BOYDS WHEELS INC, SB-2/A, 1996-05-23

BOYDS WHEELS INC
SB-2/A, 1996-05-23
MOTOR VEHICLE PARTS & ACCESSORIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 23, 1996

REGISTRATION NO. 333-4029

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1

FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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BOYDS WHEELS, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

<TABLE>
<S> <C> <C>
CALIFORNIA 3714 93-1000272
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CODE NUMBER) IDENTIFICATION NO.)
8380 CERRITOS AVENUE, STANTON, CALIFORNIA 90680
(714) 952-4038
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
8380 CERRITOS AVENUE, STANTON, CALIFORNIA 90680
(714) 952-4038
(ADDRESS OF PRINCIPAL PLACE OF BUSINESS)
BOYD CODDINGTON, CHAIRMAN AND CHIEF EXECUTIVE OFFICER
8380 CERRITOS AVENUE, STANTON, CALIFORNIA 90680
(714) 952-4038
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
</TABLE>

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

COPIES TO:

<TABLE>
<S> <C>
EVRIDIKI (VICKI) DALLAS, ESQ. NICK E. YOCCA, ESQ.
THOMAS G. BROCKINGTON, ESQ. MICHAEL E. FLYNN, ESQ.
RUTAN & TUCKER MATTHEW P. THULLEN, ESQ.
611 ANTON BOULEVARD, SUITE 1400 STRADLING, YOCCA, CARLSON & RAUTH
COSTA MESA, CALIFORNIA 92626 660 NEWPORT CENTER DRIVE, SUITE 1600
(714) 641-5100 NEWPORT BEACH, CALIFORNIA 92660
(714) 725-4000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement under the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED MAXIMUM
TITLES OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
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Common Stock, no par value(2)...... 1,129,000 $11.00 $12,419,000 (3)
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Representative's Warrants(4)....... 52,500 $ .001 $ 52.50 (4)
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Common Stock, no par value(5)...... 52,500 $13.20 $ 693,000 (3)
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TOTAL.............................. (3)
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</TABLE>

(1) Estimated pursuant to Rule 457(a) solely for calculating the registration
fee.

(2) Includes 129,000 shares of Common Stock which may be purchased by the
Underwriters to cover over-allotments, if any.

(3) Previously paid.

(4) To be issued to the Representative of the several Underwriters. No fee
pursuant to Rule 457(g).

(5) Issuable upon exercise of the Representative's Warrants. Pursuant to Rule
416, there are also being registered such additional shares as may be
issuable pursuant to anti-dilution provisions of the Representative's
Warrants.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MAY 23, 1996

PROSPECTUS
1,000,000 SHARES

BOYDS WHEELS, INC.
COMMON STOCK

Of the 1,000,000 shares of Common Stock offered, 771,000 shares are being
offered by Boyds Wheels, Inc. (the "Company") and 229,000 shares are being
offered by certain shareholders of the Company (the "Selling Shareholders"). See
"Principal and Selling Shareholders." The Company will not receive any of the
proceeds from the shares sold by the Selling Shareholders. The Common Stock of
the Company is quoted on the Nasdaq National Market under the symbol "BYDS". On
May 21, 1996, the last sale price per share of the Common Stock as reported by
the Nasdaq National Market was $10.50. See "Price Range for Common Stock and
Dividend Policy."

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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" AT PAGE 5 OF THIS PROSPECTUS.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
DISCOUNTS PROCEEDS TO SELLING
PRICE TO PUBLIC AND COMMISSIONS(1) COMPANY(2) SHAREHOLDERS(2)
<S> <C> <C> <C> <C>
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Per Share.................. $ $ $ $
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Total(3)................... $ $ $ $
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</TABLE>

(1) Does not include (i) a non-accountable expense allowance payable by the
Company to the Representative and (ii) the sale by the Company to the
Representative of the Underwriters of five-year warrants to purchase up to
52,500 shares of Common Stock at an exercise price of $ per share
(120% of the per share price to the public). The Company and the Selling
Shareholders have agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $375,000,
including the Representative's nonaccountable expense allowance.

(3) The Company has granted the Underwriters a 45-day option to purchase up to
129,000 additional shares on the same terms and conditions as set forth
above solely to cover over-allotments, if any. If all such shares are
purchased, the total Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company and Proceeds to Selling Shareholders will
be $ , $ , $ and $ , respectively. See
"Underwriting."

The shares of Common Stock are being offered severally by the Underwriters
named herein, subject to receipt and acceptance by them, and subject to other
conditions. The Underwriters reserve the right to reject any order in whole or
in part and to withdraw, cancel or modify the offer without notice. It is
expected that delivery of the certificates representing the shares of Common
Stock will be made against payment therefor at the offices of Cruttenden Roth
Incorporated, Irvine, California, on or about , 1996.

CRUTTENDEN ROTH

I N C O R P O R A T E D

THE DATE OF THIS PROSPECTUS IS , 1996
LOGO
<PAGE> 3

[PHOTOS]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN
PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON NASDAQ IN ACCORDANCE
WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus. Except as otherwise indicated, the information in this
Prospectus assumes no exercise of: (i) the Underwriters' over-allotment option,
(ii) outstanding options and warrants to purchase up to 182,661 shares of Common
Stock and (iii) options which have been granted under the Company's 1995 Stock
Option Plan; and assumes no conversion of outstanding notes which are
convertible into 7,143 shares of Common Stock. See "Risk Factors" for a
discussion of important factors that should be considered by prospective
investors related to forward-looking statements included in this Summary.

THE COMPANY

Boyds Wheels, Inc. (the "Company") designs, manufactures and markets high
quality aluminum wheels for the specialty automotive aftermarket. In addition to
its premium aluminum wheels, the Company designs, manufactures and markets
motorcycle wheels, steering wheels for automobiles, automotive and motorcycle
billet aluminum accessories and also sells car care products under its own
label. The Company's products utilize machined aluminum materials and unique
designs which the Company believes enhance individuality of vehicle styling. The
Company sells its products domestically through a national distribution network
of tire and performance retailers, warehouse distributors and mail order
outlets, and internationally through foreign distribution channels.

The Company was founded in 1988 by Boyd Coddington in response to consumer
demand for billet aluminum wheels similar to those featured on custom hot rod
vehicles designed and manufactured by Hot Rods by Boyd, a company which has been
recognized as a leading designer, manufacturer and marketer of custom vehicles
and hot rods. Since 1978, Mr. Coddington has owned and operated Hot Rods by
Boyd, which has built vehicles that have been featured in many automotive and
general interest publications, including Car and Driver, Autoweek, Hot Rod,
Smithsonian and Forbes. The Company believes that its relationship with Hot Rods
by Boyd is a key factor in maintaining and enhancing the image and brand name
recognition of the Company's products. The Company has entered into a
marketing/promotion agreement with Hot Rods by Boyd pursuant to which Hot Rods
by Boyd is required to endorse, promote and market the Company's products as the
"official wheel" of Hot Rods by Boyd, use the Company's wheels on vehicles
produced by Hot Rods by Boyd and permit the Company to use these vehicles for
promotional displays and photographs. In addition, the Company has an option to
purchase Hot Rods by Boyd.

The custom wheel market is the second largest segment of the specialty
automotive aftermarket. The custom wheel market is generally divided into five
product categories: aluminum wheels, composite wheels, modular wheels, steel
wheels and custom wheel accessories. According to Specialty Equipment Market
Association ("SEMA"), aluminum wheels are the largest segment of this market,
accounting for more than 75% of total sales. SEMA reports that the custom wheel
industry has grown from sales of approximately $525 million in 1992 to $650
million in 1994. The Company believes that this industry grew at approximately
10% in 1995 and will continue to grow at that rate for 1996. The Company further
believes that consumer desire for individuality in vehicle appearance will
contribute to the Company's growth since custom wheels represent one of the
easiest, least expensive and quickest ways to dramatically alter the appearance
of a vehicle.

The Company's strategy is to expand its position as a leading marketer of
premium automotive/ motorcycle aftermarket products by capitalizing on consumer
recognition of the "Boyds" brand name and the Company's growing distribution
network. The Company intends to implement this strategy by (i) leveraging and
strengthening its premium brand name recognition, (ii) creating selected new
product lines in order to build its customer loyalty into a broader based
business, (iii) differentiating its products from its competition by continually
identifying and introducing trend setting designs, (iv) diversifying domestic
product distribution by penetrating new geographic areas and targeting key
distributors to service its customer and consumer markets and (v) expanding the
Company's penetration into international markets by establishing relationships
with selected distributors in Europe and the Pacific Rim.

The Company was incorporated in California in April 1988. The principal
executive offices of the Company are located at 8380 Cerritos Avenue, Stanton,
California 90680. The Company's telephone number is (714) 952-4038.

3
<PAGE> 5

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company....................... 771,000 shares.
Common Stock offered by Selling Shareholders.............. 229,000 shares.
Common Stock to be outstanding after the offering......... 3,319,128 shares.
Use of proceeds........................................... To acquire capital equipment,
repay outstanding indebtedness,
for general corporate purposes
and working capital requirements.
See "Use of Proceeds."
Nasdaq National Market symbol............................. BYDS
</TABLE>

SUMMARY FINANCIAL INFORMATION
(in thousands, except per share data)

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
--------------------------- ---------------
STATEMENTS OF INCOME DATA: 1993 1994 1995 1995 1996
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Net sales........................................ $10,188 $12,127 $17,796 $3,660 $5,334
Cost of goods sold............................... 8,524 9,336 13,263 2,782 3,976
------ ------ ------ ----- -----
Gross margin..................................... 1,664 2,791 4,533 878 1,358
Selling, general and administrative expenses..... 1,230 1,648 2,741 465 714
------ ------ ------ ----- -----
Income from operations........................... 434 1,143 1,792 413 644
Interest and other expenses, net................. 423 695 383 142 48
------ ------ ------ ----- -----
Income before income taxes....................... 11 448 1,409 271 596
Provision (benefit) for income taxes............. 1 (227) 462 111 236
------ ------ ------ ----- -----
Net income....................................... $ 10 $ 675 $ 947 $ 160 $ 360
====== ====== ====== ===== =====
Net income per common share and common equivalent
share(1)...................................... $ -- $ 0.40 $ 0.48 $ 0.09 $ 0.14
====== ====== ====== ===== =====
Weighted average shares outstanding.............. 1,671 1,701 1,960 1,697 2,655
====== ====== ====== ===== =====
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1996
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BALANCE SHEET DATA: 1994 1995 ACTUAL AS ADJUSTED(2)
------ ------- ------- ---------------
<S> <C> <C> <C> <C>
Working capital (deficit)........................ $ (175) $ 2,113 $ 2,646 $ 8,418
Total assets..................................... 6,326 11,782 12,862 17,571
Long-term debt................................... 1,328 903 1,326 --
Shareholders' equity............................. 1,880 5,856 6,266 13,420
</TABLE>

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(1) Does not reflect adjustment for accretion of the Company's Series A
Redeemable Preferred Stock which was redeemed with the proceeds of the
initial public offering of the Company's Common Stock in September 1995. See
"Financial Statements."

(2) Adjusted to give effect to the sale by the Company of 771,000 shares of
Common Stock offered hereby at an assumed offering price of $10.50 per share
and the application of the estimated net proceeds therefrom. See "Use of
Proceeds."

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

BOYDS(R), BOYDS WHEELS(TM), BOYDS ULTRA VIOLET(TM) and THE BOYD LOOK(TM
)are trademarks of the Company. This Prospectus also contains trademarks of
companies other than those of the Company.

4
<PAGE> 6

RISK FACTORS

In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing the Common Stock offered hereby.

DEPENDENCE ON KEY CUSTOMERS

Typically a limited number of customers have accounted for a substantial
portion of the Company's revenues. In 1995, the Company's ten largest customers
accounted for approximately 82.4% of net sales, with four accounting for greater
than 10% each: Wheel City at 24.1%, Ousyu Hambi Co. Ltd. ("American Motoring
Accessories") at 16.7%, Moon of Japan, Ltd. ("Mooneyes") at 15.6% and American
Racing Equipment, Inc. ("American Racing") at 12.0%. In 1994, the Company's ten
largest customers accounted for approximately 84.6% of net sales, with three
accounting for greater than 10% each: American Racing at 25.2%, Mooneyes at
15.5% and Wheel City at 12.3%. The Company does not have any long-term
contractual relationships with its major customers. The loss of or any material
reduction in orders by any of such customers, including reductions due to
market, economic or competitive pressures in the automotive aftermarket
industry, could adversely affect the Company's business, financial condition and
results of operations. The Company's ability to maintain or increase its sales
levels in the future will depend in part upon its ability to obtain orders from
new customers as well as the financial condition and success of its current
customers and the general economy. There can be no assurance that the Company
will be able to maintain or continue to increase the level of its sales in the
future or that the Company will be able to retain existing customers or attract
new customers. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and "Business -- Distribution, Sales and Marketing."

COMPETITION

The market for the Company's products is highly competitive and is based
primarily on price, product selection, product availability and service. Many of
the Company's competitors have substantially greater financial and other
resources than the Company and may offer lower prices on competing products. The
Company also competes with dealers and distributors who may offer their own
branded products at prices below those offered by the Company. A key competitive
factor among suppliers of automotive aftermarket products is the ability to
promptly deliver products to dealers and distributors and, accordingly, even
smaller regional companies may be able to compete effectively against the
Company. Increased competition could result in product price reductions, reduced
margins and loss of market share, all of which could have a material adverse
effect on the Company's results of operations and financial condition. While the
Company believes its prices are competitive for the quality level of its
products, the Company relies primarily on its reputation for selling quality
products supported by strong customer service. There can be no assurance that
the Company will be able to compete successfully in the future with its
competitors. Furthermore, the custom aluminum wheel business has been
characterized by widespread imitation of popular designs. The Company must,
therefore, continually strive to develop new designs to differentiate its
products from those of its competitors. There can be no assurance that the
Company will continue to develop sufficient new designs and any failure to do so
could have a material adverse effect on its results of operations and financial
condition. See "Business -- Competition."

CHANGING CONSUMER TRENDS

The Company's success depends substantially on its ability to correctly and
consistently anticipate, gauge and respond in a timely manner to rapidly
changing consumer preferences. The Company attempts to minimize the risks
relating to changing consumer trends by offering a wide variety of product
styles, analyzing consumer purchases, maintaining an active product development
effort and monitoring sales of its products. However, any misjudgment by the
Company of the market for a particular product, or its failure to correctly
anticipate consumer preferences, could have a material adverse impact on its
results of operations and financial condition. See "Business -- Product
Development."

5
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DEPENDENCE ON KEY PERSONNEL

The Company's success depends, in large part, on the efforts and abilities
of Boyd Coddington, its founder, Chairman and Chief Executive Officer. Under the
terms of his employment agreement with the Company, Mr. Coddington is not
required to and does not expend his full time and attention on the Company's
activities and Mr. Coddington has other business interests, including Hot Rods
by Boyd, which require his time and attention. The Company does not maintain key
man life insurance on Mr. Coddington. The loss of the services of Mr. Coddington
would have a material adverse effect on the business of the Company. The success
of the Company will depend on, among other factors, the successful recruitment
and retention of quality management and personnel. See "Management."

COST OF ALUMINUM AND DEPENDENCE ON THIRD PARTY SUPPLIERS

The Company purchases several types of aluminum, including billet discs,
billet bar stock, prime ingot and prefabricated outer rims from third party
suppliers for use in the manufacture of its products. Consequently, an
interruption in the supply or a significant increase in the price of aluminum
could have a material adverse effect on the Company's results of operations and
financial condition. There can be no assurance that such materials will be
delivered on a timely basis or on terms favorable to the Company. Should the
Company lose its present sources of supply for these materials, not be able to
obtain such materials on favorable terms or experience delays in receiving them,
a material adverse impact on the Company's results of operations and financial
condition may result. The Company believes, however, that alternative sources of
supply exist or can be developed. The Company experienced significant rises in
aluminum prices in 1994 and early 1995. Although such prices have subsequently
stabilized, there can be no assurance that the Company will not experience
significant rises in aluminum prices in the future. See
"Business -- Manufacturing."

DEPENDENCE ON INTERNATIONAL SALES

A significant element of the Company's business strategy is to expand into
selected international markets, such as the recent introduction of its products
in Japan. In 1994 and 1995 and the first quarter of 1996, the Company derived
approximately 26.3%, 39.3% and 26.4%, respectively, of its net sales from
international markets, substantially all of which were in Japan. The Company's
international sales efforts are subject to the customary risks of doing business
abroad, including exposure to regulatory requirements, political and economic
instability, barriers to trade, trade restrictions (including import quotas),
tariff regulations, foreign taxes, restrictions on transfer of funds, difficulty
in obtaining distribution and support and export licensing requirements, any of
which could have a material adverse effect on the Company's operations. In
addition, a weakening in the value of foreign currencies relative to the U.S.
dollar and potential fluctuations in foreign currency exchange rates could have
an adverse impact on the effective price of the Company's products in its
international markets. See "Business -- Distribution, Sales and Marketing."

ADVERSE EFFECT OF REDUCED DISCRETIONARY CONSUMER SPENDING

Purchases of specialty automotive aftermarket products are discretionary
for consumers. The success of the Company is influenced by a number of economic
factors affecting disposable income such as employment levels, business
conditions, interest rates and tax rates. Adverse changes in these economic
factors, among others, may cause consumers to reduce discretionary spending for
the Company's products, thereby adversely affecting the Company's results of
operations and growth.

VARIABILITY IN QUARTERLY OPERATING RESULTS; SEASONALITY

The Company may experience significant fluctuations in future quarterly
operating results due to a number of factors including, among other things, the
size and timing of customer orders, delays in new product enhancements and new
product introductions, quality control difficulties, market acceptance of new
products, product returns, seasonality in product purchases by distributors and
end users and pricing trends in the automotive aftermarket industry in general
and in the specific markets in which the Company is active. Any of these factors
could cause quarterly operating results to vary significantly from prior
periods. Furthermore, the

6
<PAGE> 8

Company's business is seasonal in most sections of the country, as the Company
believes that it is affected by weather conditions. Historically, the Company's
net sales have been highest in the second and third quarters of each year.
However, the Company believes that unusually adverse or otherwise poor weather
conditions in the spring and summer seasons may have a negative effect on the
Company's sales in such quarters. Significant variability in orders during any
period may have an adverse impact on the Company's cash flow or work flow, and
any significant decrease in orders could have a material adverse impact on the
Company's results of operations and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

PRODUCT CONCENTRATION

Substantially all of the Company's revenues are derived from sales of
aluminum automobile and motorcycle wheels. The Company anticipates that these
products will continue to account for a substantial portion of its sales in the
foreseeable future. A decline in the demand for these products, whether as a
result of competition or other factors, could have a material adverse effect on
the Company's results of operations and financial condition.

RISK OF DECLINING AVERAGE SELLING PRICES

The Company may face increasing pricing pressures from current and future
competitors and, accordingly, there can be no assurance that competitive
pressures will not require the Company to reduce its prices. In particular, over
time, the average selling prices for the Company's wheel products (which
currently represent a significant portion of the Company's revenues) may decline
as the market for these products becomes more competitive. Any material
reduction in the price of the Company's products would negatively affect the
Company's gross margin and would require the Company to increase unit sales in
order to maintain net sales. See "Business -- Distribution, Sales and Marketing"
and "-- Competition."

MANAGEMENT OF COMPANY GROWTH; FUTURE CAPITAL REQUIREMENTS

The Company has experienced significant growth in recent years. This growth
will continue to make significant demands on the Company's management, resources
and operations. To manage its growth effectively, the Company intends to
continue to improve its operational, financial, sales and marketing systems and
to hire and train new employees and better manage its current employees. The
Company's failure to manage its growth effectively could have a material adverse
effect on the Company's results of operations and financial condition.

To the extent that the proceeds from this offering and cash flow from
operations are insufficient to fund the Company's activities, the Company will
be required to raise additional funds through equity or debt financings. No
assurance can be given that such financings will be available on terms
acceptable to the Company, if at all and, if available, such financings may
result in further dilution to the Company's shareholders and in higher interest
expense. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business."

