,963
----------- -----------
Net increase in cash and cash
equivalents 2,094,338 31,445
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 667,258 247,891
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,761,596 $ 279,336
=========== ===========
</TABLE>
See the accompanying notes to these financial statements
5
<PAGE> 6
BIKERS DREAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998, and 1997
1. The consolidated financial statements include the accounts of Bikers Dream,
Inc. and all of its wholly-owned subsidiaries. All significant inter-
company accounts and transactions are eliminated in consolidation.
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary (consisting only of normal
recurring accruals) to present fairly the financial information contained
therein. These statements do not include all disclosures required by
generally accepted accounting principles and should be read in conjunction
with the audited financial statements of the Company for the year ended
December 31, 1997. The results of operations for the six months ended June
30, 1998 are not necessarily indicative of the results to be expected for
the year ending December 31, 1998. Net earnings or loss per share was
computed by dividing net income or loss by the weighted average number of
common shares outstanding during the respective periods.
2. Summary Of Significant Accounting Policies:
Revenue Recognition:
Product Sales - Motorcycle manufacturing revenue from the sale of
product is recognized at the time of shipment. Retail revenue from the
sale of products is recognized at the time of sale to a retail customer.
Motorcycle manufacturing sales made to one of the Company owned stores
are eliminated in consolidation
Financing Income - Financing income is the Company's commission revenue
resulting from certain motorcycle sales. Such revenue is recognized at
the time the finance company or a third-party lender remits payment to
the Company.
Income Taxes:
The Company utilizes Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," which requires the recognition of
deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred income taxes will
be recognized for the tax consequences in future years of differences
between the tax bases of assets and liabilities and their financial
reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation allowances will be
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
Net Earnings or Loss Per Common Share:
The computation of diluted net earnings or loss per share was
anti-dilutive in each of the periods presented; therefore, the amounts
reported for basic and diluted are the same. Net income or loss per
common share was determined by dividing net income or loss by the
weighted average shares outstanding in each period. Effective February
5, 1998, the Company effected a 1-for-5 reverse
6
<PAGE> 7
stock split of its common stock. All shares and per share data in the
current fiscal year have been stated to reflect the stock split.
Cash and Cash Equivalents:
For purposes of the balance sheet and the statement of cash flows, the
Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Inventories:
Inventories are valued at the lower of cost or market using a cost
method which approximates average cost. The entire inventory consists of
purchased items together with labor that has been applied thereto.
Property, Equipment and Capitalized Leases:
Property, equipment and capitalized leases are recorded at cost with
depreciation and amortization provided using the straight-line method
over the estimated useful lives of the assets, which range from three to
ten years or the term of the lease, whichever is the lesser. Repairs and
maintenance are expensed as incurred. When property and equipment are
retired or disposed of, the related costs and accumulated depreciation
and amortization are eliminated from the accounts and any gain or loss
on such disposition is reflected in operations.
Estimates:
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenue
and expenses during the reported period. Actual results could differ
from those estimates.
3. Series C Preferred Stock
On April 16, 1998, the Company sold through a private offering 155 Units at
$25,000 per Unit, of Series C Preferred Stock. Each Unit consisted of one share
of the Company's Series C Preferred Stock (the "Preferred C") and 1,250 Series F
Common Stock Purchase Warrants (the " F Warrants") to purchase one share of the
Company's common stock at $5.00 per share, for total consideration of
$3,875,000. Each share of the Company's Preferred C is convertible, at the
option of the holder, at any time after the date of issuance (the "Conversion
Date"), into shares of the Company's common stock. The price at which the
Preferred C converts into the Company's common stock (the "Conversion Price"),
is determined by dividing $25,000 by the greater of; (1) seventy-five percent
(75%) of the average closing price of the Company's common stock for the ten
trading days immediately preceding the Conversion Date, or (2) $2.50, provided,
however, that under no circumstance shall the Conversion Price exceed $4.00.