RISK OF PRODUCT LIABILITY

The nature of the Company's business exposes it to risk from product
liability claims. The Company currently maintains product liability insurance
for its products worldwide, with limits of $5,000,000 per occurrence and
$5,000,000 in the aggregate, per annum. However, such coverage is becoming
increasingly expensive and there can be no assurance that the Company's
insurance will be adequate to cover future product liability claims, or that the
Company will be successful in maintaining adequate product liability insurance
at commercially reasonable rates. Any losses that the Company may suffer from
future liability claims, including the successful assertion against the Company
of one or a series of large uninsured claims in excess of the Company's
coverage, may have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, any product
liability litigation may have a material adverse effect on the reputation and
marketability of the Company's products. See "Business -- Product Warranties."

7
<PAGE> 9

ENVIRONMENTAL COMPLIANCE

In the ordinary course of its manufacturing process, the Company uses
metals, oils and similar materials which are stored on-site. The waste created
by use of these materials is transported off-site on a regular basis by a
state-registered waste hauler. Although the Company is not aware of any claim
involving violation of environmental or occupational safety and health laws and
regulations, there can be no assurance that such a claim may not arise in the
future, which may have a material adverse effect on the Company.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of the Common Stock in the public
market following this offering could adversely affect the market price of the
Common Stock. Mr. and Mrs. Coddington have agreed pursuant to lock-up agreements
that they will not, without the prior written consent of the Representative,
sell or otherwise dispose of approximately 656,942 shares of Common Stock
beneficially owned by them for a period of twelve months from the date of this
Prospectus, but may sell or otherwise dispose of up to 15,000 shares of Common
Stock per quarter commencing after this offering. Upon the completion of this
offering, the Company will have 3,319,128 shares of Common Stock outstanding. Of
this amount, the 1,000,000 shares sold in this offering (plus any additional
shares sold upon the Underwriter's exercise of the over-allotment option) and
approximately 1,545,000 other shares (subject in certain cases to the volume and
other limitations of Rule 144 ("Rule 144") as promulgated under the Securities
Act of 1933, as amended (the "Securities Act")), will be available for immediate
sale in the public market as of the date of this Prospectus. As of December 1,
1996, approximately 106,000 shares will become available for immediate sale in
the public market, subject to Rule 144. See "Principal and Selling Shareholders"
and "Underwriting."

CONTROL BY EXISTING SHAREHOLDERS

Upon completion of this offering, the principal shareholders, directors and
officers of the Company will beneficially own approximately 19.8% of the
Company's outstanding voting securities, or 19.1% in the event the
over-allotment option is exercised. Because of their stock ownership and
positions with the Company, these persons will be in a position to continue to
control the affairs and management of the Company. Such concentration of
ownership and control may have the effect of delaying, deferring or preventing a
change in control of the Company. See "Principal and Selling Shareholders" and
"Description of Capital Stock."

EFFECT OF PREFERRED STOCK ON RIGHTS OF COMMON STOCK

The Board of Directors of the Company is authorized to issue, from time to
time, without any action on the part of the Company's shareholders, up to
5,000,000 shares of Preferred Stock in one or more series, with such relative
rights, powers, preferences, limitations and restrictions as are determined by
the Board of Directors at the time of issuance. Accordingly, the Board of
Directors is empowered to issue Preferred Stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting power
or other rights of the holders of Common Stock. In the event of such issuance,
the Preferred Stock could be utilized, under either circumstances, as a method
of discouraging, delaying or preventing a change in control of the Company. See
"Description of Capital Stock -- Preferred Stock."

VOLATILITY OF STOCK PRICE; NO DIVIDENDS

The trading price of the Common Stock has been and is likely to continue to
be subject to significant fluctuations in response to variations in quarterly
operating results, the gain or loss of significant contracts, changes in
management, announcements of technological innovations or new products by the
Company or its competitors, legislative or regulatory changes, general trends in
the industry and other events or factors. In addition, the stock market has
experienced extreme price and volume fluctuations which have affected the market
price for many companies for reasons frequently unrelated to the operating
performance of these companies. These broad market fluctuations may adversely
affect the market price of the Company's Common Stock. The Company currently
intends to retain any future earnings for use in its business and does not
anticipate any cash dividends in the future. See "Price Range for Common Stock
and Dividend Policy."

8
<PAGE> 10

DILUTION

Purchasers of the Common Stock offered hereby will incur immediate
substantial dilution in net tangible book value of the Common Stock. The
conversion of existing convertible notes or the exercise of warrants and options
may also have an additional dilutive effect on the interest of the investors in
this offering. See "Dilution."

IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934 (the "Exchange Act") and the Company intends that such
forward-looking statements be subject to the safe harbors created thereby. These
forward-looking statements include the plans and objectives of management for
future operations, including plans and objectives relating to the products and
future economic performance of the Company. The forward-looking statements and
associated risks set forth in this Prospectus may include or relate to (i)
development of brand name recognition and loyalty to the Company's trade names
and trademarks, (ii) increasing sales through the introduction and development
of new products and product lines, (iii) success of marketing initiatives to be
undertaken by the Company, (iv) increasing international sales through
distribution arrangements in Japan and through the pursuit of additional
distribution arrangements in other countries, (v) increasing distribution
through expansion of the Company's network of distributors and its customer
base, (vi) success of the Company in forecasting demand for particular designs
and product styles and its success in establishing production and delivery
schedules and forecasts which accurately anticipate and respond to market
demand, (vii) success in expanding the Company's market through increasing sales
to large regional and national distributor accounts, (viii) success of the
Company in achieving increases in net sales such that cost of goods sold and
selling, general and administrative expenses may decrease as a percentage of net
sales and (ix) the size and growth rate of the custom wheel market.

The forward-looking statements included herein are based upon current
expectations that involve a number of risks and uncertainties. These
forward-looking statements are based upon assumptions that the Company will
continue to design, manufacture, market and ship new products on a timely basis,
that competitive conditions within the automotive aftermarket industry will not
change materially or adversely, that the custom wheel market will continue to
experience steady growth, that demand for the Company's products will remain
strong, that the Company will retain existing distributors and key management
personnel, that inventory risks due to shifts in market demand will be
minimized, that the Company's forecast will accurately anticipate market demand
and that there will be no material adverse change in the Company's operations or
business. Assumptions relating to the foregoing involve judgments with respect,
among other things, to future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that the assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the results contemplated in forward-looking
information will be realized. In addition, as disclosed above, the business and
operations of the Company are subject to substantial risks which increase the
uncertainty inherent in such forward-looking statements. Any of the other
factors disclosed above could cause the Company's net sales or net income, or
growth in net sales or net income, to differ materially from prior results.
Growth in absolute amounts of costs of goods sold and selling, general and
administrative expenses or the occurrence of extraordinary events could cause
actual results to vary materially from the results contemplated in the
forward-looking statements. Budgeting and other management decisions are
subjective in many respects and thus susceptible to interpretations and periodic
revisions based on actual experience in business developments, the impact of
which may cause the Company to alter its marketing, capital expenditure or other
budgets, which may in turn affect the Company's results of operations. In light
of the significant uncertainties inherent in the forward-looking information
included herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved.

9
<PAGE> 11

USE OF PROCEEDS

The net proceeds to the Company from the sale of 771,000 shares of Common
Stock offered hereby by the Company, at an assumed offering price of $10.50 per
share and after deducting the underwriting discount and estimated offering
expenses, are estimated to be approximately $7.2 million ($8.4 million if the
Underwriters' overallotment option is fully exercised). The Company will not
receive any of the proceeds from the sale of shares of Common Stock by the
Selling Shareholders.

The Company intends to use approximately $3.5 million of the net proceeds
to purchase capital equipment in order to develop additional manufacturing
capacity. In addition, approximately $1.8 million of the net proceeds will be
used to retire long-term debt and approximately $0.9 million will be used to
repay the Company's indebtedness under its revolving line of credit. The
interest rates on the long-term debt vary from 4.8% to 15.0% per annum with
various maturity dates. The interest rate on the revolving line of credit is
1.0% over the Wall Street Journal's published prime rate. The Company intends to
use the balance of the net proceeds for general corporate purposes, including
the financing of product sales growth, development of new products and working
capital requirements. A portion of the net proceeds may also be used by the
Company to acquire or invest in businesses, assets, technologies or product
lines that complement the Company's existing businesses. While from time to time
the Company evaluates potential acquisitions of such businesses, assets,
technologies or product lines, there is no present understanding or agreement
with respect to any such acquisitions.

The foregoing represents the Company's best estimate of the use of the net
proceeds to be received in this offering based on current planning and business
conditions. The Company reserves the right to change such use when and if market
conditions or unexpected changes in operating conditions or results occur. The
amounts actually expended for each use may vary significantly depending upon a
number of factors, including future sales growth and the amount of cash
generated by the Company's operations. Net proceeds not immediately required for
the purposes described above will be invested principally in U.S. government
securities, short-term certificates of deposit, money market funds or other
short-term, interest-bearing securities.

10
<PAGE> 12

PRICE RANGE FOR COMMON STOCK AND DIVIDEND POLICY

The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "BYDS." The following table sets forth for the quarters indicated the
reported high and low closing sale prices as reported by Nasdaq.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal 1995:
Third Quarter (commencing September 15, 1995).............. 7 5/8 6 7/8
Fourth Quarter............................................. 9 3/4 6 3/4
Fiscal 1996:
First Quarter.............................................. 10 3/4 8
Second Quarter (through May 21, 1996)...................... 11 3/4 8 1/2
</TABLE>

At May 21, 1996, there were approximately 1,200 holders of the Company's
outstanding shares of Common Stock and the closing sale price of the Common
Stock on the Nasdaq National Market was $10.50 per share.

The Company anticipates that all future earnings, if any, will be retained
for use in the Company's business and it does not anticipate paying any cash
dividends. Payment of future dividends, if any, will be at the discretion of the
Company's Board of Directors after taking into account various factors,
including the Company's financial condition, operating results, current and
anticipated cash needs and plans for expansion. The Company's ability to pay
cash dividends is restricted under its revolving line of credit facility and
future borrowings may contain similar restrictions.

DILUTION

As of March 31, 1996, the Company had a net tangible book value of
approximately $6,094,000 or $2.45 per share. "Net tangible book value" per share
represents the amount of total tangible assets less total liabilities divided by
the number of shares of Common Stock issued and outstanding. After giving effect
to the sale of the Common Stock offered by the Company hereby at an assumed
offering price of $10.50 per share, and assuming no other changes in the net
tangible book value after March 31, 1996, the Company's net tangible book value
(after deduction of underwriting discounts and commissions and estimated
offering expenses) at March 31, 1996 would have been approximately $13,248,000
or $4.06 per share. This represents an immediate increase in net tangible book
value of $1.61 per share to existing shareholders and an immediate dilution to
new investors of $6.44 per share. Dilution is determined by subtracting net
tangible book value per share after the offering from the amount of cash paid by
a new investor for a share of Common Stock. The following table illustrates the
per share dilution:

<TABLE>
<S> <C> <C>
Assumed offering price per share................................... $ 10.50
Net tangible book value per share before the offering............ $ 2.45
Increase per share attributable to new investors................. 1.61
------
Net tangible book value per share after the offering............... 4.06
------
Dilution per share to new investors................................ $ 6.44
======
</TABLE>

11
<PAGE> 13

CAPITALIZATION

The following table sets forth the capitalization of the Company at March
31, 1996 and as adjusted to give effect to the sale of the Common Stock offered
hereby at an assumed offering price of $10.50 per share and the application of
the net proceeds thereof to repay certain indebtedness.

<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------
ACTUAL AS ADJUSTED
------ -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt(1)....................................................... $1,326 $ --
------ -------
Shareholders' equity:
Preferred Stock, no par value:
5,000,000 shares authorized, none issued or outstanding............... -- --
Common Stock, no par value:
25,000,000 shares authorized; 2,489,856 shares issued and outstanding,
3,260,856 shares as adjusted(2)....................................... 6,007 13,161
Contributed capital..................................................... 827 827
Accumulated deficit..................................................... (568) (568)
------ -------
Total shareholders' equity............................................ 6,266 13,420
------ -------
Total capitalization............................................... $7,592 $13,420
====== =======
</TABLE>

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

(1) See Note 9 of Notes to Financial Statements for a description of the
Company's long-term debt.

(2) Excludes (i) 158,613 of Common Stock issuable upon exercise of currently
outstanding warrants, (ii) 69,762 shares of Common Stock issuable upon
exercise of currently outstanding options, (iii) 7,143 shares of Common
Stock issuable upon conversion of the convertible notes and (iv) 247,500
shares of Common Stock issuable pursuant to options under the 1995 Stock
Option Plan.

12
<PAGE> 14

SELECTED FINANCIAL DATA

The selected financial data set forth below with respect to the Company's
statements of income data for the years ended December 31, 1993, 1994 and 1995
and balance sheet data at December 31, 1994 and 1995 are derived from the
audited financial statements of the Company included elsewhere in this
Prospectus that have been audited by Coopers & Lybrand L.L.P., independent
accountants. The selected financial data as of March 31, 1996, and for the three
month periods ended March 31, 1995 and 1996 have been derived from the Company's
unaudited financial statements, which reflect all adjustments of a normal
recurring nature which the Company considers necessary for a fair presentation
of the results for such periods. The results of operations for the three months
ended March 31, 1996 are not necessarily indicative of the results of operations
to be expected for any future quarter or the fiscal year ending December 31,
1996. The data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements and Notes related thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
----------------------------- ----------------
STATEMENTS OF INCOME DATA: 1993 1994 1995 1995 1996
------- ------- ------- ------ ------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net sales.................................... $10,188 $12,127 $17,796 $3,660 $5,334
Cost of goods sold........................... 8,524 9,336 13,263 2,782 3,976
------- ------- ------- ------ ------
Gross margin................................. 1,664 2,791 4,533 878 1,358
Selling, general and administrative
expenses.................................. 1,230 1,648 2,741 465 714
------- ------- ------- ------ ------
Income from operations....................... 434 1,143 1,792 413 644
Interest and other expenses, net............. 423 695 383 142 48
------- ------- ------- ------ ------
Income before income taxes................... 11 448 1,409 271 596
Provision (benefit) for income taxes......... 1 (227) 462 111 236
------- ------- ------- ------ ------
Net income................................... $ 10 $ 675 $ 947 $ 160 $ 360
======= ======= ======= ====== ======
Net income per common share and common
equivalent share(1)....................... $ -- $ 0.40 $ 0.48 $ 0.09 $ 0.14
======= ======= ======= ====== ======
Weighted average shares outstanding.......... 1,671 1,701 1,960 1,697 2,655
======= ======= ======= ====== ======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1996
------------------ -------------------------
BALANCE SHEET DATA: 1994 1995 ACTUAL AS ADJUSTED(2)
------ ------- ------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Working capital (deficit)....................... $ (175) $ 2,113 $ 2,646 $ 8,418
Total assets.................................... 6,326 11,782 12,862 17,571
Long-term debt.................................. 1,328 903 1,326 --
Shareholders' equity............................ 1,880 5,856 6,266 13,420
</TABLE>

13
<PAGE> 15

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

The following information includes forward-looking statements, the
realization of which may be impacted by certain important factors discussed
under "Risk Factors -- Important Factors Related to Forward-Looking Statements
and Associated Risks."

OVERVIEW

The Company designs, manufactures and markets high quality aluminum wheels
for the specialty automotive aftermarket. In addition to its premium aluminum
wheels, the Company designs, manufactures and markets motorcycle wheels,
steering wheels for automobiles, automotive and motorcycle billet aluminum
accessories, and also sells car care products under its own label. The Company
sells its products domestically through a national distribution network of tire
and performance retailers, warehouse distributors and mail order outlets and
internationally through foreign distribution channels. The Company derived
approximately 26.3%, 39.3% and 26.4% of its sales in fiscal 1994 and 1995, and
the first quarter of fiscal 1996, respectively, from international sales,
primarily in Japan.

Net sales consist of gross sales less the amount of discounts, returns and
allowances. The Company generally provides its customers a standard term of
2%/10 net 30 days upon payment of the gross invoice price. Discounts, returns
and allowances vary from year to year but were approximately 3% for 1994 and 5%
for 1995, with most of the increase attributable to discounts taken by customers
for early payment of invoices. Net sales for any of the Company's product lines
can be influenced by a number of factors, including changes in customer
preferences and pricing policies of the Company's competitors. In late 1994, the
Company adopted a long term strategy to shift its domestic sales distribution to
large, national and regional warehouse distributors from local and smaller
regional chains and independent dealers. As a result of implementing this
strategy, domestic sales increased 20.9% in fiscal 1995 over fiscal 1994 and
68.0% in the three months ended March 31, 1996 over the same period in 1995.

Cost of goods sold consists primarily of the costs of labor, aluminum, raw
materials and overhead used in the production of the Company's products. The
Company's gross margin in late 1994 and early 1995 was adversely impacted by
significant rises in aluminum costs. During 1995 and the first quarter of 1996
aluminum prices stabilized. The Company currently does not purchase forward
contracts for aluminum and, therefore, any future increase in aluminum prices
could adversely affect the Company's gross margin. The Company's gross margin
was 25.5% for 1995 and remained at 25.5% for the first quarter of 1996. The
Company anticipates that its gross margin will remain relatively constant or
will slightly increase in the near future.

Selling, general and administrative expenses consist primarily of
commissions, marketing expenses, sales and administrative salaries, product
development expenses, office expenses and general overhead. The Company expects
that selling, general and administrative expenses will increase in absolute
amounts in fiscal 1996 due, in part, to increased advertising and promotion
activities, increased product development expenditures, the hiring of additional
personnel and periodic reporting and compliance requirements associated with
being a public company. However, the Company believes that such expenses should
decrease as a percentage of net sales from the 1995 level.

Traditionally, the Company's ten largest customers have accounted for a
substantial portion of the Company's net sales. During the three months ended
March 31, 1996, the Company's ten largest customers accounted for approximately
87.8% of the Company's net sales. During 1995 and for the three months ended
March 31, 1996, the Company's significant customers were Wheel City (24.1% of
net sales in 1995 and 27.5% of net sales for the three months ended March 31,
1996), American Motoring Accessories (16.7% and 13.0%), Mooneyes (15.6% and
10.2%) and American Racing (12.0% and 16.6%).

14
<PAGE> 16

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
of net sales represented by certain items included in the Company's Statements
of Income.

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
------------------------- ---------------
STATEMENTS OF INCOME DATA: 1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales.......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold................................. 83.7 77.0 74.5 76.0 74.5
----- ----- ----- ----- -----
Gross margin....................................... 16.3 23.0 25.5 24.0 25.5
Selling, general and administrative expenses....... 12.1 13.6 15.4 12.7 13.4
----- ----- ----- ----- -----
Income from operations............................. 4.2 9.4 10.1 11.3 12.1
Interest and other expenses, net................... 4.1 5.7 2.2 3.9 0.9
----- ----- ----- ----- -----
Income before provision for income taxes........... 0.1 3.7 7.9 7.4 11.2
Provision (benefit) for income taxes............... -- (1.9) 2.6 3.0 4.4
----- ----- ----- ----- -----
Net income......................................... 0.1% 5.6% 5.3% 4.4% 6.8%
===== ===== ===== ===== =====
</TABLE>

COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 AND THREE MONTHS ENDED MARCH 31,
1995

Net sales for the three months ended March 31, 1996, were $5,334,000
compared to $3,660,000 for the same period in 1995, an increase of $1,674,000 or
45.7%. The increase was primarily attributable to the continued demand for the
Company's main product lines, two-piece cast wheels and billet wheels, sales of
which increased approximately $600,000. The new motorcycle wheels and
accessories, introduced in mid-1995, accounted for approximately $500,000 of the
increase. The new one-piece cast wheels, introduced in the fourth quarter of
1995, contributed approximately $200,000 to the increase in net sales and
private label sales contributed approximately $300,000 to the increase in net
sales.

Gross margin for the three months ended March 31, 1996 was $1,358,000
compared to $878,000 for the same period in 1995, an increase of $480,000 or
54.7%. As a percentage of net sales, gross margin increased to 25.5% in 1996
from 24.0% in 1995. The increase in gross margin was primarily attributable to
volume discounts associated with larger quantity purchases of raw materials, an
increase in average sales price and a change in sales mix which included new
products at higher gross margins. The increase in gross margin was slightly
offset by an increase in general factory overhead.

Selling, general and administrative expenses for the three months ended
March 31, 1996 were $714,000 compared to $465,000 for the same period in 1995,
an increase of $249,000 or 53.5%. As a percentage of net sales, selling, general
and administrative expenses increased to 13.4% in 1996 from 12.7% in 1995. This
increase was primarily attributable to an increase in expenditures related to
new product development, advertising and promotional costs associated with new
product introductions and legal, accounting and other costs related to being a
public company.

Interest and other expenses, net, for the three months ended March 31, 1996
were $48,000 compared to $142,000 for the same period in 1995, a decrease of
$94,000 or 66.2%. This decrease was attributable to the partial application of
the proceeds from the Company's initial public offering which were used to
reduce debt and were invested in short-term interest-bearing securities.

Income taxes for the three months ended March 31, 1996 were $236,000
compared to $111,000 for the same period in 1995, an increase of $125,000 or
112.6%. The provision for income taxes in the first quarter of 1996 and 1995
represents the Company's expected annual effective tax rate and was 39.6% and
41.0% for 1996 and 1995, respectively.

15
<PAGE> 17

As a result of the above, net income for the three months ended March 31,
1996 was $360,000 compared to $160,000 for the same period in 1995, an increase
of $200,000 or 125.0%.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 AND THE YEAR ENDED DECEMBER 31,
1994

Net sales for the year ended December 31, 1995, were $17,796,000 compared
to $12,127,000 for the same period in 1994, an increase of $5,669,000 or 46.7%.
This increase was attributable to increased sales as a result of additional
product offerings, continued growth internationally and a general price increase
in May 1995.

Gross margin for the year ended December 31, 1995 was $4,533,000 compared
to $2,791,000 for the same period in 1994, an increase of $1,742,000 or 62.4%.
As a percent of sales gross margin increased to 25.5% in 1995 from 23.0% in
1994. The increase in gross margin was primarily attributable to a
reconfiguration of the Company's plant layout which resulted in greater
production efficiencies. These efficiencies were offset in part by an increase
in the price of aluminum stock. In addition, the allocation of overhead charges
over a greater sales base helped to improve gross margin.

Selling, general and administrative expenses for the twelve months ended
December 31, 1995, were $2,741,000 compared to $1,648,000 for the same period in
1994, an increase of $1,093,000 or 66.3%. As a percent of sales the costs
increased in 1995 to 15.4%, from 13.6% in 1994. This increase was attributable
to additional administrative and facility costs incurred to support the
Company's growth and the addition of management, including a one-time payment to
a former executive officer.

Interest and other expenses, net for the year ended December 31, 1995, were
$383,000 compared to $695,000 for the same period in 1994, a decrease of
$312,000 or 44.9%. This decrease was attributable to favorable lease refinancing
and a decrease in factoring costs, which were eliminated by year-end. During the
fourth quarter, the Company earned interest income of $19,000 from the cash
proceeds of the initial public offering.

The benefit for income taxes in 1994 resulted from the elimination of the
valuation allowance against deferred tax assets resulting from current taxable
income and the expected utilization of the Company's net operating loss
carryforwards. The provision for income taxes in 1995 of $462,000, reflects the
continued application of the net operating loss carryforwards and the benefit of
state tax credits. The effective tax rate for 1995 was 32.8%.

As a result of the above, net income for the year ended December 31, 1995,
was $947,000 compared to $675,000 for the same period in 1994, an increase of
$272,000 or 40.3%.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1994 AND THE YEAR ENDED DECEMBER 31,
1993

Net sales for 1994 were $12,127,000 compared to $10,188,000 for 1993, an
increase of $1,939,000 or 19.0%. This increase was attributable to additional
sales volume in the Japanese market as a result of additional product offerings
and an increased number of distributors to such market.

Gross margin for 1994 was $2,791,000 compared to $1,664,000 for 1993, an
increase of $1,127,000 or 67.7%. As a percentage of sales, gross margin
increased to 23.0% in 1994 from 16.3% in 1993. The improved margins were
attributable to the allocation of overhead charges to a greater sales base,
substituting costly outside processing with in-house services and the
efficiencies obtained by the reconfiguration of the Company's plant layout.

Selling, general and administrative expenses for 1994 were $1,648,000
compared to $1,230,000 for 1993, an increase of $418,000 or 34.0%. As a
percentage of sales, these expenses increased from 12.1% to 13.6%. This increase
was attributable to the expansion of sales and administrative personnel to
support the Company's growth, larger administrative facilities and increased
participation at industry trade shows throughout the United States.

Interest and other expenses, net, for 1994 were $695,000 compared to
$423,000 for 1993, an increase of $272,000 or 64.3%. The increase in interest
expense was attributable to higher debt levels needed to finance the Company's
growth and to higher factoring costs.

16
<PAGE> 18

The benefit for income taxes in 1994 was attributable to the elimination of
the valuation allowance on deferred tax assets resulting from current taxable
income and the expected utilization of net operating loss carryforwards. See
Note 13 to the Financial Statements.

As a result of the above, net income for 1994 was $675,000 compared to
$10,000 for 1993, an increase of $665,000.

QUARTERLY RESULTS

The following table sets forth unaudited selected quarterly financial
information. This information has been derived from unaudited financial
statements which, in the opinion of management, include all adjustments
(consisting of normal recurring entries) necessary for a fair presentation of
such information. Results of operations for any one or more quarters are not
necessarily indicative of results for an entire year or of results to be
expected for any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1994 1994 1994 1994 1995 1995 1995 1995 1996
-------- -------- --------- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Net sales............ $2,728 $3,214 $ 3,141 $3,044 $3,660 $4,680 $ 4,594 $4,862 $5,334
Cost of goods sold... 2,100 2,474 2,418 2,344 2,782 3,516 3,455 3,510 3,976
------ ------ ------ ------ ------ ------ ------ ------ ------
Gross margin......... 628 740 723 700 878 1,164 1,139 1,352 1,358
Selling, general and
administrative
expenses........... 346 407 420 475 465 607 623 1,046 714
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from
operations......... 282 333 303 225 413 557 516 306 644
Interest and other
expenses, net...... 238 164 160 134 142 117 97 27 48
------ ------ ------ ------ ------ ------ ------ ------ ------
Income before
provision for
income taxes....... 44 169 143 91 271 440 419 279 596
Provision (benefit)
for income taxes... (22) (86) (73) (47) 111 173 166 12 236
------ ------ ------ ------ ------ ------ ------ ------ ------
Net income........... $ 66 $ 255 $ 216 $ 138 $ 160 $ 267 $ 253 $ 267 $ 360
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>

The Company may experience significant fluctuations in future quarterly
operating results due to a number of factors including, among others things, the
size and timing of customer orders, delays in new product enhancements and new
product introductions, quality control difficulties, market acceptance of new
products, product returns, seasonality in product purchases by distributors and
end users and pricing trends in the automotive aftermarket industry in general
and in the specific markets in which the Company is active. While the effect of
these factors on the Company's operating results has been obscured to date by
the Company's growth, any of these factors could cause quarterly operating
results to vary from prior periods.

17
<PAGE> 19

SEASONALITY

The following table sets forth net sales information for each of the
Company's last 17 quarters. This unaudited net sales information has been
prepared on the same basis as the annual information presented elsewhere in this
Prospectus and, in the opinion of management, reflects all adjustments
(consisting of normal recurring entries) necessary for a fair presentation of
the information presented. Net sales for any quarter are not necessarily
indicative of sales for any future period.

<TABLE>
<CAPTION>
NET SALES
---------------------------------------
FIRST SECOND THIRD FOURTH
YEAR QUARTER QUARTER QUARTER QUARTER
---------------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
1992.................................... $1,411 $2,115 $1,762 $1,440
1993.................................... 2,261 2,726 2,654 2,547
1994.................................... 2,728 3,214 3,141 3,044
1995.................................... 3,660 4,680 4,594 4,862
1996.................................... 5,334 -- -- --
</TABLE>

In general, the Company's business is seasonal in most sections of the
country, as the Company believes that it is affected by weather conditions.
Historically, the Company's net sales have been the highest in the second and
third quarters of each year. The Company believes that unusually adverse or
otherwise poor weather conditions in the spring and summer seasons may have a
negative effect on the Company's sales in such quarters. Significant variability
in orders during any period may have an adverse impact on the Company's cash
flow or work flow, and any significant decrease in orders could have a material
adverse impact on the Company's results of operations and financial condition.
The Company's strategy of expanding motorcycle sales and sales into
international markets has ameliorated the impact of seasonality on the Company's
business.

LIQUIDITY AND CAPITAL RESOURCES

The Company has experienced significant growth since 1992, with its net
sales growing from $6,728,000 in 1992 to $17,796,000 in 1995 which represents a
38% compound annual growth rate. During this period, the Company has financed
its cash requirements primarily through cash generated from operations,
borrowings on bank credit lines, capitalized lease financing of fixed asset
purchases, a factoring arrangement from September 1993 to March 1995, private
placements of securities and an initial public offering of Common Stock in
September 1995. At March 31, 1996, the Company's cash and cash equivalents
balance was $555,000 and its current ratio was 1.53 to 1.00.

In August 1995 and as amended in November 1995 and April 1996, the Company
entered into a revolving line of credit agreement and an equipment line of
credit agreement with a bank with maximum loan amounts of $2,500,000 and
$1,000,000, respectively. The interest rate on the revolving line of credit
agreement is 1.0% over the Wall Street Journal's published prime rate and the
interest rate on the equipment line of credit agreement is 1.5% over the Wall
Street Journal's published prime rate. The bank has a lien on the Company's
assets as collateral for both agreements. At May 21, 1996, the outstanding
balance of the revolving line of credit was $850,000, with $383,000 available on
that date. The equipment line of credit of $1,000,000 had an available balance
of $1,000,000 as of May 21, 1996. On April 19, 1996, the Company also refinanced
the then outstanding balance on the equipment line of $599,874 into a 60-month
term loan, payable in equal monthly installments and bearing interest at 1.75%
over the Wall Street Journal's published prime rate (an effective rate of 10% at
April 19, 1996).

Net cash used by operating activities totalled approximately $862,000 for
the three months ended March 31, 1996. This increase was directly attributable
to working capital used for an increase in inventories from approximately
$3,600,000 at December 31, 1995 to $4,700,000 at March 31, 1996. The increase in
inventories reflects the general growth of the Company's business and the
seasonal growth in anticipation of customer orders to be shipped in the second
and third quarters of 1996. Net cash used by investing activities totalled
approximately $419,000 for the three months ended March 31, 1996. The primary
use of cash was for

18
<PAGE> 20

the purchase of property and equipment of approximately $442,000 to expand the
Company's plant capacity. Working capital was approximately $2,646,000 at March
31, 1996 compared to $2,113,000 at December 31, 1995. Working capital
requirements are expected to grow as the Company expands its inventories,
property and equipment and seeks to increase sales through additional marketing
activities and extension of its new products and product lines.

The Company intends to use the proceeds of this offering, its revolving
line of credit, equipment line of credit and cash generated from operations, if
any, to support the growth of the Company.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." The accounting or disclosure requirements of this statement are
effective at the Company's fiscal year-end 1996. It is currently anticipated
that the Company will continue to account for stock-based compensation using
Accounting Principles Board Opinion No. 25 and the impact of SFAS 123 has not
yet been determined.

19
<PAGE> 21

BUSINESS

The following discussion contains certain forward-looking statements.
Actual results could differ materially. See "Risk Factors -- Important Factors
Related to Forward-Looking Statements and Associated Risks."

INTRODUCTION

Boyds Wheels, Inc. (the "Company") designs, manufactures and markets high
quality aluminum wheels for the specialty automotive aftermarket. In addition to
its premium aluminum wheels, the Company designs, manufactures and markets
motorcycle wheels, steering wheels for automobiles and automotive and motorcycle
billet aluminum accessories, and also sells car care products under its own
label. The Company's products utilize machined aluminum materials and unique
designs which the Company believes enhance individuality of vehicle styling. The
Company sells its products domestically through a national distribution network
of tire and performance retailers, warehouse distributors and mail order outlets
and internationally through foreign distribution channels.

The Company was founded in 1988 by Boyd Coddington in response to consumer
demand for billet aluminum wheels similar to those featured on custom hot rod
vehicles designed and manufactured by Hot Rods by Boyd, a company which has been
recognized as a leading designer, manufacturer and marketer of custom vehicles
and hot rods. Since 1978, Mr. Coddington has owned and operated Hot Rods by
Boyd, which has built vehicles that have been featured in many automotive and
general interest publications, including Car and Driver, Autoweek, Hot Rod,
Smithsonian and Forbes. The Company believes that its relationship with Hot Rods
by Boyd is a key factor in maintaining and enhancing the image and brand name
recognition of the Company's products. The Company has entered into a
marketing/promotion agreement with Hot Rods by Boyd pursuant to which Hot Rods
by Boyd is required to endorse, promote and market the Company's wheels as the
"official wheel" of Hot Rods by Boyd, use the Company's wheels on vehicles
produced by Hot Rods by Boyd and permit the Company to use these vehicles for
promotional displays and photographs. In addition, the Company has an option to
purchase Hot Rods by Boyd.

INDUSTRY BACKGROUND

The Company believes that several factors which have contributed to the
growth in its segment of the market include: (i) increases in sales of domestic
cars and light trucks which have resulted in increasing the aggregate number of
vehicles in use and therefore potential consumers of automotive aftermarket
products, (ii) increases in average vehicle life, which the Company believes
contributes to demand for automotive aftermarket parts as vehicle owners seek to
enhance the appearance of older vehicles, (iii) increases in sales through tire
dealers and performance retailers, (iv) the continuing enthusiasm of Americans
for vehicle styling and (v) the growing popularity in international markets for
American-styled and "Made in the USA" products. The Company further believes
that consumer desire for individuality in vehicle appearance will contribute to
the Company's growth and custom wheels represent one of the easiest, least
expensive, and quickest ways to dramatically alter the appearance of a vehicle.
Additionally, increased government regulation of specialty performance
automotive aftermarket parts has made it more difficult to modify engine and
drive-train components, which the Company believes will also contribute to its
growth.

To address the growing Harley-Davidson motorcycle accessory market, the
Company has developed a line of machined billet aluminum wheels, belt drives,
stainless steel rotors and other accessories marketed under the brand name
"Boyds Motorcycle Accessories." According to Harley-Davidson's 1995 annual
report, Harley-Davidson dominates the heavy-weight portion of the market (751cc
and above) with 55% of the North American market and 22% and 11% of the
Asian/Pacific and European markets, respectively. Harley-

20
<PAGE> 22

Davidson reports that annual shipments of its motorcycles have increased at a
compound annual growth rate of 12.4% since 1986, with approximately 680,000 of
its motorcycles shipped worldwide in that period. This large installed base
combined with projected annual shipments represents a significant potential
market for the Company's motorcycle aftermarket wheels and accessories. The
Company believes that by leveraging its brand awareness in this cross-over
market, the Company can capitalize on established consumer recognition and
diversify the product line through this growing industry. Currently the
Company's motorcycle product line addresses the entire Harley-Davidson line.
Also, the Company is currently seeking distribution in Europe, the largest
market in the world for heavy-weight motorcycles. The Company is also in the
process of developing a one-piece cast aluminum motorcycle wheel, which it
expects to introduce during the second half of 1996.

BUSINESS STRATEGY

The Company's strategy is to expand its position as a leading marketer of
premium automotive and motorcycle aftermarket products by capitalizing on
consumer recognition of the "Boyds" brand name and the Company's growing
distribution network. Key elements of the Company's business strategy include:

Leverage and Strengthen Premium Brand Name Recognition. The Company has
developed the reputation for delivering premium products to the marketplace. The
Company intends to leverage its premium brand name recognition in order to
introduce new products and product lines to the markets it serves. Furthermore,
the Company intends to strengthen its premium brand name recognition through the
use of dynamic advertising and marketing programs, public relations efforts,
licensing agreements and celebrity associations.

Create New Product Lines. The Company continually assesses industry
trends, the marketplace and product positioning. The Company is committed to
adding selected new product lines in order to build its customer loyalty into a
broader based business. For example, the Company has introduced Boyds Ultra
Violet car care products and billet motorcycle wheels marketed under the name
"Boyds Motorcycle Accessories" and in late 1995 introduced one-piece cast
aluminum wheels. The Company also plans to introduce a one-piece cast aluminum
motorcycle wheel during the second half of 1996.

Continue Innovative Product Design and Development. The Company's strategy
is to differentiate its products from its competition by continually identifying
and introducing trend setting designs. Innovative designs for new products in
existing product lines that appeal to the consumer's desire for individuality
and superior product quality are critical to the Company's sales growth. The
goal of the Company's product development team is to be a leader in design
trends, develop fashions for the aftermarket and develop cost effective and
creative manufacturing techniques for the production of its products.

Diversify Domestic Product Distribution. The Company has successfully
established distribution of its products in key regions of the United States.
The Company believes that future growth of its distribution channels will come
from penetration of new geographic areas. In addition, through the use of
demographic and psychographic information, the Company intends to target key
distributors to service its customer and consumer markets. Creative distribution
methods and new distribution channels are key elements of continued sales
expansion for the Company.

Expand Penetration of International Markets. The Company's products are
recognized in many international markets. In order to meet what the Company
anticipates to be a growing international market, the Company intends to expand
its foreign presence by establishing relationships with selected distributors in
Europe and the Pacific Rim. The Company believes that its premium brand name
recognition, promotion of its "Made in the USA" products and unique styling will
facilitate penetration into these markets.

PRODUCTS

The Company currently offers three distinct lines of custom aluminum
automotive wheels: two-piece machined billet wheels, two-piece machined cast
wheels and one-piece machined cast wheels. The Company offers a line of custom
aluminum steering wheels, machined billet motorcycle wheels and related billet
aluminum accessories in addition to car-care products. Innovative designs and
premium quality are key elements of each product line manufactured by the
Company.

21
<PAGE> 23

TWO-PIECE BILLET WHEELS. The Company currently markets 54 styles of
two-piece machined billet aluminum wheels, with a suggested retail price range
of $1,300 to $6,500 for a set of four wheels. The Company believes that the
machined billet wheel is the most elite and high-quality custom aluminum wheel
available. Billet wheel centers are manufactured from a solid piece of aluminum
known as a billet, through the use of computerized numerically controlled
("CNC") machines which "carve" out the specialized custom designs from the
billet aluminum. After polishing, the finished center is welded into an aluminum
outer rim. Through the precision and flexibility of this billet manufacturing
process, the Company is able to offer billet wheels with greater detail in
design, higher quality finish and larger variety of styles, applications and
vehicle fitments than other standard manufacturing processes. Billet wheels
accounted for approximately 33.6%, 28.1% and 17.8% of the Company's sales for
the years ended December 31, 1994 and 1995, and for the three months ended March
31, 1996, respectively.

TWO-PIECE MACHINED CAST WHEELS. The Company currently markets 28 styles of
custom two-piece machined cast wheels. Nine additional styles are sold to
Japanese distributors for sale exclusively in Japan. The suggested retail price
range for a set of four wheels is $700 to $1,000. The two-piece cast wheels are
produced with integrated machine processes, whereby the wheel centers are molded
from aluminum ingot in a low pressure foundry, machined to achieve a more
distinctive look (similar to that of the billet wheel), polished and welded into
an aluminum outer rim. This two-piece assembly process allows the Company to
weld the center into a variety of positions creating a larger selection of
appearances and fitments and, in some cases, to produce a variety of designs
from a single mold. Included within this product line are cast aluminum wheel
centers which are sold to American Racing which then assembles the centers with
its own outer rims for resale as private label wheels. See "-- Product
Distribution -- Warehouse Distributors." Two-piece cast wheels accounted for
approximately 61.3%, 64.1% and 64.0% of the Company's sales for the years ended
December 31, 1994 and 1995, and for the three months ended March 31, 1996,
respectively.

STEERING WHEELS. The Company currently markets ten styles of steering
wheels, made with the same machining process as its billet wheels. The suggested
retail price range for one steering wheel is $400 to $1,000. Each steering wheel
begins as a 1/8 inch thick piece of billet aluminum which is stamped into a
basic pattern and machined on a CNC machine. The steering wheel is then
polished, a foam grip is injected around its perimeter and a hand-stitched
leather wrap is sewn to the steering wheel. The Company also builds limited
quantities of an extremely high end steering wheel which is hand machined and
available in special finishes. Steering wheels accounted for approximately 4.7%,
3.6% and 2.3% of the Company's sales for the years ended December 31, 1994 and
1995, and for the three months ended March 31, 1996, respectively.