Under certain circumstances, the Conversion Price is subject to adjustment. The
Preferred C shall be automatically converted into the Company's common stock in
the event the closing price equals or exceeds $8 per share for any period of
twenty (20) consecutive trading days.
7
<PAGE> 8
4. Commitments and Contingencies:
Leases
The Company leases all of its operating facilities located in Santa Ana,
Sacramento, San Diego, and Riverside, California, as well as Dallas, Texas.
5. Related Party Transactions:
In February 1998, Meyer Duffy & Associates, through various partnerships,
provided the Company an $800,000 "bridge loan", bearing interest at 12% per
annum, pending completion of the Series C Preferred Stock offering described in
Note 3. Donald Duffy, a principal of Meyer, Duffy & Associates, was Chairman of
the Board of the Company at June 30, 1998. The Company currently maintains a
consulting arrangement with Meyer Duffy. Upon completion of the Series C
Preferred Offering, (Note 3), this bridge loan was converted into Series C
Preferred Stock 25,000 stock options. 150,000 warrants to purchase the Company's
common stock were also issued to Meyer Duffy and other investors party to the
bridge loan.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain matters discussed in this Quarterly Report 10-Q are "forward-looking
statements" intended to qualify for the safe harbors from liability established
by the Private Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as the Company "believes," "anticipates,"
"expects," "estimates," or words of similar meaning. Similarly, references to
the Company's future plans, objectives or goals are forward-looking statements.
Such forward-looking statements are subject to certain risks and uncertainties
which are described in close proximity to such statements and which could cause
actual results to differ materially from those anticipated as of the date of
this report. Shareholders, potential investors, and other readers are urged to
consider these factors in evaluating the forward-looking statements, and are
cautioned not to rely on such forward-looking statements. The forward-looking
statements included herein are only made as of the date of this report and the
Company undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstances.
COMPARISON OF THE QUARTERS ENDED JUNE 30, 1998 AND 1997:
Net sales for the three months ended June 30, 1998, were $8,121,021 an increase
of $3,651,772, or 82 %, from the same period in 1997. The increase in net sales
was primarily attributable to Motorcycle Manufacturing, as units sold during
this period increased 79% when compared to the same period in 1997. The dealer
network has increased to 58 dealers at June 30, 1998 compared to approximately
20 dealers as of June 30, 1997. Additionally, the Company experienced improved
sales from its Retail Stores Division. There are currently four Company owned
Bikers Dream Superstores in operation which is the same number of Company owned
Superstores in operation during the same period in 1997.
Gross profit for the three months ended June 30, 1998, was $1,527,194, or 19%,
as compared to gross profit of $380,030, or 8.5%, during the same three month
period in 1997. This increase of $1,147,164 in gross profit is attributable to
increased motorcycle unit shipments as well as improved manufacturing
efficiencies. In addition, four Bikers Dream Superstores were in operation
throughout this period and they contributed approximately $514,782 to gross
margin.
8
<PAGE> 9
COMPARISON OF THE QUARTERS ENDED JUNE 30, 1998 AND 1997:
(Continued)
Selling, general and administrative expenses were $1,090,832 for the quarter
ended June 30, 1998 compared to $1,709,332 for the three months ended June 30,
1997. The decrease of $618,500 or 36%, is primarily attributable to reduced
corporate overhead, as well as operating efficiencies at the corporate level and
in the retail stores.
Interest expense declined by $57,716 to $104,506 for the three month period
ended June 30, 1998, when compared to the same period in 1997. This is primarily
attributable to the debt restructuring which took place in November 1997.
There is no provision for income taxes in 1998. The Company has fully reserved
for the deferred tax asset related to its net operating loss carry-forwards
beginning in the second quarter of 1995. The Company's management has concluded
that, based upon its assessment of all available evidence, the future benefit of
this asset cannot be projected accurately at this time.