MOTORCYCLE WHEELS AND ACCESSORIES. The Company currently markets 15 styles
of motorcycle wheels as well as accessories under the trade name Boyds
Motorcycle Accessories for application on Harley-Davidson motorcycles. The
Company's motorcycle wheels were first manufactured in 1994 and are currently
distributed by Sullivan Brothers, Drag Specialties and Nempco. Currently the
motorcycle accessories include stainless steel brake rotors, billet aluminum
belt drives, aluminum chain drive sprockets, billet aluminum rocker boxes,
billet aluminum swing arms and billet aluminum cam covers. These accessory
products are designed to complement the styling of wheels and further enhance
the look of the motorcycle. The Company introduced five new accessory items in
1995. The Company's suggested retail price for one motorcycle wheel ranges from
$650 to $980. Motorcycle wheels and accessories accounted for approximately 3.0%
of the Company's sales for the year ended December 31, 1995 and 9.0% for the
three months ended March 31, 1996. The Company also plans to introduce a
one-piece cast aluminum motorcycle wheel during the second half of 1996.

ONE-PIECE MACHINED CAST WHEELS. The Company introduced five styles of
one-piece machined cast aluminum wheels in late 1995 for the sport utility
vehicle and European vehicle markets. One-piece cast wheels are produced with
integrated machine processes whereby the entire wheel is molded from aluminum
ingot in a low pressure foundry. The wheel is then machined to achieve a more
distinctive look. One-piece cast wheels have a greater load capacity than the
Company's other wheel lines thereby making them suitable for applications on
heavier vehicles. One-piece cast wheels are manufactured using a simpler, faster
production process since the rim and the center is molded as one integral unit
thereby eliminating the costs associated with an outside supplier of outer rims
and reduced assembly and handling costs. The lower material costs and reduced
machining time should enable the Company to reach a market in which it could not
otherwise

22
<PAGE> 24

effectively compete. The Company's suggested retail price range for a set of
four wheels is $600 to $1,200. One-piece cast wheels accounted for approximately
4.0% of the Company's first quarter 1996 net sales.

WHEEL ACCESSORIES AND CAR-CARE PRODUCTS. The Company currently sells Boyds
Ultra Violet car care products and also sells a variety of billet aluminum
accessory items under its "The Boyd Look" trademark, such as pedal kits, horn
buttons, air cleaners and license plate frames. These products enhance the
product line and provide ancillary sales at the dealer level. The Company is
currently in negotiations with a national auto parts retail chain pursuant to
which Boyds Ultra Violet car care products will be manufactured and sold by such
retail chain.

PRODUCT DEVELOPMENT

The Company seeks to design innovative and trend-setting styles for
existing and new product lines. The Company's design influence is derived
primarily from Boyd Coddington and is often referred to in the industry as "The
Boyd Look," which is based on simplicity in style, look and design. The
Company's products are designed by a five-person product development team which
includes Boyd Coddington. Boyd Coddington and one other member of the team
design wheels as well as vehicles for Hot Rods by Boyd. The product development
team uses CAD/CAM technology for the development of many new products. The
CAD/CAM system enables the Company to transition new products rapidly from
design, to prototype development, and then to full-scale production. The Company
currently has several products within several product lines under development.

DISTRIBUTION, SALES AND MARKETING

PRODUCT DISTRIBUTION

The Company's products are currently sold through a national and
international distribution network consisting primarily of the categories
described below. The following are brief descriptions of the Company's
distribution channels:

TIRE DEALERS AND PERFORMANCE RETAILERS. The Company sells its custom
wheels and other products to tire dealers throughout the United States,
including Discount Tire, Les Schwab and Super Shops, Inc. The Company's
performance retailer customers currently include Tradertim, Inc., Hunter's
and Super Shops, Inc. Tire dealers and performance retailers, two
traditionally separate channels which are beginning to overlap in their
product coverages, are currently the largest distribution channel for the
Company's custom wheels and related accessories. The Company believes that
tire dealers have experienced success with "combination" sales of tires
with custom wheels and that performance retailers serve as an important
link to automotive enthusiasts.

WAREHOUSE DISTRIBUTORS. The Company sells its products to warehouse
distributors, such as Wheel City and American Racing, who sell to tire
dealers, performance retailers, service stations and specialty boutiques.
Since 1993, the Company has sold both its billet wheels and private label
cast wheel centers to American Racing which the Company believes is the
nation's largest warehouse distributor of specialty automotive wheels with
approximately 65 warehouses. In 1995, the Company agreed to sell wheels
directly to Tredit Tire, one of the largest direct distributors of custom
wheels and tires to the van/truck conversion industry. Automotive
aftermarket warehouse distributors generally seek rapid inventory turnover
by heavily stocking a limited selection of high quality merchandise offered
at good values. The Company believes that warehouse distributors are, and
will continue to be, an important factor in the Company's penetration of
new geographic areas and that the van conversion industry will be a new
market for distribution of its wheel lines.

MAIL ORDER OUTLETS. The Company sells its products to mail order
catalog houses which resell them to the public. The Company believes that
inclusion of its products in large mail-order catalogs, including ASAP,
Tradertim Inc. and Hunter's, has been, and will continue to be, a
significant factor in promoting the brand name recognition of the Company's
products and increasing direct sales to consumers.

23
<PAGE> 25

INTERNATIONAL SALES. In 1992, the Company began selling to the
Japanese market through a domestic distributor and currently sells to eight
distributors that market the Company's products in Japan. In 1994 and 1995,
and for the three months ended March 31, 1996 international sales accounted
for approximately 26.3%, 39.3% and 26.4%, respectively, of the Company's
net sales, substantially all of which were in Japan. The Company believes
that continued success and growth in this market will be largely due to (i)
significant demand that exists for wheels made and designed in the United
States with distinctive styling and (ii) the offering of exclusive designs
to individual distributors.

SALES

The Company's strategy is to increase sales by (i) identifying new niche
markets such as sport utility vehicles, sports cars and European vehicles, (ii)
reaching new domestic distribution channels in new geographic areas of the
United States, (iii) using direct marketing to specialty groups through mail
order outlet channels, (iv) expanding its international distribution to address
selected foreign markets and (v) developing new products and product lines,
including those to be aimed at new market segments, such as the one-piece cast
wheels introduced in late 1995 for use on other types of vehicles and
applications.

As of May 21, 1996, the Company employed ten individuals in its sales and
marketing department. The Company's sales and marketing employees are
responsible for implementing marketing plans and sales programs, providing
technical advice and customer service, handling customer inquiries, coordinating
the Company's trade shows and staffing exhibits. Returns in excess of $5,000 are
subject to preapproval and a 15% restocking fee.

Typically a limited number of customers have accounted for a substantial
portion of the Company's net sales. In 1995, the Company's ten largest customers
accounted for approximately 82.4% of net sales, with four accounting for greater
than 10% each: Wheel City at 24.1%, American Motoring Accessories at 16.7%,
Mooneyes at 15.6% and American Racing at 12.0%. In 1994, the Company's ten
largest customers accounted for approximately 84.6% of net sales, with three
accounting for greater than 10% each: American Racing at 25.2%, Mooneyes at
15.5% and Wheel City at 12.3%. The Company does not have any long-term
contractual relationships with its major customers. The loss of or any reduction
in orders by any such customers could adversely affect the Company's business,
financial condition and results of operations.

MARKETING

The Company's collaboration with Hot Rods by Boyd is one of its principal
marketing tools. See "-- Collaboration with Hot Rods by Boyd." The Company uses
a variety of other methods to promote its products, including participation in
automotive events and international trade shows. In order to ensure that the
Company stays in close touch with the constantly changing needs of its
customers, including both consumers and distributors, the Company maintains a
consumer data base derived from warranty card information and other sources.
Sales personnel also attend distributor open houses and retail store openings,
enabling direct one-on-one interaction with consumers and customers. Key
management personnel attend many of these events in order to develop ideas for
new products and programs. The Company believes that its trademarks, Boyds,
Boyds Wheels, Boyds Ultra Violet, and The Boyd Look have become recognized brand
names in the automotive/motorcycle markets and represent its commitment to
well-designed, high-quality innovative wheels and accessories.

To date, the Company has utilized limited print advertising. The Company
has, instead, concentrated on high-profile public relations opportunities such
as featuring its wheels on the award-winning vehicles of Hot Rods by Boyd and
gaining coverage of its wheels in leading specialty automotive publications such
as Hot Rod Magazine, Truckin', Street Rodder, Sport Truck and AutoWeek and
targeted enthusiast television and radio programs. The Company recently received
the 1995 "Wheel of the Year" award presented by Eagle One. The Petersen
Automotive Museum in Los Angeles also recently devoted a wing of the museum to a
retrospective

24
<PAGE> 26

of the works of Boyd Coddington, including his hot rods and the Company's
wheels. The Company also engages in cooperative advertising efforts with its
major retailers and distributors.

The Company currently publishes a periodic newsletter which is mailed
directly to various newspapers and periodicals, retailers, distributors and
customers and features new products, special events, technical innovations,
employee profiles and interesting facts about the Company. The Company believes
that its direct mail programs are effective in maintaining its reputation as a
leading manufacturer of premium custom wheels and related accessories. The
Company also believes that dealer support programs are key factors for marketing
success and provides its wheel dealers with marketing kits that include ad
slicks, product photos, logo sheets, press releases and other advertising
information and a videotape presentation featuring the Company's latest products
and information. The Company also supports its dealers and brand name image with
special events and onsite presentations, featuring two 70 foot
semi-tractor/trailer rigs. These act as mobile displays of the Company's
products and award winning vehicles by Hot Rods by Boyd. The rolling displays
travel the country attending shows and dealer events allowing for dealer
hospitality in the on-board lounge. These vehicle costs have been partially
underwritten by the corporate sponsorship of B.F. Goodrich and revenues derived
from direct retail sales from the trucks.

The Company also promotes its brand name through exclusive styling
agreements and product licensing. In 1994 the Company began a program to license
its various brand names to selected licensees. The Company has granted licenses
to Franklin Mint and through Hot Rods by Boyds to Testors Corporation and Mattel
Corporation allowing reproduction of the Boyds Wheels styles on scale models.
The Company charges royalty fees for such licenses and exercises care in
selecting the licensees to protect the association of its brand names with
premium products. This program was recently initiated and to date has not
yielded any significant revenues to the Company. The Company believes exclusive
styling arrangements and private licensing will broaden the Company's visibility
and brand name recognition.

COLLABORATION WITH HOT RODS BY BOYD

The Company has had a long-standing collaboration with Hot Rods by Boyd, a
company wholly-owned by Mr. Coddington and his wife. In 1977, Mr. Coddington
began building custom vehicles and hot rods in his garage which were quickly
recognized by automotive publications as design leaders. Today, Hot Rods by Boyd
designs and builds custom vehicles which range in price from $75,000 to $500,000
and are custom produced typically for wealthy individuals, including
celebrities, as promotional vehicles for corporations and as prototypes or show
cars for major automobile manufacturers. These cars, displaying the Company's
custom wheels, are regularly featured at hot rod and automotive shows and have
been featured in national automotive and general interest publications such as
Car and Driver, Autoweek, Hot Rod, Smithsonian and Forbes and have also been
displayed in the Petersen Automotive Museum in Los Angeles. In June 1995, the
Company entered into a marketing/promotion agreement with Hot Rods by Boyd
pursuant to which Hot Rods by Boyd is required to (i) endorse, promote and
market the Company's wheels as the "official wheel" of Hot Rods by Boyd, (ii)
use the Company's wheels on vehicles produced by Hot Rods by Boyd and (iii)
allow the Company to use vehicles produced by Hot Rods by Boyd for promotional
displays and photographs, including the likeness of Boyd Coddington and the
vehicles for printed and electronic media in connection with the design,
manufacture and sale of automotive wheels, motorcycle wheels, steering wheels,
car care products and related accessories. Unless terminated in accordance with
the provisions thereof, this agreement expires upon the exercise of the
Company's option to purchase Hot Rods by Boyd. The Company has entered into an
option agreement with Mr. and Mrs. Coddington and Hot Rods by Boyd pursuant to
which the Company currently has an option to purchase all of the outstanding
Common Stock of Hot Rods by Boyd for up to $750,000, payable in shares of the
Company's Common Stock, valued at its then fair market value. This option is
exercisable by the Company commencing after delivery to it of the audited
financial statements of Hot Rods by Boyd for the years ending December 31, 1995
and December 31, 1996, but in no event after September 30, 1997, unless extended
pursuant to the terms thereof. If, at the time the option agreement becomes
exercisable the Company believes that the acquisition of Hot Rods by Boyd is in
the Company's best interests, the Company intends to exercise the option.

25
<PAGE> 27

MANUFACTURING

The Company's aluminum products are manufactured, finished and packaged at
its Stanton, California facilities. The Company's corporate offices and
manufacturing and distributing facilities occupy seven buildings covering
approximately 75,900 square feet. The Company is committed to maintaining
control over the entire design and manufacturing process which it believes
enables it to (i) reduce design and production time, (ii) refine manufacturing
techniques and existing products, (iii) design future products and (iv) maintain
the Company's high quality standards.

The machined billet aluminum wheel manufacturing process for commercial
applications was developed by Mr. Coddington and continues to be refined by the
Company. The Company believes that the machined billet manufacturing process
results in a superior quality of product and that other types of billet
manufacturing processes, such as stamped, are inferior due to structural and
design limitations. The billet wheel centers for the two-piece machined billet
aluminum wheels are manufactured from a solid piece of aluminum known as a
billet, through the use of CNC machines which "carve" out the specialized custom
designs from the billet aluminum. After polishing, the finished center is welded
into an aluminum outer rim. Through the precision and flexibility of this billet
manufacturing process, the Company is able to offer billet wheels with greater
detail in design, higher quality finish and larger variety of styles,
applications and vehicle fitments than other types of manufacturing processes
such as cast or forged. An additional advantage of the billet manufacturing
process is reduced development time, whereby a new wheel design can be typically
produced in one to two weeks, compared to ten to twelve weeks required for the
development and tooling of a new cast wheel design. The Company believes that
the shorter design cycle enables the Company to maintain a competitive
advantage. During 1995 the Company produced approximately 12,000 billet aluminum
wheel centers.

The two-piece cast wheels are also produced with integrated machine
processes. The wheel centers are molded from aluminum ingot in a low pressure
foundry, machined to achieve a more distinctive look (similar to that of the
billet wheel) and, after polishing, welded into an aluminum outer rim. This
two-piece assembly process allows the Company to store work-in-process in a
smaller area, to weld the center into a variety of positions creating a larger
selection of appearances and fitments and, in some cases, to produce a variety
of designs from a single mold. The Company's cast wheel manufacturing facility
is equipped with seven state-of-the-art low pressure casting machines. During
1995 the Company produced approximately 175,000 cast aluminum wheels.

Steering wheels begin as a 1/8 inch thick piece of billet aluminum, which
is stamped into a basic pattern and machined on a CNC machine. The wheel is then
polished, a foam grip is injected around its perimeter and a hand-stitched
leather wrap is sewn to the wheel. All of the machining processes (except
stamping), and all of the polishing, leather wrapping, foam injection and
packaging efforts for the manufacture of the Company's steering wheels, are
completed on-site at the Company's facilities. During 1995 the Company produced
approximately 4,800 steering wheels. The Company's various accessory products
are manufactured in-house, while its line of Boyds Ultra Violet car care
products are mixed and packaged by an outside contractor.

Billet motorcycle wheels are produced in a similar process as the billet
automotive wheels. The product begins as a solid piece of billet aluminum which
is machined on the same type of CNC equipment as the automotive wheels. The
wheels undergo a trueing process to ensure proper fit and are then polished and
welded. Final assembly involves stringent controls that maintain proper fit of
the hub assemblies. The exclusive "Invisible Weld(C)" technology employed by the
Company in manufacturing its motorcycle wheels was developed by Boyd Coddington
and the Company believes it provides a better looking and more structurally
sound product.

The Company uses a modern design and manufacturing system for the
manufacture of its wheels and billet accessories, which through the use of
CAD/CAM technologies, provides the Company with two dimensional CAD drawings.
All of the CNC equipment in the Company's manufacturing facility is linked to a
CAD/CAM manufacturing system in order to obtain efficiencies and maintain
exacting tolerances in manufacture. The Company's design control department
monitors the compliance of production processes in order to ensure that the
designs have been correctly processed by the manufacturing computers and that

26
<PAGE> 28

finished products are accurately produced. The CAD/CAM system allows the Company
to transition new products rapidly from development to full-scale production.
The Company's CNC machinery maintains precise controls over manufacturing
processes. The CNC machinery greatly reduces the chance of error, scrap and
injury commonly found in manually operated machines. CNC technology also allows
for reduced machine times. The Company continually seeks to increase efficiency
at its production facilities through further automation and increased use of
technology.

The Company relies on outside suppliers for its billet aluminum and ingot
aluminum requirements. The Company currently purchases billet aluminum from
Metalcenter, Inc. and Earle M. Jorgensen Co. The Company currently does not have
any contractual relationships with any billet or ingot aluminum suppliers and
purchases materials on an as-needed basis. In 1994 and 1995, the Company
purchased 100% of its ingot requirements for its cast aluminum wheels from two
suppliers, Noranda Aluminum, Inc. and Vista Sales Co. The Company believes that
there are other suppliers of billet and ingot from which the Company could
obtain such materials in the future should the need arise. Any significant
interruption in the supply of these required raw materials could have a material
adverse effect on the Company's business and results of operations. The rims for
the Company's wheels are purchased from five different suppliers and the Company
believes alternative sources of supply of rims are readily available.

In the ordinary course of its manufacturing process, the Company uses
metals, oils and similar materials which are stored on-site. The waste created
by use of these materials is transported off-site on a regular basis by a state
registered waste hauler. To date, the Company has not experienced any
significant environmental compliance problems, although there can be no
assurances such problems will not arise in the future.

COMPETITION

The custom aluminum wheel business is highly competitive and is based
primarily on price, product selection, product availability and service and is
characterized by widespread imitation of popular wheel designs. The preferences
of custom aluminum wheel purchasers may also be subject to rapid and
unanticipated changes. Competition in the billet segment of the custom wheel
market is intense, but concentrated among a limited number of manufacturers,
such as Budnik Wheels, Colorado Custom, Weld Racing, Inc. and Billet
Specialties, Inc. In addition, the Company believes several wheel manufacturers
such as Ultra Custom Wheel and American Racing who do not currently manufacture
premium quality billet aluminum wheels could, because of their substantial
resources, pose significant competition if they were to enter this market.

Cast aluminum wheels comprise a much larger portion of the custom wheel
market than billet wheels, due to their lower retail prices. There are numerous
competitors in the cast wheel market, including American Racing, Ultra Custom
Wheel and Prime Wheel, and competition is fierce and based primarily on cost,
with most manufacturers seeking high volume to compensate for low margins. The
one-piece cast wheels which the Company introduced in 1995 will be aimed at a
broader range of customers than the Company's other wheel lines because of their
moderate price range and more varied vehicle applications. Accordingly, the
Company expects that these wheels may face more competition, including branded
wheels and "look-alike" designs produced by low-cost offshore manufacturing
sources.

There are several competing manufacturers of steering wheel products and
motorcycle wheels, including Grant Products and Weld Racing, Inc., some with
substantially more resources than the Company. Increased competition could
result in product price reductions, reduced margins and loss of market share,
all of which could have a material adverse effect on the Company's results of
operations and financial condition. The Company intends to meet its competition
with innovative designs, quality workmanship and the strength of its brand
names. The Company believes its relationship with its customers is strengthened
by its exclusive styling of products for certain of its competitors who are also
customers, such as American Racing.

FACILITIES

The Company's executive offices, product development, manufacturing and
distribution facilities are currently housed in a cluster of leased industrial
buildings. Building No. 1 contains the foundry and machining facilities and is
approximately 20,700 square feet. Building No. 2 contains the warehouse and
administrative

27
<PAGE> 29

facilities and is approximately 20,400 square feet. Building No. 3 contains the
assembly area and is approximately 9,800 square feet. Building No. 4 contains a
motorcycle wheel design studio and custom motorcycle assembly area and is
approximately 17,000 square feet, of which Hot Rods by Boyds currently subleases
approximately 12,500 square feet. Building No. 5 contains the polishing
department and is approximately 5,100 square feet. Building No. 6 contains the
manufacturing facilities for motorcycle wheels and accessories and is
approximately 8,550 square feet. Building No. 7 contains machining facilities
and is approximately 6,850 square feet. The Company believes that its facilities
are adequate for its immediate needs, however, it is currently in negotiations
to lease additional property containing buildings with approximately 28,000
square feet. The Company has expanded its facilities in the last year in order
to accommodate its growing motorcycle product operations and to take advantage
of adjacent properties which became available for lease within the past nine
months.

INTELLECTUAL PROPERTY

The Company markets its custom wheels and products under a variety of brand
names designed to capitalize on the reputations of Boyd Coddington and Hot Rods
by Boyd among automotive enthusiasts. The Company believes that its trademarks,
Boyds, Boyds Wheels, Boyds Ultra Violet, and The Boyd Look, are critical to its
marketing strategy. There are no infringing uses currently known to the Company.
The Company does not believe its business is otherwise dependent upon any
patent, license, trademark, service mark or copyright.

PRODUCT WARRANTIES

Historically, the Company's wheels have been sold with a limited one-year
warranty from the date of purchase. Commencing in April 1995, the Company began
honoring a limited three-year warranty from the date of purchase. The Company's
warranties generally provide that, in the case of defects in material or
workmanship, the Company will, at its option, replace or repair the defective
product without charge. The Company currently maintains product liability
insurance for its products worldwide with limits of $5,000,000 per occurrence
and $5,000,000 in the aggregate, per annum. Such coverage is becoming
increasingly expensive and there can be no assurance that the Company's
insurance will be adequate to cover future product liability claims, or that the
Company will be able to maintain adequate product liability insurance at
commercially reasonable rates.

EMPLOYEES

As of May 21, 1996, the Company had approximately 313 employees, a majority
of which were full-time employees, including ten employed in sales and
marketing, three employed in development and 246 employed in production. The
remaining full-time employees are administrative and support staff. The Company
considers its employee relations to be good. None of the Company's employees are
represented by unions.

LEGAL PROCEEDINGS

The Company is involved in routine litigation incidental to the conduct of
its business. There are currently no material pending legal proceedings to which
the Company is a party or to which any of its property is subject.

28
<PAGE> 30

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The executive officers, directors and nominees for the office of director
of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------- --- -----------------------------------------
<S> <C> <C>
Boyd Coddington(1)....................... 52 Chairman of the Board and Chief Executive
Officer
Stanley Clark............................ 44 Chief Operating Officer and Nominee
(Director)
Rex A. Ours.............................. 35 Chief Financial Officer and Secretary
Marcus Sorenson(1)(2).................... 48 Director
Curt Barwick(1)(2)....................... 41 Director
Melanie McCaffery........................ 42 Nominee (Director)
</TABLE>

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

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

Boyd Coddington founded the Company in 1988 and has served as a director
and executive officer of the Company since its inception. Mr. Coddington also
founded Hot Rods by Boyd in 1978 and has been featured in many automotive and
general interest publications, including Car and Driver, Autoweek, Smithsonian
and Forbes.

Stanley Clark joined the Company in April 1996 as the Chief Operating
Officer of the Company and is a nominee for the Board of Directors. From 1992 to
March 1996, Mr. Clark was vice president and general manager for the automotive
wheels division of Titan Wheel International, where he was in charge of
production of wheels for original equipment manufacturers and the automotive
aftermarket. Prior to 1992, Mr. Clark worked for fourteen years in the aerospace
industry with American Welding and Manufacturing Inc., a division of Freedom
Forge Corporation, a manufacturer of jet engine components for the aerospace
industry.

Rex A. Ours joined the Company in June 1994 as the Chief Financial Officer.
From 1993 to June 1994, Mr. Ours was an accountant in private practice
specializing in tax and general business matters. From 1991 to 1993, Mr. Ours
was Chief Financial Officer of Russell Performance, Inc., a manufacturer of
specialty aftermarket automotive products and high performance hoses for racing
engines and from 1990 to 1991, he was Vice President of Finance of Simpson Race
Products, Inc., a manufacturer of racing safety equipment. Mr. Ours was
previously employed by B.D.O. Seidman and Ernst & Whinney.

Marcus Sorenson joined the Board of Directors in June 1995. From 1976 to
the present, Mr. Sorenson has been the President of Calwest Marketing, a
manufacturer's representative specializing in consumer electronics and
automotive electronics. Mr. Sorenson is a co-founder of Mackie Designs, a
publicly traded company and since 1990 has served as its Vice President and
director. Mackie Designs manufactures recording consoles used in professional
and home recording studios.

Curt Barwick joined the Board of Directors in April 1996. From May 1994 to
the present, Mr. Barwick has been an attorney with the law firm of Day Campbell
& McGill. From February 1992 to September 1993, Mr. Barwick was Vice President
and General Counsel of DVI, Inc., a New York stock exchange listed company and a
healthcare finance and service provider. From February 1985 until January 1992,
Mr. Barwick was an attorney with the law firm of Buchalter, Nemer, Fields &
Younger. Mr. Barwick is a member of the California and District of Columbia
Bars.

Melanie McCaffery is a nominee for the Board of Directors. Ms. McCaffery, a
Certified Public Accountant, is the President of McCaffery & Associates, a
financial and accounting firm which she founded in October 1995. From October
1988 through September 1995, Ms. McCaffery was a Partner with the international
accounting firm of Coopers & Lybrand L.L.P.

29
<PAGE> 31

The Company's Bylaws provide that the authorized number of directors of the
Company must be no less than three nor more than five. The number of authorized
directors, which is currently five, may be set from time to time within this
range by either approval of the Board of Directors or the affirmative vote of
the holders of a majority of the Company's capital stock. Directors are elected
annually to serve until the next annual meeting of shareholders and until their
successors are elected and qualified. Executive officers are elected annually
by, and serve at the discretion of, the Board of Directors.

BOARD COMMITTEES

The Compensation Committee consists of Messrs. Barwick and Sorenson. The
Compensation Committee establishes salaries, incentives and other forms of
compensation for officers and other employees, administers incentive
compensation and benefit plans, including the Company's 1995 Stock Option Plan
and recommends policies relating to such plans.

The Audit Committee consists of Messrs. Coddington, Sorenson and Barwick.
The Audit Committee, which meets periodically with management and the Company's
independent auditors, reviews the results and scope of the audit and other
services provided by the Company's independent auditors and the need for
internal auditing procedures and the adequacy of internal controls.

DIRECTORS' COMPENSATION

Standard Compensation

Directors who are not employees of the Company or its subsidiaries
("Non-Employee Directors") receive $1,000 for attendance at the Company's annual
meeting of shareholders plus $500 for each meeting of the Board or committee
meeting that they attend, plus reimbursement of any expenses they may incur with
respect to such meeting. Directors who are employees of the Company serve as
directors without compensation.

Stock Options

Non-Employee Directors receive additional compensation in the form of stock
options granted automatically under the Company's 1995 Stock Option Plan. Upon
their initial election to the Board of Directors, Non-Employee Directors
automatically receive options to purchase 3,000 shares of Common Stock. Such
options vest on the Non-Employee Directors' first anniversary with the Company.
In addition, such Non-Employee Directors will automatically be granted options
to purchase 1,000 shares of Common Stock each year they serve as a Director.
Such additional options will be fully vested and exercisable after each
additional full year of service. All options granted to Non-Employee Directors
have an exercise price equal to the fair market value of the shares on the date
of grant of such option.

30
<PAGE> 32

EXECUTIVE COMPENSATION

The following table shows certain information concerning the compensation
of the Chief Executive Officer and each other executive officer of the Company
where aggregate compensation for services in all capacities rendered during the
year ended December 31, 1995 exceeded $100,000 (collectively the "Named
Executive Officers.")

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------- LONG-TERM
OTHER ANNUAL COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (OPTIONS/SARS)
- ---------------------------------- ---- -------- ----- ------------ --------------
<S> <C> <C> <C> <C> <C>
Boyd Coddington(1) 1995 $173,675 $ -0- $ 15,200 60,000
Chairman and Chief Executive 1994 79,075 -0- 14,000 --
Officer
Brad Fanshaw 1995 124,146 -0- 12,300 30,000
President (former)(2) 1994 69,160 -0- 12,000 --
Stanley Clark(3) 1995 -- -- -- --
Chief Operating Officer 1994 -- -- -- --
</TABLE>

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

(1) Pursuant to a five-year employment agreement between the Company and Boyd
Coddington, Mr. Coddington currently receives an annual salary of $160,000
and will receive an annual bonus in an amount to be determined by the
Compensation Committee of the Board of Directors. Mr. Coddington is required
to devote his entire productive time, with certain limited exceptions
described in his employment agreement, to the business of the Company. In
addition to salary and bonus, under the terms of his employment agreement
the Company is required to provide Mr. Coddington with a nonaccountable
automobile expense allowance of at least $1,100 per month, pay all health
insurance premiums for him and his spouse and pay the premiums of a term
life insurance policy. In the event of termination of the executive without
cause, the Company is liable for the remaining unpaid annual salary under
the full term of the agreement plus a severance payment equal to 10% of the
annual salary each year. Other annual compensation for 1995 included the
above-described annual automobile allowance of $13,200 for a vehicle used by
Mr. Coddington and approximately $2,000 in repair and maintenance expenses
for this automobile. Other annual compensation for 1994 included a separate
annual automobile allowance of $12,000 for a vehicle used by Mr. Coddington
and approximately $2,000 in repair and maintenance expenses for this
automobile.

(2) Mr. Fanshaw's employment with the Company terminated in February 1996.
During fiscal 1995, Mr. Fanshaw received, in addition to salary and bonus, a
nonaccountable automobile expense allowance of $1,100 per month and payment
of health insurance premiums for him and his spouse. Other annual
compensation for 1995 included an annual automobile allowance of $12,300 for
a vehicle used by Mr. Fanshaw. Other annual compensation for 1994 included
an annual automobile allowance of approximately $12,000 for a vehicle used
by Mr. Fanshaw. In May 1993, Mr. Fanshaw was granted a stock option
exercisable until December 31, 1999 to purchase 71,429 shares of Common
Stock for a price of $1.00 per share. Mr. Fanshaw exercised 2,000 of these
options in September 1995.

(3) Mr. Clark's employment with the Company commenced in April 1996. Mr. Clark
currently receives an annual salary of $110,000.

OPTION GRANTS TABLE

The following table sets forth information with respect to options to
purchase shares of the Company's Common Stock granted in fiscal 1995 to the
Named Executive Officers.

31
<PAGE> 33

STOCK OPTION GRANTS IN 1995

<TABLE>
<CAPTION>
NUMBER OF SECURITIES % OF TOTAL OPTIONS
UNDERLYING OPTIONS GRANTED TO EMPLOYEES EXERCISE PRICE EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR (PER SHARE) DATE
- ----------------------------- -------------------- -------------------- -------------- ----------
<S> <C> <C> <C> <C>
Boyd Coddington.............. 60,000 24% $ 6.25 9/15/05
Brad Fanshaw................. 30,000 12% 6.25 9/15/05
</TABLE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table sets forth certain information regarding option
exercises during the year ended December 31, 1995 by the Named Executive
Officers. The number of shares covered by both exercisable and unexercisable
options as of December 31, 1995 and the value of unexercised in-the-money
options held by the Named Executive Officers as of December 31, 1995. None of
the Named Executive Officers held any stock appreciation rights at the end of
that fiscal year.

<TABLE>
<CAPTION>
NUMBER OF UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED SECURITIES IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ----------- ------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Boyd Coddington.......... -0- $ -0- 60,000 -0- $ 210,000 $ -0-
Brad Fanshaw............. 2,000 10,500 99,429 -0- 712,504 -0-
</TABLE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the year ended December 31, 1995, the Company's Board of Directors
established the levels of compensation for certain of the Company's executive
officers prior to the formation of the Compensation Committee. The current
members of the Company's Compensation Committee are Messrs. Barwick and
Sorenson. None of these individuals were at any time during 1995 an officer or
employee of the Company.

1995 STOCK OPTION PLAN

The Company's 1995 Stock Option Plan (the "Plan") was adopted by the Board
of Directors in June 1995 and was approved by the shareholders at the Company's
annual meeting of shareholders in July 1995. The Plan is administered by the
Compensation Committee (the "Committee") of the Board of Directors, except that
grants to the Non-Employee Directors are automatically made pursuant to a
predetermined formula. The Committee consists solely of Non-Employee Directors.
The Committee has broad authority in administering and interpreting the Plan.

The purpose of the Plan is to enable the Company to attract, retain and
motivate employees by providing for or increasing their proprietary interests in
the Company and, in the case of Non-Employee Directors, to attract such
directors and further align their interests with those of the Company's
shareholders by providing for or increasing their proprietary interests in the
Company. Under the Plan, officers, directors, employees and independent
consultants of the Company are eligible to receive options to purchase Common
Stock. As of May 21, 1996, approximately 300 persons were eligible.

The aggregate number of shares which may be issued pursuant to the grant of
awards under the Plan is 250,000, subject to adjustment for certain
circumstances such as a stock exchange, reorganization, recapitalization, stock
split, reverse stock split, stock dividend or other capital change or
adjustment. At the Company's next annual meeting scheduled for June 12, 1996,
the shareholders of the Company will be requested to consider and approve a
proposed amendment to the Plan to increase the number of shares of Common Stock
reserved for issuance thereunder by 200,000 shares, bringing the total number of
shares issuable under the Plan to 450,000 shares. The Board of Directors
approved such amendment in May 1996.

32
<PAGE> 34

Awards to Employees

Options granted under the Plan may be options intended to qualify as
incentive stock options (the "Incentive Stock Options") under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or options not intended
to so qualify (the "Non-Qualified Stock Options").

An award to an employee may permit the employee to pay all or part of the
purchase price of the shares issuable pursuant thereto, and/or to pay all or
part of such employee's tax withholding obligation with respect to such
issuance, by (i) delivering previously owned shares of capital stock of Company
or (ii) reducing the amount of shares otherwise issuable pursuant to the award.
If an option granted to an employee permitted the employee to pay for the shares
issuable pursuant thereto with previously owned shares, the employee would be
able to exercise the option in successive transactions, known as pyramiding, to
acquire a large number of shares with no more investment than the original share
or shares delivered upon exercise of the option.

Upon the grant of an option under the Plan, the person receiving the grant
(the "Option Holder") must enter into a written option agreement with the
Company that contains terms, provisions and conditions that are consistent with
the Plan and have been determined from time to time by the Committee. Incentive
Stock Options granted under the Plan may not expire later than ten years after
the date of grant except that an Incentive Stock Option granted to an individual
owning (after the application of the family and other attribution rules of
Section 424(d) of the Code), at the time the option was granted, more than 10%
of the total combined voting power of all classes of stock of the Company (a
"10% Shareholder"), may not expire later than five years from the date the
option is granted. The exercise price for any Incentive Stock Option may not be
less than 100% of the fair market value of Common Stock of the Company at the
date the Option is granted and the exercise price of an Incentive Stock Option
granted to a 10% Shareholder may not be less than 110% of the fair market value
of the Common Stock of the Company on the date such option is granted. The Plan
provides that the maximum number of shares of Common Stock that may be issued
pursuant to Incentive Stock Options, in the aggregate, is 250,000 shares.

An award granted under the Plan to an employee may include a provision
terminating the award upon termination of employment under certain circumstances
or accelerating the receipt of benefits upon the occurrence of specified events,
such as a change of control of the Company or a dissolution, liquidation,
merger, reclassification, sale of substantially all of the property and assets
of the Company or other significant corporate transaction. Options granted to
Non-Employee directors must be exercised by the first anniversary of the date of
grant if the grantee ceases to be a director of the Company as a result of death
or disability, and the three months after such grantee ceases to be a director
for any other reason other than cause, in which case the option terminates
immediately.

Awards to Non-Employee Directors

Non-Qualified Stock Options to purchase 3,000 shares of Common Stock are
automatically granted to Non-Employee Directors upon their initial election to
the Board. Such options will vest on the first anniversary of the date of
appointment or election. Non-Qualified Stock Options to purchase an additional
1,000 shares will be granted to each Non-Employee Director each year provided
such individual continues to serve as a director. Such additional options will
vest after each additional year of service.

33
<PAGE> 35

CERTAIN TRANSACTIONS

Boyd and Diane Coddington, the Company's principal shareholders, have
personally guaranteed the Company's equipment leases and the leases on the real
properties located at 8400, 8402 and 8380 Cerritos Avenue and 10541 Ashdale
Street.

In September 1994, Boyd and Diane Coddington assigned to the Company all of
their rights and interests under the lease of the real properties located at
8380 Cerritos Avenue and 10541 Ashdale Street in consideration of the Company's
assumption of all of the obligations of the Coddingtons' under such leases. The
Company has been subleasing a portion of the premises located at 10541 Ashdale
Street to Hot Rods by Boyd (a company which is wholly owned by Boyd Coddington)
since the commencement of the lease term, and has been paying Hot Rods by Boyd's
share of all rental and other payments due thereunder. The total current monthly
rent under these leases is $14,991, with the Company's share being $10,000. The
rent is subject to annual adjustment based on increases in the Consumer Price
Index.

From time to time the Company has loaned amounts to Hot Rods by Boyd on an
interest free basis, for use as working capital and to cover certain expenses,
including the build-out of the premises occupied by Hot Rods by Boyd. In 1993
and 1994, the Company also paid on behalf of Hot Rods by Boyd the entire salary
for several employees that work for both Hot Rods by Boyd and the Company. As of
March 31, 1996, the amount owed to the Company from Hot Rods by Boyd was
approximately $158,000, representing amounts previously advanced by the Company
and the portion of the salary payments made to such employees by the Company
which are allocable to Hot Rods by Boyd.

The Company has entered into an option agreement with Mr. and Mrs.
Coddington pursuant to which the Company currently has the option to purchase
all of the outstanding Common Stock of Hot Rods by Boyd for up to $750,000,
payable in shares of the Company's Common Stock, valued at its then fair market
value. This option is exercisable by the Company commencing after delivery to it
of audited financial statements of Hot Rods by Boyd for the years ending
December 31, 1995 and December 31, 1996, but in no event after September 30,
1997, unless extended pursuant to the terms of the option agreement. Until the
option is exercised, any transactions between the Company and Hot Rods by Boyd
will be reviewed and approved by the outside board members of the Company. In
June 1995, the Company entered into a marketing/promotion agreement with Hot
Rods by Boyd pursuant to which Hot Rods by Boyd is required to (i) endorse,
promote and market the Company's products, (ii) use the Company's wheels on
vehicles produced by Hot Rods by Boyd and (iii) allow the Company to use
vehicles produced by Hot Rods by Boyd for promotional displays and photographs,
including the likeness of Boyd Coddington and the vehicles for printed and
electronic media. Unless terminated in accordance with the provisions thereof,
this agreement expires upon the exercise of the Company's option to purchase Hot
Rods by Boyd.

In November 1994, the Board of Directors of the Company authorized the
issuance of 1,000,000 shares of Series A Redeemable Preferred Stock, 706,668
shares of which were issued to Karl Kantarjian, a former director of the
Company, in exchange for 706,668 shares of Common Stock held by Mr. Kantarjian.
The Series A Redeemable Preferred Stock was redeemed by the Company in September
1995. In consideration for exchanging his shares of Common Stock for shares of
Series A Redeemable Preferred Stock, Mr. Kantarjian received a warrant to
purchase 10,000 shares of Common Stock (the "Kantarjian Warrant") at a price of
$6.25 per share. The Kantarjian Warrant expires on November 3, 1996.

Codde, Inc., a company in which Mr. Coddington is an officer, director and
principal shareholder, leases two 70 foot semi-tractor/trailer rigs to the
Company for special event and onsite presentations for a monthly fee of
approximately $10,000. The Company believes that its agreement with Codde, Inc.
is on terms no less favorable than could be obtained from a nonaffiliated party.

Boyd Coddington, Jr., the son of Boyd Coddington, is employed by the
Company in the position of National Sales Manager at an annual salary of $78,000
plus bonus. In fiscal 1995, he received aggregate compensation of $61,035 from
the Company.

In February 1996, the Company entered into an agreement under which an
employee of the Company was released from his duties under an employment
contract. Under the agreement, the Company paid to this

34
<PAGE> 36

employee total consideration of $275,000, consisting of $150,000 in
consideration for a five-year covenant not to compete and $125,000 for other
compensation. Of such consideration, $225,000 was paid in cash and the remaining
$50,000 was paid in shares of the Company's Common Stock. All other amounts due
to/from the Company and the employee pursuant to the employment contract were
cancelled.