For the three month period ended June 30, 1998 the Company reported a net profit
of $190,786, $0.07 per share basic and $0.04 per share diluted, compared to a
net loss of $1,608,363, ($0.91) per share basic and diluted, during the three
month period ended June 30, 1997. The improved profitability of $1,799,149,
$0.98 per share basic and $0.95 per share diluted, is the result of the
aforementioned increases in manufacturing and sales as well as improved
operating efficiencies. The Company has increased its production and sales to
over 150 motorcycles per month which directly contributes to this improved
profitability. Additionally, the Company has had four Bikers Dream Superstores
in operation throughout this entire period.
While the Company does not expect inflation to have a material impact upon its
operating results, there can be no assurance that inflation will not affect the
Company's business in the future. The Company expects to mitigate inflationary
increases through securing additional purchase volume discounts as production
continues to increase as well as selected price increases for its products.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997:
Net sales for the six months ended June 30, 1998, were $13,113,809 compared to
$7,648,917 during the same six month period in 1997. This is an increase of
$5,464,892, or 71 %, from the same period in 1997. The increase in net sales was
primarily attributable to Motorcycle Manufacturing as units sold during this
period increased 150% over the same period in 1997. The dealer network has
increased to 58 dealers at June 30, 1998 compared to approximately 20 dealers as
of June 30, 1997. Additionally, the Company experienced improved sales from the
Retail Stores Division. The Company did not have four corporate owned
Superstores fully operational until March 1997.
Gross profit for the six months ended June 30, 1998, was $2,247,558, or 17%, as
compared to gross profit of $1,070,271, or 14%, during the same three month
period in 1997. This increase of $1,177,287 in gross profit is attributable to
increased motorcycle unit shipments as well as improved manufacturing
efficiencies. In addition, four corporate owned Bikers Dream Superstores were in
operation throughout this period.
Selling, general and administrative expenses were $2,209,478 for the six months
ended June 30, 1998 compared to $2,891,063 for the six months ended June 30,
1997. The decrease in expenses of $681,585,
9
<PAGE> 10
24%, is primarily attributable to reduced corporate overhead, as well as
operating efficiencies at the corporate level and in the retail stores.
Depreciation and amortization increased $111,057 during the first six months of
1998 primarily as a result of changing the amortization period of goodwill from
a forty year amortization period to a fifteen year amortization period.
10
<PAGE> 11
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997:
(Continued)
Interest expense declined to $206,432, or by 24%, for the six month period ended
June 30, 1998, when compared to the same period in 1997. This is primarily
attributable to debt restructuring which took place in November 1997.
For the six month period ended June 30, 1998 the Company reported a cumulative
net loss of $440,055, ($0.17) per share, basic and diluted, compared to a
cumulative net loss of $2,276,515, ($1.29) per share, basic and diluted, during
the six month period ended June 30, 1997. The improved profitability of
$1,836,460, $1.12 per share, is the result of the aforementioned operating
efficiencies as well as increased sales of manufactured motorcycles.
Additionally, the Company has had four corporate owned Bikers Dream Superstores
in operation throughout this entire period whereas in the first half of 1997
four stores operated for only four of the six months during this period in 1997.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. Some of the
Company's computer programs that have data sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar business activity.
Based on a recent assessment, the Company has determined that it may be required
to modify or replace certain portions of its software so that its computer
systems will properly utilize dates beyond December 31, 1999. The Company's
computer systems are entirely "PC" based utilizing "off the shelf" software
produced by major software suppliers. The Company presently believes that with
modifications to its existing software and conversions to new software, each of
which can be readily and economically accomplished, the Year 2000 Issue can be
mitigated. However, if such modifications are not made, or are not completed
timely, the Year 2000 Issue could have a material adverse impact on the
operations of the Company.
The Company will initiate formal communications with all of it significant
suppliers and large customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
Issue. The Company's total Year 2000 project cost and estimates to complete
include the estimated costs and time associated with the impact of a third
party's Year 2000 Issue, are based on presently available information. However,
there can be no guarantee that the systems of other companies on which the
Company's systems rely will be timely converted, or that a failure to convert by
another company, would not have a material adverse effect on the Company.