In February 1996 the Company purchased substantially all of the assets of
Velocity Distribution, Inc. (the "Velocity"), a company owned by Boyd Coddington
and a former employee of the Company. Velocity was in 1995 a party to an
agreement with the Company pursuant to which Velocity was granted a license to
use certain trademarks owned by the Company in connection with the distribution
of apparel and other accessories. As consideration for these assets, the Company
assumed certain liabilities of Velocity totalling approximately $81,000 and also
entered into a five-year covenant not to compete with an employee of Velocity
for total consideration of approximately $25,000.

35
<PAGE> 37

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of May 21, 1996 and as adjusted to
reflect the sale of the Common Stock being offered hereby (assuming no exercise
of the Underwriter's over-allotment option) by (i) each person (or group of
affiliated persons) who is known by the Company to own beneficially more than 5%
of the Common Stock, (ii) each of the Company's directors, (iii) the executive
officers named in the Summary Compensation Table, (iv) all Selling Shareholders,
and (v) all directors and executive officers of the Company as a group. Except
as otherwise indicated, the Company believes that the beneficial owners of the
Common Stock listed below, based on information furnished by such owners, have
sole investment and voting power with respect to such shares, subject to
community property laws where applicable:

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO THE OWNED AFTER THE
OFFERING (1) OFFERING
------------------ SHARES BEING ------------------
NAME AND ADDRESS NUMBER PERCENT OFFERED NUMBER PERCENT
- --------------------------------------------- ------- ------- ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Boyd Coddington(2)(3)........................ 413,334 15.8% 24,863 388,471 11.5%
Diane Coddington(2).......................... 353,334 13.9% 24,863 328,471 10.0%
Entities associated with
Gruber & McBaine Capital Management, Inc.
50 Osgood Place
San Francisco, CA 94133(4)............... 169,600 6.7% 0 169,600 5.1%
Brad Fanshaw(5).............................. 87,250 3.4% 52,821 34,429 1.0%
Frank W. Cutler++............................ 27,879 1.1% 17,879 10,000 *
The Richard F. Foster Family Trust UAD
5/24/93++.................................. 19,362 * 13,362 6,000 *
The Silagy Living Trust DTD 1/15/93(6)++..... 19,362 * 14,362 5,000 *
George Nicholas++............................ 16,842 * 10,842 6,000 *
Kendall W. Everson, Jr. Family Trust DTD
9/21/89(7)++............................... 12,102 * 7,730 4,372 *
Larry E. Baumgardner, Jr++................... 10,839 * 10,839 0 *
CJ & WM Reed Trust DTD 1986(8)++............. 10,839 * 5,839 5,000 *
The Davis Living Trust(9)++.................. 9,681 * 6,681 3,000 *
John E. Thompson and Linda Thompson++........ 6,619 * 6,619 0 *
Gregory A. Brown and Susan R. Brown++........ 5,519 * 5,519 0 *
Silverberg Trust DTD 12/21/88(10)++.......... 5,434 * 5,434 0 *
Dale Mitchum++............................... 5,419 * 5,419 0 *
Ajit Singh M.D. Profit Sharing Plan and
Trust++.................................... 5,419 * 2,919 2,500 *
Lawrence J. Larsen and Janice L. Larsen++.... 4,842 * 4,842 0 *
Michael Murphy++............................. 4,119 * 3,000 1,119 *
Newport Potomac Partners(11)................. 3,872 * 2,500 1,372 *
Miller Revocable Intervivos Trust UDT
11/29/90(12)++............................. 2,717 * 2,717 0 *
Kurt Mason++................................. 2,418 * 1,500 918 *
Yie Fong Chiang and Kuang Chi Chiang++....... 2,170 * 500 1,670 *
Gary Rorden and Sheryl S. Rorden++........... 1,450 * 450 1,000 *
Rex A. Ours.................................. 500 * -- 500 *
Stanley Clark................................ -- * -- -- *
Marcus Sorenson.............................. -- * -- -- *
Curt Barwick................................. -- * -- -- *
All Executive Officers and Directors as a
Group
(5 persons)(13)............................ 413,834 15.9% 24,863 388,971 11.5%
</TABLE>

36
<PAGE> 38

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

* Indicates ownership of less than one percent.

++ Indicates that the shareholder purchased Common Stock and warrants in a
November 1994 private placement and converted the warrants into Common
Stock in September 1995. (See "Description of Capital Stock").

(1) Includes Common Stock issued pursuant to a conversion of warrants into
shares of Common Stock, in September 1995. See "Description of Capital
Stock -- Warrants from Private Placement," and "Description of Capital
Stock -- Other Warrants." Any correspondence to the shareholders should be
addressed to such shareholder c/o the Company at the Company's address. The
percent beneficially owned by each shareholder has been calculated pursuant
to Rule 13d-3(d) promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.

(2) Boyd Coddington and Diane Coddington are married, and therefore, each has a
beneficial interest in the other's shares of Common Stock.

(3) Includes 60,000 shares purchasable within 60 days of the date hereof upon
exercise of an option to purchase Common Stock.

(4) Based on Schedule 13D filed by Jon D. Gruber ("Gruber"), J. Patterson
McBaine ("McBaine"), Gruber & McBaine Capital Management ("GMCM"), Gruber &
McBaine Capital Management International ("International"), GMJ
Investments, L.P. ("GMJ") and Lagunitas Partners ("Lagunitas"). Gruber is
deemed to be the beneficial owner of 156,600 shares and McBaine is deemed
to be the beneficial owner of 142,000 shares. Each of Messrs. Gruber and
McBaine has shared voting and dispositive power with respect to 132,000
shares. Gruber and McBaine are the sole directors and officers of GMCM and
International. Gruber, McBaine and GMCM are the general partners of
Lagunitas and GMJ.

(5) Includes 34,429 shares purchasable within 60 days of the date hereof upon
exercise of an option to purchase Common Stock.

(6) John W. Silagy and Deana K. Silagy are deemed to be beneficial owners of
all shares of Common Stock owned by the Silagy Living Trust dated January
15, 1993.

(7) Includes shares owned by Newport Potomac Partners, of which Kendall W.
Everson, Jr. is also a general partner and in such capacity has shared
voting and investment power with respect to shares of Common Stock owned
thereby. As a result, Mr. Everson is deemed to be a beneficial owner of
such Common Stock.

(8) Charles J. Reed and Winifred M. Reed are deemed to be beneficial owners of
all shares of Common Stock owned by the CS & WM Reed Trust dated 1986.

(9) James P. Davis and Virginia D. Davis are deemed to be beneficial owners of
all shares of Common Stock owned by the Davis Living Trust.

(10) Joseph G. Silverberg and Audrey G. Silverberg are deemed to be beneficial
owners of all the shares of Common Stock owned by the Silverberg Trust
dated December 21, 1988.

(11) Kendall W. Everson, Jr. is a general partner of Newport Potomac Partners
and in such capacity has shared voting and investment power with respect to
shares of Common Stock owned by Newport Potomac Partners and is deemed to
be a beneficial owner of such Common Stock. Steven Wilcox is also a general
partner of Newport Potomac Partners and in such capacity has shared voting
and investment power with respect to shares of Common Stock owned by
Newport Potomac Partners and is deemed to be a beneficial owner of such
Common Stock.

(12) Richard A. Miller and Beverly L. Miller are deemed to be beneficial owners
of all the shares of Common Stock owned by the Miller Revocable Intervivos
Trust dated November 29, 1990.

(13) Includes 60,000 shares of Common Stock purchasable within 60 days of the
date hereof upon exercise of an option to purchase Common Stock. See Note
(3).

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<PAGE> 39

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, no par value, and 5,000,000 shares of Preferred Stock, no par
value. The following description of the Company's capital stock is qualified in
all respects by reference to the Company's Amended and Restated Articles of
Incorporation ("Articles of Incorporation"), which have been filed as an exhibit
to the Registration Statement incorporating this Prospectus.

COMMON STOCK

The holders of outstanding shares of Common Stock are entitled to receive
dividends out of assets legally available therefor at such times and in such
amounts as the Board of Directors may, from time to time, determine, subject to
any preferences which may be granted to the holders of Preferred Stock. Holders
of Common Stock are entitled to one vote per share on all matters on which the
holders of Common Stock are entitled to vote and the holders of Common Stock may
cumulate their votes in the election of directors upon giving notice as required
by law. Cumulative voting means that in any election of directors, each
shareholder may give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of shares held by such
shareholder, or such shareholder may distribute such number of votes among as
many candidates as the shareholder sees fit. The Common Stock is not entitled to
preemptive rights and is not subject to redemption or conversion. Upon
liquidation, dissolution or winding-up of the Company, the assets (if any)
legally available for distribution to shareholders are distributable ratably
among the holders of the Common Stock after payment of all debt and liabilities
of the Company and the liquidation preference of any outstanding class or series
of Preferred Stock. All outstanding shares of Common Stock are, and the shares
of Common Stock to be issued pursuant to this offering will be, when issued and
delivered, validly issued, fully paid and nonassessable. The rights, preferences
and privileges of holders of Common Stock are subject to any series of Preferred
Stock that the Company may issue in the future.

PREFERRED STOCK

Preferred Stock may be issued from time to time in one or more series, and
the Board of Directors, without action by the holders of the Common Stock, may
fix or alter the voting rights, redemption provisions (including sinking fund
provisions), dividend rights, dividend rates, liquidation preferences,
conversion rights and any other rights, preferences, privileges and restrictions
of any wholly unissued series of Preferred Stock. The Board of Directors,
without shareholder approval, can issue shares of Preferred Stock with rights
that could adversely affect the rights of the holders of Common Stock. No shares
of Preferred Stock presently are outstanding, and the Company has no present
plans to issue any such shares. The issuance of shares of Preferred Stock could
adversely affect the voting power of holders of Common Stock and could have the
effect of delaying, deferring or preventing a change in control of the Company
or other corporate action.

WARRANTS FROM PRIVATE PLACEMENT

In connection with an offering of securities in a private placement in
November 1994 (the "Private Placement"), the Company issued 609,998 warrants
(the "Warrants"). Holders of 595,713 Warrants exercised their Warrants by
electing to convert their Warrants into 248,213 shares of Common Stock in the
Company, effective upon the closing of the Company's initial public offering in
September 1995. Warrants to purchase 3,571 shares of Common Stock remain
outstanding and each outstanding Warrant entitles the holder to purchase one
share of Common Stock at a price equal to $3.50 per share until November 30,
1997. On May 10, 1996, the Warrants were called by the Company for a price of
$.01 per Warrant. A holder must either exercise his or her Warrant within 30
days of the notice of redemption or accept the redemption price. The shares of
Common Stock underlying the Warrants, when issued upon exercise of the Warrants,
will be fully paid and nonassessable, and the Company will pay any transfer tax
incurred as a result of the issuance of shares of Common Stock to the holder
upon exercise. The Warrants contain provisions that protect the holders against
dilution by adjustment of the exercise price and the number of shares of Common
Stock subject to the Warrants in certain events, such as stock dividends and
distributions, stock splits, recapitalization, mergers or consolidations and
certain issuances below the fair market value of the Common Stock. The

38
<PAGE> 40

Company is not required to issue fractional shares upon the exercise of a
Warrant. The holder of a Warrant will not possess any rights as a shareholder of
the Company until such holder exercises the Warrant.

OPTIONS

In May 1993, the Company granted to Mr. Fanshaw options to purchase 71,429
shares of Common Stock at an exercise price of $1.00 per share (the "Fanshaw
Options"). Mr. Fanshaw exercised 2,000 of the Fanshaw Options in September 1995
and 35,000 in May 1996. Mr. Fanshaw was also granted certain registration rights
with respect to the shares of Common Stock issuable upon exercise of the Fanshaw
Options. See "Description of Capital Stock -- Registration Rights."

9% CONVERTIBLE PROMISSORY NOTES

In September 1993, the Company privately sold $660,000 principal amount of
9% Convertible Promissory Notes due June 30, 1996 (the "Notes"). In November
1994, in connection with an offering of securities in the Private Placement, the
Company converted $622,500 in principal amount ($572,648, net of original debt
issue costs) of Notes into 177,857 shares of the Company's Common Stock and
redeemed $12,500 in principal amount of Notes. As of the date of this offering,
$25,000 in principal amount of Notes is outstanding. The Company does not have
the right to prepay all or any part of the principal of the Notes. The Notes are
convertible, in whole or in part, into shares of Common Stock at the rate of
$3.50 per share. However, no fractional shares will be issued, as all fractional
shares will be rounded down to the nearest whole number of shares with
fractional shares, if any, to be paid a cash adjustment based upon the
conversion price. The Company granted to the holders of Notes, subject to
certain limitations, certain registration rights covering the Common Stock
issuable upon conversion of the Notes. See "Description of Capital
Stock -- Registration Rights."

OTHER WARRANTS

In connection with the September 1993 private placement of Notes, the
Company issued to officers of the placement agent warrants to purchase (the
"Note Placement Agent Warrants") an aggregate of 9,328 shares of Common Stock at
a price of $4.25 per share. The Note Placement Agent Warrants are currently
exercisable and expire in September 1999. The holders of the Note Placement
Agent Warrants may elect to exercise the Note Placement Agent Warrants by having
withheld from the number of shares issuable upon exercise of the Note Placement
Agent Warrants that number of shares of Common Stock with an aggregate fair
market value at the time of exercise equal to the aggregate exercise price. The
exercise price and the number of shares of Common Stock issuable upon the
exercise of the Note Placement Agent Warrants is subject to adjustment in the
event of any stock dividend, stock split, recapitalization or similar
transaction and upon the issuance of shares of Common Stock, or rights to
acquire shares of Common Stock, at a price which is less than the exercise price
then in effect, with certain exceptions. Holders of the Note Placement Agent
Warrants also have been granted certain registration rights with respect to the
shares of Common Stock issuable upon exercise. See "Description of Capital
Stock -- Registration Rights."

In November 1994, the Board of Directors of the Company authorized the
issuance of 1,000,000 shares of Series A Redeemable Preferred Stock, 706,668
shares of which were issued to Karl Kantarjian in exchange for 706,668 shares of
Common Stock held by Mr. Kantarjian. These shares were redeemed in September
1995. In consideration for exchanging his shares of Common Stock for Series A
Redeemable Preferred Stock, Mr. Kantarjian received a warrant to purchase 10,000
shares of Common Stock at $6.25 per share.

In connection with the 1994 Private Placement, the Company issued to
officers of the placement agent warrants to purchase (the "Unit Placement Agent
Warrants") an aggregate of 85,714 shares of Common Stock, which effective as of
the closing of the initial public offering were converted into 35,714 shares of
Common Stock as a result of having withheld from the number of shares issuable
upon exercise of the Unit Placement Agent Warrants that number of shares of
Common Stock (at an agreed price of $6.00 per share) equal to the aggregate
exercise price of $3.50 per share. Holders of the Unit Placement Agent Warrants
have

39
<PAGE> 41

been granted certain registration rights with respect to the shares of Common
Stock which were issued upon exercise. See "Description of Capital
Stock -- Registration Rights."

IPO WARRANTS

In connection with the Company's initial public offering, the Company
agreed to sell to the Representative and its co-manager warrants to purchase up
to 125,000 shares of Common Stock at an exercise price per share equal to $7.50
(the "IPO Warrants"). The IPO Warrants, which are not transferable (other than
to officers or partners of the Representative or its co-manager), are
exercisable beginning September 20, 1996 until September 20, 2000. See
"Underwriting."

REPRESENTATIVE'S WARRANTS

The Company has agreed to sell to the Representative warrants to purchase
up to 52,500 shares of Common Stock at an exercise price per share equal to 120%
of the public offering price (the "Representative's Warrants"). The
Representative's Warrants which are not transferable (other than to officers or
partners of the Representative), are exercisable for a period of four years
beginning one year from the date of this Prospectus. See "Underwriting."

REGISTRATION RIGHTS

The Company has granted to the holder of the Notes, subject to certain
limitations, the right to require the Company to file one registration statement
covering the Common Stock issuable upon conversion of the Notes at any time
commencing December 15, 1995.

The Company has granted to the holders of the Common Stock underlying the
Warrants, subject to certain limitations, the right to require the Company to
file a registration statement covering such Common Stock, commencing March 15,
1996. In addition, the Company has agreed to use its best efforts to register
such shares of Common Stock on Form S-3 under the Securities Act, and in
addition to register the shares if the Company proposes to register stock or
securities in connection with certain underwritten public offerings of its
securities, subject to certain limitations.

In connection with the Private Placement, the Company granted to the
holders of Common Stock certain rights to register the shares if the Company
proposes to register stock or securities in connection with certain underwritten
public offerings of its securities, subject to certain limitations. Any such
shares of Common Stock not sold in this offering will continue to have
registration rights, subject to certain limitations.

The Company has agreed to use its best efforts to register the shares of
Common Stock issuable to Mr. Fanshaw upon exercise of the Fanshaw Options.

The Company has granted to the holders of the Note Placement Agent Warrants
certain rights with respect to the registration under the Securities Act of the
9,328 shares of Common Stock issuable upon exercise of the Note Placement Agent
Warrants (the "Note Placement Agent Shares"). The holders of the Note Placement
Agent Warrants can require the Company, subject to certain limitations, to file
a registration statement covering the Note Placement Agent Shares at any time
commencing March 15, 1996 and can request, on up to three occasions, that the
Note Placement Agent Shares be sold by means of an underwritten public offering.
In addition, the Company has agreed to use its best efforts to register such
shares on Form S-3 under the Securities Act and the holders of the Note
Placement Agent Warrants can require the Company, subject to certain
limitations, to include all or any portion of the 9,328 Note Placement Agent
Shares in any registration statement.

The Unit Placement Agent Warrants provide certain rights with respect to
the registration under the Securities Act of the shares of Common Stock issuable
upon exercise thereof. If the Company registers any of its Common Stock either
for its own account or for the account of other security holders, the holders of
such shares are entitled to include their shares of Common Stock in the
registration. Effective as of the closing of

40
<PAGE> 42

the Company's initial public offering, the Unit Placement Agent Warrants were
converted into 35,714 shares of Common Stock.

The Company has agreed to register the shares of Common Stock issued to a
former employee in February 1996 in the event that the Company undertakes a
public offering of its Common Stock and has included such shares in this
offering.

The IPO Warrants provide certain rights with respect to the registration
under the Securities Act of up to 125,000 shares of Common Stock issuable upon
exercise thereof. The holders of the shares issuable upon exercise of the IPO
Warrants may require the Company to file a registration statement under the
Securities Act with respect to such shares. In addition, if the Company
registers any of its Common Stock either for its own account or for the account
of other security holders, the holders of the shares issuable upon exercise of
the IPO Warrants are entitled to include their shares of Common Stock in the
registration.

The Representative's Warrants provide certain rights with respect to the
registration under the Securities Act of up to 52,500 shares of Common Stock
issuable upon exercise thereof at 120% of the per share price to the public. The
holders of the shares issuable upon exercise of the Representative's Warrants
may require the Company to file a registration statement under the Securities
Act with respect to such shares. In addition, if the Company registers any of
its Common Stock either for its own account or for the account of other security
holders, the holders of the shares issuable upon exercise of the
Representative's Warrants are entitled to include their shares of stock in the
registration.

The Company generally is required to bear all costs incurred in connection
with any such registrations, other then underwriting discounts and commissions.
The foregoing registration rights could result in substantial future expense to
the Company and could adversely affect any future equity or debt offerings of
the Company.

CERTAIN CHARTER PROVISIONS

The Company's Articles of Incorporation provide that, to the fullest extent
permitted by California law, the Company's directors will not be liable for
monetary damages for breach of the directors' fiduciary duty of care to the
Company or its shareholders. This provision in the Articles of Incorporation
does not eliminate the duty of care, and in appropriate circumstances equitable
remedies such as an injunction or other forms of nonmonetary relief would remain
available under California law. Each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company, for acts
or omissions involving intentional misconduct or knowing and culpable violations
of law, for acts or omissions that a director believes to be contrary to the
best interests of the Company or its shareholders or that involve the absence of
good faith on the part of the director, for any transaction from which the
director derived an improper personal benefit, for acts or omissions involving a
reckless disregard for the director's duty to the Company or its shareholders
when the director was aware or should have been aware of a risk of serious
injury to the Company or its shareholders, for acts or omissions that constitute
an unexcused pattern of inattention that amounts to an abdication of the
director's duty to the Company or its shareholders, for improper transactions
between the director and the Company, for improper distributions to shareholders
and loans to directors and officers or for acts or omissions by the director
acting in his or her capacity as an officer of the Company. This provision also
does not affect a director's responsibilities under any other laws, such as the
federal securities laws or state or federal environmental laws.

TRANSFER AGENT, REGISTRAR AND WARRANT AGENT

The stock transfer agent, registrar and warrant agent for the Common Stock
and Warrants is U.S. Stock Transfer Corporation, Glendale, California.

41
<PAGE> 43

UNDERWRITING

The Underwriters named below, for whom Cruttenden Roth Incorporated is
acting as representative (the "Representative"), have severally agreed, subject
to the terms and conditions of the Underwriting Agreement (the form of which has
been filed as an exhibit to the Registration Statement), to purchase from the
Company the respective number of shares of Common Stock set forth opposite their
names in the table below. The Underwriting Agreement provides that the
obligations of the Underwriters are subject to certain conditions precedent and
that the Underwriters shall be obligated to purchase all of the Common Stock
offered hereby (other than the Common Stock covered by the over-allotment option
described below) if any are purchased.

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
------------------------------------------------------------------ ---------
<S> <C>
Cruttenden Roth Incorporated......................................
Total...........................................................
========
</TABLE>

The Company has been advised by the Representative that the Underwriters
propose to offer the shares of Common Stock to the public at the public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of $ per share. The
Underwriters may allow and such dealers may reallow a concession not in excess
of $ per share to certain other dealers. After the public offering, the
public offering price and such concessions may be changed. The Representative
has informed the Company that the Underwriters do not intend to confirm sales to
accounts over which they exercise discretionary authority.

The offering of the shares of Common Stock is made for delivery when, as if
accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares.

The Company has granted an option to the Underwriters, exercisable during
the 45-day period after the date of this Prospectus, to purchase up to an
aggregate of 129,000 additional shares of Common Stock at the public offering
price set forth on the cover page of this Prospectus, less the underwriting
discounts and commissions. The Underwriters may exercise such option only for
the purpose of covering over-allotments made in connection with the sale of the
Common Stock offered hereby. To the extent that the Underwriters exercise such
option, each Underwriter may be committed, subject to certain conditions, to
purchase a number of additional shares of Common Stock proportionate to such
Underwriter's initial commitment pursuant to the Underwriting Agreement.

The Company has agreed to indemnify the Underwriters against certain
liabilities in connection with the Registration Statement, including liabilities
under the Securities Act.

The Company has agreed to pay the Representative a non-accountable expense
allowance of 1.5% of the aggregate offering price of the Common Stock offered
hereby (including any Common Stock purchased pursuant to the Underwriters'
over-allotment option), of which $10,000 has been paid to date. The
Representative's expenses in excess of the nonaccountable expense allowance,
including their legal expenses, will be borne by the Representative.

The Company has also agreed to sell to the Representative for nominal
consideration the Representative's Warrants pursuant to which the Representative
may purchase up to 52,500 shares of Common Stock at a price of 120% of the
public offering price. The Representative's Warrants will be exercisable
commencing one year after the date hereof for a period of four years thereafter.
The Representative's Warrants cannot be transferred, assigned or hypothecated
for one year from the date of their issuance, except that they may be assigned,
in whole or in part, to any successor, officer or partner of the Representative
or their partners or members of the underwriting group. The Representative's
Warrants will contain certain registration rights and antidilution provisions
providing for appropriate adjustment of the exercise price and number of shares
which may be purchased upon exercise upon the occurrence of certain events.

Pursuant to the Underwriting Agreement, Boyd and Diane Coddington, who will
own after this offering an aggregate of 656,942 shares of the Company's Common
Stock, are subject to lock-up arrangements for a

42
<PAGE> 44

period of twelve months from the date of this Prospectus (but collectively may
sell or otherwise dispose of up to 15,000 shares of Common Stock per quarter
after the date of this Prospectus).

In November 1994, the Company raised $1,512,500 and converted $622,500 in
Notes in a private placement of units consisting of one share of Common Stock
and a Warrant to purchase one share of Common Stock at a price of $3.50 per
share. The Representative acted as placement agent for such private placement
and was paid an aggregate commission of $185,800. In addition, in connection
with such private placement, the Representative received Unit Placement Agent
Warrants to purchase an aggregate of 85,714 shares of Common Stock at $3.50 per
share which were converted into 35,714 shares of Common Stock effective upon the
closing of the Company's initial public offering. The Company has also granted
certain registration rights with respect to the shares of Common Stock.

In September 1995, the Company agreed to sell to the Representative and its
co-manager the IPO Warrants, pursuant to which the Representative and its
co-manager may purchase up to 125,000 shares of Common Stock at an exercise
price of $7.50 per share. The IPO Warrants, which are not transferrable (other
than to officers or partners of the Representative or its co-manager) are
exercisable commencing September 20, 1996 and for a period of four years
thereafter.

The rules of the Commission generally prohibit the Underwriters and other
members of the selling group from making a market in the Company's Common Stock
during the "cooling off" period immediately preceding the commencement of sales
in the offering. The Commission has, however, adopted an exemption from these
rules that permits passive market making under certain conditions. These rules
permit an Underwriter or other member of the selling group to continue to make a
market in the Company's Common Stock subject to the conditions, among others,
that its bid not exceed the highest bid by a market maker not connected with the
offering and that its net purchases on any one trading day not exceed prescribed
limits. Pursuant to those exemptions, certain Underwriters and other members of
the selling group intend to engage in passive market making in the Company's
Common Stock during the cooling off period.

The foregoing sets forth the material terms and conditions of the
Underwriting Agreement, but does not purport to be a complete statement of the
terms and conditions thereof, copies of which are on file at the offices of the
Representative, the Company and the Securities and Exchange Commission,
Washington, D.C. See "Additional Information."

LEGAL MATTERS

The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Rutan & Tucker LLP, Costa Mesa, California.
Certain legal matters will be passed upon for the Underwriters by Stradling,
Yocca, Carlson & Rauth, a Professional Corporation, Newport Beach, California.

EXPERTS

The balance sheets as of December 31, 1994 and 1995 and the statements of
income, shareholders' equity and cash flows for the years ended December 31,
1993, 1994 and 1995 included in this Prospectus have been so included in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (herein, together with all amendments and
exhibits, referred to as the "Registration Statement") under the Securities Act
with respect to the securities being offered pursuant to this Prospectus. This
Prospectus does not contain all information set forth in the Registration
Statement and exhibits and schedules thereto, certain parts of which are omitted
in accordance with the rules and regulations of the Commission. The Registration
Statement may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 25049
and at the regional office

43
<PAGE> 45

of the Commission located at 5670 Wilshire Boulevard, 11th Floor, Los Angeles,
California 90036-3648. Copies of such material can be obtained at prescribed
rates from the Public Reference Room of the Commission at 450 Fifth Street N.W.,
Washington, D.C. 20549. Statements contained in this Prospectus concerning the
provisions of any documents are not necessarily complete and in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.

The Company is subject to the reporting and other informational
requirements of the Exchange Act and, in accordance therewith, files reports and
other information with the Commission. Such reports, proxy statements and other
information filed by the Company, including the Registration Statement and
exhibits thereto, may be inspected and copied at the public reference facilities
maintained by the Commission at the offices of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, 7 World Trade Center, New York, New York 10048 and 5670
Wilshire Boulevard, Los Angeles, California 90036-3648. Copies of such materials
can also be obtained by written request to the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. The Company's Common Stock is quoted on the Nasdaq National
Market (symbol: BYDS). Reports and other information concerning the Company may
be inspected at the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, D.C. 20006.

44
<PAGE> 46

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants...................................................... F-2
Balance Sheets at December 31, 1994 and 1995 and at March 31, 1996 (unaudited)......... F-3
Statements of Income For the Years Ended December 31, 1993, 1994 and 1995 and for the F-4
Three Months Ended March 31, 1995(unaudited) and for the Three Months Ended March 31,
1996 (unaudited).....................................................................
Statements of Shareholders' Equity for the Years Ended December 31, 1993, 1994 and 1995 F-5
and for the Three Months Ended March 31, 1996 (unaudited)............................
Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995 and for F-6
the Three Months Ended March 31, 1995 (unaudited) and for the Three Months Ended
March 31, 1996 (unaudited)...........................................................
Notes to Financial Statements.......................................................... F-8
</TABLE>

F-1
<PAGE> 47

REPORT OF INDEPENDENT ACCOUNTANTS

To The Board of Directors
Boyds Wheels, Inc.

We have audited the accompanying balance sheets of Boyds Wheels, Inc. as of
December 31, 1994 and 1995, and the related statements of income, shareholders'
equity and cash flows for the years ended December 31, 1993, 1994 and 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Boyds Wheels, Inc. as of
December 31, 1994 and 1995, and the results of its operations and its cash flows
for the years ended December 31, 1993, 1994 and 1995, in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Newport Beach, California
March 14, 1996

F-2
<PAGE> 48

BOYDS WHEELS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
1996
DECEMBER 31, DECEMBER 31, -----------
1994 1995
------------ ------------ (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 144,595 $ 1,039,552 $ 554,606
Accounts receivable, net............................ 437,616 1,287,275 1,375,453
Inventories, net.................................... 1,540,753 3,643,512 4,667,007
Due from affiliate.................................. 100,000 100,000 100,000
Prepaids and other current assets................... 264,536 593,642 753,566
Deferred income taxes............................... 49,304 156,946 156,946
------------ ------------ -----------
Total current assets............................. 2,536,804 6,820,927 7,607,578
Due from affiliate.................................... 178,841 72,684 58,142
Property and equipment, net........................... 3,137,142 4,689,372 4,977,752
Covenants not to compete, net......................... -- 150,000 172,085
Other assets.......................................... 292,317 49,034 46,627
Deferred tax asset.................................... 180,779 -- --
------------ ------------ -----------
Total assets................................ $6,325,883 $ 11,782,017 $12,862,184
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................... $1,200,137 $ 2,449,674 $ 2,695,326
Accrued liabilities................................. 588,458 1,458,980 988,749
Revolving credit agreements......................... -- 289,554 550,000
Current maturities of long-term debt................ 860,366 343,413 494,932
Due to affiliate.................................... 37,752 35,769 29,170
Due to majority shareholder......................... 25,545 -- --
Income taxes payable................................ -- 130,689 203,521
------------ ------------ -----------
Total current liabilities........................ 2,712,258 4,708,079 4,961,698
Long-term debt........................................ 1,328,221 902,754 1,326,072
Other long-term liabilities........................... 223,534 79,757 72,979
Deferred income taxes................................. -- 235,179 235,179
------------ ------------ -----------
Total liabilities........................... 4,264,013 5,925,769 6,595,928
------------ ------------ -----------
Commitments and contingencies
Preferred stock, no par value; 5,000,000 shares
authorized:
Series A redeemable preferred stock, noncumulative,
$1.7688 per share liquidation value, 1,000,000
shares authorized, 706,668 shares issued and
outstanding at December 31, 1994.................... 181,371 -- --
------------ ------------ -----------
Shareholders' equity:
Common stock, no par value; 25,000,000 shares
authorized, 1,316,666, 2,484,593 and 2,489,856
shares issued and outstanding, respectively...... 1,860,457 5,957,207 6,007,207
Contributed capital................................... 826,511 826,511 826,511
Accumulated deficit................................... (806,469) (927,470) (567,462)
------------ ------------ -----------
Total shareholders' equity....................... 1,880,499 5,856,248 6,266,256
------------ ------------ -----------
Total liabilities and shareholders'
equity.................................... $6,325,883 $ 11,782,017 $12,862,184
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE> 49

BOYDS WHEELS, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------------------------- ------------------------
1993 1994 1995 1995 1996
------------- ----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales......................... $ 10,187,984 $12,127,208 $17,796,110 $3,659,669 $5,334,074
Cost of goods sold................ 8,523,504 9,336,026 13,262,522 2,781,721 3,976,019
----------- ----------- ----------- ---------- ----------
Gross margin................. 1,664,480 2,791,182 4,533,588 877,948 1,358,055
Selling, general and
administrative expenses......... 1,230,059 1,647,793 2,741,332 464,932 714,142
----------- ----------- ----------- ---------- ----------
Income from operations....... 434,421 1,143,389 1,792,256 413,016 643,913
Interest and other expenses,
net............................. 422,798 694,931 382,859 142,392 47,873
----------- ----------- ----------- ---------- ----------
Income before provision
(benefit) for income
taxes...................... 11,623 448,458 1,409,397 270,624 596,040
Provision (benefit) for income
taxes........................... 1,600 (226,783) 461,769 111,074 236,032
----------- ----------- ----------- ---------- ----------
Net income.............. $ 10,023 $ 675,241 $ 947,628 $ 159,550 $ 360,008
=========== =========== =========== ========== ==========
Net income per common share and
common equivalent share before
accretion of Series A redeemable
preferred stock................. $ -- $ 0.40 $ 0.48 $ 0.09 $ 0.14
=========== =========== =========== ========== ==========
Accretion of Series A redeemable
preferred stock:
Net income, as above............ $ 10,023 $ 675,241 $ 947,628 $ 159,550 $ 360,008
Adjustment for accretion of
Series A redeemable preferred
stock........................ -- (180,371) (1,068,629) (313,840) --
----------- ----------- ----------- ---------- ----------
Net income (loss)
applicable to common
shareholders.......... $ 10,023 $ 494,870 $ (121,001) $ (154,290) $ 360,008
=========== =========== =========== ========== ==========
Net income per share, as above.... $ -- $ 0.40 $ 0.48 $ 0.09 $ 0.14
Adjustment for accretion of Series
A redeemable preferred stock.... -- (0.11) (0.55) (0.18) --
----------- ----------- ----------- ---------- ----------
Net income (loss) per common share
and common equivalent share..... $ -- $ 0.29 $ (0.07) $ (0.09) $ 0.14
=========== =========== =========== ========== ==========
Weighted average common shares and
common equivalent shares
outstanding..................... 1,671,000 1,701,000 1,960,000 1,697,000 2,655,000
=========== =========== =========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE> 50

BOYDS WHEELS, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
---------------------- CONTRIBUTED ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1992............ 1,413,336 $ 2,000 $ 798,225 $(1,311,362) $ (511,137)
Cash contributions....................... -- -- 142,870 -- 142,870
Noncash contributions.................... -- -- 54,017 -- 54,017
Cash distributions....................... -- -- (157,420) -- (157,420)
Noncash distributions.................... -- -- (11,181) -- (11,181)
Net income............................... -- -- -- 10,023 10,023
--------- ---------- -------- ---------- ---------
Balances at December 31, 1993............ 1,413,336 2,000 826,511 (1,301,339) (472,828)
Conversion of common stock to Series A
redeemable preferred stock.......... (706,668) (1,000) -- -- (1,000)
Issuance of common stock for cash (net
of costs of $225,695)............... 432,141 1,286,809 -- -- 1,286,809
Conversion of notes payable into common
stock (net of debt issuance costs of
$49,852)............................ 177,857 572,648 -- -- 572,648
Accretion of Series A redeemable
preferred stock..................... -- -- -- (180,371) (180,371)
Net income............................. -- -- -- 675,241 675,241
--------- ---------- -------- ---------- ---------
Balances at December 31, 1994............ 1,316,666 1,860,457 826,511 (806,469) 1,880,499
Accretion of Series A redeemable
preferred stock..................... -- -- -- (1,068,629) (1,068,629)
Issuance of common stock for cash (net
of costs of $1,417,875)............. 850,000 3,894,625 -- -- 3,894,625
Issuance of common stock upon
conversion of warrants.............. 315,927 200,000 -- -- 200,000
Issuance of common stock warrants for
cash................................ -- 125 -- -- 125
Common stock options exercised......... 2,000 2,000 -- -- 2,000
Net income............................. -- -- -- 947,628 947,628
--------- ---------- -------- ---------- ---------
Balances at December 31, 1995............ 2,484,593 5,957,207 826,511 (927,470) 5,856,248
Issuance of common stock in connection
with employment contract settlement
(unaudited)......................... 5,263 50,000 -- -- 50,000
Net income (unaudited)................. -- -- -- 360,008 360,008
--------- ---------- -------- ---------- ---------
Balances at March 31, 1996 (unaudited)... 2,489,856 $6,007,207 $ 826,511 $ (567,462) $ 6,266,256
========= ========== ======== ========== =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE> 51

BOYDS WHEELS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------------------------- --------------------------
1993 1994 1995 1995 1996
------------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.................................... $ 10,023 $ 675,241 $ 947,628 $ 159,550 $ 360,008
Adjustments to reconcile net income to net
cash provided (used) by operating
activities:
Depreciation and amortization............... 403,466 533,798 581,527 125,665 185,392
Loss (gain) on disposal of property and
equipment................................. 48,982 2,413 (5,171) -- 8,160
Bad debt expense............................ 34,352 75,577 2,540 -- 20,000
Reserve for inventory obsolescence.......... -- -- -- -- 20,000
Deferred income taxes....................... -- (230,083) 308,316 111,074 --
Increase in accounts receivable............. (115,620) (94,807) (852,199) (578,522) (100,302)
(Increase) decrease in inventories.......... 288,490 (801,984) (2,051,561) (841,157) (1,011,907)
Increase in prepaids and other assets....... (226,206) (128,022) (147,468) (77,440) (157,217)
Increase (decrease) in accounts payable..... (72,366) 385,095 726,637 906,223 242,935
Increase (decrease) in accrued
liabilities............................... 190,807 67,082 568,383 (277,296) (494,671)
Increase in income taxes payable............ -- -- 130,689 -- 72,832
Increase (decrease) in other long-term
liabilities............................... 18,581 29,324 56,223 32,965 (6,778)
--------- ----------- ----------- ----------- -----------
Net cash provided (used) by operating
activities........................... 580,509 513,634 265,544 (438,938) (861,548)
--------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchase of property and equipment............ (481,458) (493,758) (1,275,564) (178,773) (442,049)
Proceeds from the sale of property and
equipment................................... 19,824 2,000 700 -- 2,400
Deposits on leased equipment.................. -- (10,000) (20,000) -- --
Decrease (increase) in due to (from)
affiliates.................................. (261,537) 24,584 (41,024) 24,114 7,943
Payments on covenants not to compete.......... -- -- -- -- (24,585)
Cash acquired in acquisition.................. -- -- -- -- 37,693
--------- ----------- ----------- ----------- -----------
Net cash used by investing activities........... (723,171) (477,174) (1,335,888) (154,659) (418,598)
--------- ----------- ----------- ----------- -----------
Cash flows from financing activities:
Decrease in book overdraft.................... (25,155) (125,398) -- -- --
Increase (decrease) in revolving purchasing
agreement................................... 288,794 (5,024) -- -- --
Increase (decrease) in due to majority
shareholder................................. (85,300) 37,168 (25,545) (20,641) --
Borrowings on revolving line of credit........ -- -- 862,105 550,000 550,000
Payments on revolving line of credit.......... -- -- (862,105) -- --
Proceeds from issuance of long-term debt...... 850,000 -- 1,192,686 1,111,782 332,407
Principal repayments of long-term debt........ (871,127) (1,085,420) (2,183,609) (1,187,347) (87,207)
Proceeds from sale of common stock............ -- 1,512,504 5,312,500 -- --
Cost of equity issuances...................... -- (225,695) (1,083,156) -- --
Proceeds from issuance of common stock
warrants.................................... -- -- 125 -- --
Proceeds from exercise of common stock
options..................................... -- -- 2,000 -- --
Redemption of Series A redeemable preferred
stock....................................... -- -- (1,250,000) -- --
Cash contributions............................ 142,870 -- -- -- --
Cash distributions............................ (157,420) -- -- -- --
--------- ----------- ----------- ----------- -----------
Net cash provided by financing activities... 142,662 108,135 1,965,301 453,794 795,200
--------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents................................. -- 144,595 894,957 (139,803) (484,946)
Cash and cash equivalents at beginning of
period........................................ -- -- 144,595 144,595 1,039,552
--------- ----------- ----------- ----------- -----------
Cash and cash equivalents at end of period...... $ -- $ 144,595 $ 1,039,552 $ 4,792 $ 554,606
========= =========== =========== =========== ===========
</TABLE>

F-6
<PAGE> 52

BOYDS WHEELS, INC.

STATEMENTS OF CASH FLOWS (CONTINUED)

The accompanying notes are an integral part of these financial statements.