The Company plans to complete its Year 2000 review in early 1999. The expenses
related to the Year 2000 Issue are not expected to have a material effect on the
results of operations of the Company. The costs associated with the review and
any required modifications are based upon management's best estimates, which
were derived from utilizing numerous assumptions of future events including
third party modification plans and other factors. However, there can be no
assurance that these estimates will be achieved and actual results could vary
materially from current plans.
10
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
The Company generated $2,094,338 of cash from all activities during the first
six months of 1998, compared to a generation of $31,445 in cash during the same
six month period in 1997. The Company utilized $4,083,846 of cash in operations
during the first six months of 1998 compared to a usage of $4,226,288 in 1997.
During this six month period, the Company sold Series C Convertible Preferred
Stock, which generated approximately $3.875 million in cash. The Company also
received the net cash amount of approximately $2.0 million in the form of a long
term loan from Tandem Capital during this period.
On June 24, 1998, the Company completed a three year senior secured loan with
Tandem Capital of Nashville, Tennessee. The amount of the loan is $4.5 million,
which bears interest at 12% per annum and stipulates quarterly payments. There
is not a prepayment penalty. The lender also received 370,000 warrants to
purchase the Company's common stock at an exercise price equal to $4 1/16
payable in cash by debt cancellation, or, by in-kind exercise. The purpose of
this loan was to repay existing long term debt, approximately $2.5 million, and
to expand motorcycle manufacturing in Riverside, California.
The following are forward looking statements: The Company is pursuing a
long-term strategy to significantly increase motorcycle production capacity with
a goal of having the capacity to manufacture approximately 200 units a month by
the end of 1998 and over 300 units a month by the end of 1999. The Company's
strategy includes moving to a new manufacturing facility with approximately
twice the manufacturing space it currently possesses. The Company estimates that
the move to this facility will cost between $250,000 and $350,000. The Company
anticipates funding its production increase with cash on hand, internally
generated funds and appropriate capital markets available to the Company. Based
upon its current estimates, the Company believes that its available cash and
cash resources and prospects are sufficient to fund current and future
activities.
The Company has relied substantially on equity capital and debt financing to
meet its operating and growth needs. The Company's ability to increase its
manufacturing capacity and establish a new manufacturing facility will depend
upon, among other factors, the Company's ability to raise additional equity
capital and/or debt financing, establish a new manufacturing facility, and work
with existing and new suppliers to expand their capacity. However, there can be
no assurance that the Company will be able to raise additional equity capital or
debt financing. In addition, the Company could experience delays in implementing
changes to the existing manufacturing facility and/or establishing a new
manufacturing facility. Additionally, there is no assurance that the Company
will have the ability to sell all the motorcycles it may have the capacity to
produce.
11
<PAGE> 13
Part II
Item 5. Other Events.
1. Legal Proceedings
In April 1998, the Company finalized a settlement agreement with
Harley-Davidson, Inc. ("Harley-Davidson") ending all disputes
between them. Harley-Davidson had brought actions against the
Company for trademark infringement and infringement of "trade dress"
issues.
Without admitting or denying any violations of Harley-Davidson's
trademarks, or debating the subject of "trade dress", the Company
agreed to make certain changes to some of the components it uses to
manufacture motorcycles under the Company brand and to pay, together
with its insurers, an amount approximating Harley-Davidson's legal
expenses in the matter.
The Company is involved in various litigation arising from the
normal course of its business, none of which, in the opinion of
management, will have a material adverse effect on the Company.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
4 Certificate of Determination of Bikers Dream, Inc.
27 Financial Data Schedule
12
<PAGE> 14
SIGNATURES
Pursuant to the requirements 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.
Dated: July 24, 1998 BIKERS DREAM, INC.
By: /s/ Herm Rosenman
--------------------------------
Herm Rosenman, Chief Executive Officer
By: /s/ Christopher Ebert
--------------------------------
Christopher Ebert, Chief Financial
Officer and Principal Accounting Officer
13
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,761,596
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0
4,379,694
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