F-7
<PAGE> 53

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS

1. THE COMPANY

Boyds Wheels, Inc. (the "Company") was incorporated in California in May
1988. The Company designs, manufactures and markets high quality aluminum wheels
for the specialty automotive aftermarket. In addition to its premium aluminum
wheels, the Company designs, manufactures and markets motorcycle wheels,
steering wheels for automobiles, automotive and motorcycle billet aluminum
accessories and also sells car care products under its own label. The Company's
products utilize machined aluminum materials and unique designs which the
Company believes enhance individuality of vehicle styling. The Company sells its
products domestically through a national distribution network of tire and
performance retailers, warehouse distributors and mail order outlets, and
internationally through foreign distribution channels.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash And Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments with
acquired maturities of three months or less. Cash and cash equivalents are
carried at cost, which approximates market.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market
(net realizable value).

Property And Equipment

Property and equipment is stated at cost. Depreciation is provided on a
straight-line basis over the estimated useful lives of the respective assets,
ranging generally from 5 to 10 years. Capital leases are recorded at the lower
of the fair market value of the leased assets or the present value of the future
minimum lease payments. The leased assets are depreciated on a straight-line
basis over their economic useful lives.

Upon sale or disposition of assets, any gain or loss is included in the
statement of income.

Normal repairs and maintenance are expensed as incurred whereas significant
improvements which materially increase values or extend useful lives are
capitalized and depreciated over the estimated useful lives of the related
assets.

Covenants Not To Compete

The covenants not to compete are stated at cost and will be amortized using
the straight-line basis over the five-year lives of the agreements (Note 18).

Income Taxes

The Company follows 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 tax liabilities and assets are determined based on the
difference between the financial statement and the tax bases of assets and
liabilities using enacted rates in effect for the years in which the differences
are expected to reverse. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized. The
provision for income taxes represents the tax payable for the period and the
change during the period in deferred tax assets and liabilities.

Stock Options

In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." SFAS No. 123 defines a fair
value based method of accounting for an employee

F-8
<PAGE> 54

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

stock option. Fair value of the stock option is determined considering factors
such as the exercise price, the expected life of the option, the current price
of the underlying stock and its volatility, expected dividends on the stock, and
the risk-free interest rate for the expected term of the option. Under the fair
value based method, compensation cost is measured at the grant date based on the
fair value of the award and is recognized over the service period.

A company may elect to adopt SFAS No. 123 or elect to continue accounting
for its stock option or similar equity awards using the intrinsic method, where
compensation cost is measured at the date of grant based on the excess of the
market value of the underlying stock over the exercise price. If a company
elects not to adopt SFAS No. 123, then it must provide pro forma disclosure of
net income and earnings per share, as if the fair value based method had been
applied.

SFAS No. 123 is effective for transactions entered into for fiscal years
that begin after December 15, 1995. Pro forma disclosures for entities that
elect to continue to measure compensation cost under the old method must include
the effects of all awards granted in fiscal years that begin after December 15,
1994. It is currently anticipated that the Company will continue to account for
stock-based compensation plans under the intrinsic method and the impact of SFAS
No. 123 has not yet been determined.

Revenue Recognition

Sales and related costs of goods sold are recognized when goods are shipped
to customers. Provisions are recorded for estimated sales returns and
allowances.

Estimates

The preparation of financial statements in accordance 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Interim Financial Data

The interim financial data as of March 31, 1996 and for the three months
ended March 31, 1995 and 1996 is unaudited; however, in the opinion of the
Company, the interim data includes all adjustments, consisting only of normal
recurring adjustments, necessary for the fair statement of the results for the
interim periods.

3. INITIAL PUBLIC OFFERING

In September 1995, the Company completed an initial public offering (the
"Offering") of 850,000 shares of its common stock at $6.25 per share (the
"Offering Price") for proceeds, net of offering expenses of $1,417,875, of
$3,894,625. Of such amount, $1,250,000 was used to redeem all of the outstanding
shares of the Company's Series A redeemable preferred stock (Note 11), $580,000
was used to repay outstanding indebtedness (Note 7) and approximately $862,000
was used to repay amounts outstanding under the revolving line of credit (Note
8). In addition, the following events occurred concurrent with the closing of
the Offering: (a) 681,427 warrants were converted into 283,927 shares of the
Company's common stock (Note 10); (b) $200,000 of warrants were converted to
32,000 shares of the Company's common stock (Note 7); and (c) stock options were
exercised for 2,000 shares of the Company's common stock (Note 10).

In September 1995, the underwriters of the Offering exercised their option
to purchase warrants to acquire 125,000 shares of common stock for cash proceeds
of $125 (Note 10).

F-9
<PAGE> 55

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. ACCOUNTS RECEIVABLE

In 1994, the Company had a factoring agreement on a full recourse basis.
The Company's obligations to the factor were collateralized by all of the
Company's assets and were personally guaranteed by the majority shareholder. As
of December 31, 1994, the Company had assigned a total of $6,317,602 in gross
accounts receivable to the factor and had received a total of $6,223,983 in cash
against those receivables, which resulted in an amount due from the factor of
$93,619. In March 1995, the Company terminated the factoring agreement and as a
result all outstanding uncollected invoices were repurchased and all asset liens
and personal guarantees were released.

The allowance for doubtful accounts was $73,893, $3,630 and $23,630 as of
December 31, 1994 and 1995, and March 31, 1996, respectively.

5. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1994 1995 1996
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials.................................... $ 410,410 $ 921,819 $ 821,642
Work in process.................................. 624,460 1,805,882 3,043,871
Finished goods................................... 505,883 915,811 801,494
---------
$1,540,753 $3,643,512 $ 4,667,007
=========
</TABLE>

6. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Machinery and equipment......................... $ 4,390,410 $ 5,573,267 $ 5,792,407
Office equipment................................ 132,640 262,893 284,980
Leasehold improvements.......................... 96,341 550,432 636,847
Vehicles........................................ 138,957 133,198 133,198
Construction in progress........................ -- 313,872 447,266
----------
4,758,348 6,833,662 7,294,698
Less, accumulated depreciation and
amortization............................... (1,621,206) (2,144,290) (2,316,946)
----------
$ 3,137,142 $ 4,689,372 $ 4,977,752
==========
</TABLE>

Machinery and equipment under capital leases at December 31, 1994 and 1995
were $2,982,726 and $3,227,235, respectively, with accumulated amortization of
$1,204,665 and $1,544,661, respectively. Construction in progress at December
31, 1995 includes approximately $15,000 of capitalized interest.

F-10
<PAGE> 56

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. REVOLVING PURCHASE AGREEMENT

In prior years, the Company had a revolving purchase agreement with a major
vendor. Under this agreement, the Company could purchase up to $1,000,000 of
rims at the prevailing market price. Interest accrued on outstanding balances
greater than 60 days at the rate of one percent per month and was payable
monthly.

On December 30, 1994, the Company restructured the then outstanding balance
under this agreement into a note payable of $979,641 and made an immediate
payment of $200,000. Interest accrued on the outstanding balance at a rate of
one percent per month and was paid monthly. In August 1995, a principal payment
of $200,000 was made. With the proceeds from the Offering, all remaining amounts
outstanding under this agreement, approximately $580,000, were paid in full.

In May 1992 and as amended in March 1993, the Company issued to the vendor
a warrant to purchase, at a price of $.01 per share, shares of the Company's
common stock with an aggregate fair market value of $200,000 to be determined at
the time of exercise. Concurrent with the Offering, the warrant was converted
into 32,000 shares of the Company's common stock.

8. REVOLVING CREDIT AGREEMENTS

Revolving Line Of Credit

At December 31, 1995, the Company had no outstanding balance due under a
revolving line of credit agreement with a bank. During the year ended December
31, 1995, the Company drew advances of, and repaid amounts owed on,
approximately $862,000 on the revolving line of credit.

The revolving line of credit agreement provides for maximum borrowings of
up to $2,000,000, or 80% of eligible accounts receivable plus 40% of eligible
inventory, as defined, and bears interest at 1.0% over the Wall Street Journal's
published prime rate (an effective rate of 9.75% at December 31, 1995), and
expires on May 1, 1996, unless renewed.

Unaudited: At March 31, 1996, the Company had $550,000 outstanding under
the revolving line of credit. On April 19, 1996, the Company renewed its
revolving line of credit on the same terms as described above, with maximum
borrowings increased to $2,500,000.

Equipment Line Of Credit

At December 31, 1995, the Company had $289,554 outstanding under an
equipment line of credit agreement with a bank.

The equipment line of credit agreement provides for maximum borrowings of
up to $750,000 and bears interest at 1.75% over the Wall Street Journal's
published prime rate (an effective rate of 10.5% at December 31, 1995). The
equipment line of credit expires on May 1, 1996 and it contains a provision to
refinance all then outstanding amounts over a 60-month period, under certain
conditions.

The above credit agreements are collateralized by substantially all the
assets of the Company and require the Company to maintain certain financial
ratios.

Unaudited: At March 31, 1996, the Company had $599,874 outstanding under
the equipment line of credit. On April 19, 1996, the Company refinanced the then
outstanding balance on the equipment line of credit of $599,874 into a 60-month
term loan, payable in equal monthly installments bearing interest at 1.75% over
the Wall Street Journal's published prime rate (an effective rate of 10.0% at
April 19, 1996). Such terms have been reflected in the accompanying March 31,
1996 balance sheet. Also on April 19, 1996, the Company renewed its equipment
line of credit and increased the maximum borrowings to $1,000,000. This renewed
equipment line of credit bears interest at 1.5% over the Wall Street Journal's
published prime rate (an effective rate of 9.75% at April 19, 1996).

F-11
<PAGE> 57

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- MARCH 31,
1994 1995 1996
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Convertible notes payable, unsecured, remaining
balance due June 30, 1996, and otherwise
convertible into the Company's common stock at
the rate of one share per $3.50 of unpaid
principal, interest payable semiannually at
9.0%............................................. $ 25,000 $ 25,000 $ 25,000
Note payable to the City of Stanton, unsecured,
balance due April 25, 2000, interest at 9.5% per
annum............................................ -- 43,539 33,482
Note payable to a former employee, unsecured,
settled in 1995 (Note 18)........................ 29,375 -- --
Note payable to a vendor, all amounts were paid
during 1995 (Note 7)............................. 779,641 -- --
Notes payable with a finance company with various
maturity dates ranging from December 1997 to
February 1999, collateralized by automobiles,
principal and interest due in monthly
installments ranging from $221 to $483 at
interest rates ranging from 4.8% to 8.9% per
annum............................................ 11,835 31,385 24,278
Term loan with a bank, collateralized by equipment,
payable in equal monthly installments through
April 19, 2001, bearing interest at 1.75% over
the Wall Street Journal's published prime rate
(an effective rate of 10.0% at April 19, 1996)... -- -- 599,874
Capital lease obligations for equipment, due in
monthly installments ranging from $191 to $29,854
through January 1999 at interest rates ranging
from 10.5% to 15.0% per annum.................... 1,342,736 1,146,243 1,138,370
---------- ---------- ----------
2,188,587 1,246,167 1,821,004
Less, current maturities........................... (860,366) (343,413) (494,932)
---------- ---------- ----------
$1,328,221 $ 902,754 $ 1,326,072
========== ========== ==========
</TABLE>

The future principal payments at December 31, 1995 on long-term debt are
scheduled as follows:

<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
- ---------------------------------------------------------------
<S> <C>
1996......................................................... $ 343,413
1997......................................................... 309,411
1998......................................................... 530,242
1999......................................................... 18,556
2000......................................................... 44,545
----------
$1,246,167
==========
</TABLE>

10. COMMON STOCK AND COMMON STOCK WARRANTS

In October 1994, the Company's Board of Directors declared a 1-for-1.4151
reverse stock split on the then outstanding common stock and preferred stock.
All share and per share amounts have been adjusted to give retroactive effect to
the common and preferred shares outstanding resulting from the reverse stock
split.

F-12
<PAGE> 58

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

In November 1994, the Company issued 432,141 units for cash of $3.50 per
unit in a private offering. Net proceeds from this private offering were
$1,286,809. The Company also converted $622,500 ($572,648, net of original debt
issue costs) of its convertible notes payable into 177,857 units.

Each of the 609,998 units issued above included one share of common stock
and one warrant to purchase one share of the Company's common stock at the
lesser of $3.50 or 58 1/3% of the share price in the event of an initial public
offering of the Company's common stock. Concurrent with the Offering, 595,713 of
the above-mentioned warrants were converted into 248,213 shares of the Company's
common stock. The remaining 14,285 warrants are exercisable at their original
terms through November 1997. Unaudited: In May 1996, 10,714 warrants were
exercised for cash proceeds of $37,499.

In November 1994, the Company issued warrants to the underwriter of the
private stock offering to purchase up to 85,714 shares of the Company's common
stock at the lesser of $3.50 or 58 1/3% of the share price in the event of an
initial public offering of the Company's common stock. Concurrent with the
Offering, all 85,714 warrants were converted into 35,714 shares of the Company's
common stock.

In May 1993, the Company issued its then President an option to purchase up
to 71,429 shares of the Company's common stock at an exercise price of $1.00 per
share. The option expires in December 1999. Concurrent with the Offering,
options to acquire 2,000 shares of common stock were exercised for cash proceeds
of $2,000. Unaudited: In May 1996, options to acquire 35,000 shares of common
stock were exercised for cash proceeds of $35,000.

In 1993, the Company issued warrants to an unrelated party to purchase up
to 9,328 shares of the Company's common stock at an exercise price of $4.25 per
share. The warrants expire in September 1999. No warrants have been exercised
through December 31, 1995.

In September 1995, concurrent with the Offering, the Company granted
warrants to the underwriters of the Offering to purchase up to 125,000 shares of
the Company's common stock for $.001 per warrant. These warrants are exercisable
at 120% of the Company's Offering Price for a period of four years beginning one
year from the Offering. In September 1995, the underwriters purchased these
warrants for cash proceeds of $125.

11. REDEEMABLE PREFERRED STOCK

In October 1994, the Company authorized 1,000,000 shares of Series A
redeemable preferred stock (the "Redeemable Preferred Stock") from its initial
authorization of 5,000,000 shares of preferred stock. Holders of the Redeemable
Preferred Stock were entitled to receive noncumulative dividends at the
Company's discretion. No dividends were declared or paid through December 31,
1995. The holders of the Redeemable Preferred Stock had the right to cast one
vote per share.

In October 1994, the Company issued 706,668 shares of Redeemable Preferred
Stock to a related party in exchange for 706,668 shares of common stock. The
difference between the consideration paid and the redemption price was accreted
by a charge to the accumulated deficit. With the proceeds from the Offering, the
Company redeemed all of the Redeemable Preferred Stock for cash of $1,250,000.

The Company also issued a warrant to purchase up to 10,000 shares of the
Company's common stock at the Offering Price to the holder of the Redeemable
Preferred Stock. This warrant expires on November 3, 1996 and has not been
exercised through December 31, 1995.

F-13
<PAGE> 59

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

12. STOCK OPTION PLAN

Under the Company's 1995 Stock Option Plan (the "Plan"), the Company may
grant nonqualified and incentive stock options to officers, directors,
employees, and consultants up to a maximum of 250,000 shares of the Company's
common stock. The exercise price of incentive stock options must equal at least
the fair market value of the common stock on the date of grant. The term of any
option may not exceed ten years from the date of grant. A summary of the shares
under option is as follows:

<TABLE>
<CAPTION>
EXERCISE PRICE
NONQUALIFIED PER SHARE
------------ ---------------
<S> <C> <C>
Year ended December 31, 1995:
Granted................................................ 247,500 $6.25 to $7.25
Exercised.............................................. --
Canceled............................................... --
-------
Balance at December 31, 1995............................. 247,500 $6.25 to $7.25
Granted (unaudited).................................... --
Exercised (unaudited).................................. --
Canceled (unaudited)................................... --
-------
Balance at March 31, 1996 (unaudited).................... 247,500 $6.25 to $7.25
=======
Exercisable at March 31, 1996 (unaudited)................ 188,500 $6.25 to $7.25
=======
</TABLE>

In addition to the above, the Company issued 1,000 options outside the Plan
of which 333 options have vested and are exercisable at a price of $7.00 per
share and 667 options have been canceled as of December 31, 1995.

Unaudited: In May 1996, options to acquire 30,000 shares of common stock
were exchanged for 12,558 shares of common stock.

13. INCOME TAXES

The provision (benefit) for federal and state income taxes consists of the
following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
------ --------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal........................ $ -- $ 2,500 $125,115 $ 30,101 $145,706
State.......................... 1,600 800 28,338 6,776 10,054
------ --------- -------- -------- --------
1,600 3,300 153,453 36,877 155,760
------ --------- -------- -------- --------
Deferred:
Federal........................ -- (236,623) 351,345 84,527 41,898
State.......................... -- 6,540 (43,029) (10,330) 38,374
------ --------- -------- -------- --------
-- (230,083) 308,316 74,197 80,272
------ --------- -------- -------- --------
Total.................. $1,600 $(226,783) $461,769 $111,074 $236,032
====== ========= ======== ======== ========
</TABLE>

F-14
<PAGE> 60

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The tax effects of the temporary differences that give rise to the deferred
tax provision (benefit) consist of the following:

<TABLE>
<CAPTION>
THREE
FOR THE YEARS ENDED MONTHS
DECEMBER 31, ENDED
---------------------------------- MARCH
1993 1994 1995 31,
-------- --------- --------- --------
1996
--------
(UNAUDITED)
<S> <C> <C> <C> <C>
Accrued liabilities..................... $ (6,552) $ (4,648) $ (11,728) $ (1,663)
Bad debts............................... 3,199 (26,892) 30,424 (9,272)
Net operating loss carryforward......... (72,333) (43,095) 374,051 36,412
Property and equipment.................. 92,031 126,555 96,032 55,843
State income taxes...................... -- 272 3,041 (20,655)
Income tax credits...................... -- 8,851 (164,938) 19,607
Change in valuation allowance........... (16,345) (291,126) -- --
Other................................... -- -- (18,566) --
-------- --------- --------- --------
$ -- $(230,083) $ 308,316 $ 80,272
======== ========= ========= ========
</TABLE>

The provision (benefit) for income taxes differs from the amount that would
result from applying the federal statutory rate as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE
DECEMBER 31, MONTHS
------------------------- ENDED
1993 1994 1995 MARCH 31,
----- ----- ---- ---------
1996
---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Federal statutory income tax rate................ 34.0% 34.0% 34.0% 34.0%
State income taxes, net of federal benefit....... 9.1 1.6 6.0 7.1
State manufacturer's investment tax credit, net
of federal benefit............................. -- -- (6.7) (1.7)
Change in valuation allowance.................... (51.1) (90.1) -- --
Other............................................ 21.8 3.9 (.5) .2
----- ----- ---- ----
13.8% (50.6)% 32.8% 39.6%
===== ===== ==== ====
</TABLE>

The components of the deferred tax asset and (liability) are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1994 1995
--------- ---------
<S> <C> <C>
Accrued liabilities.......................................... $ 17,036 $ 28,764
Bad debts.................................................... 31,996 1,572
Net operating loss carryforward.............................. 476,030 101,979
Property and equipment....................................... (295,251) (391,283)
State income taxes........................................... -- (2,769)
Income tax credits........................................... -- 164,938
Other........................................................ 272 18,566
--------- ---------
$ 230,083 $ (78,233)
========= =========
</TABLE>

Unaudited: no material changes in the deferred tax balances occurred during
the three months ended March 31, 1996.

The Company did not record a valuation allowance against the deferred
income tax assets at December 31, 1994 or 1995. At December 31, 1995, the
Company had net operating loss carryforwards for federal income tax reporting
purposes of approximately $300,000 which begin expiring in 2007. The utilization
of net operating loss carryforwards may be limited under the provisions of
Internal Revenue Code Section 382.

F-15
<PAGE> 61

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

14. COMMITMENTS AND CONTINGENCIES

Leases

The Company has many noncancellable capital leases with lease terms ranging
from two to five years. The majority of the equipment leases have bargain
purchase options at the end of the lease term.

The Company leases its facilities under noncancellable operating leases.
Under these lease agreements, the Company is required to pay for insurance,
taxes, utilities and building maintenance and is subject to certain consumer
price index adjustments. The facilities leases are personally guaranteed by the
majority shareholder.

Future minimum lease payments at December 31, 1995 under capital leases and
noncancellable operating leases with remaining lease terms in excess of one year
are as follows:

<TABLE>
<CAPTION>
YEARS ENDING CAPITAL OPERATING
DECEMBER 31, LEASES LEASES
------------------------------------------------------------ ---------- ----------
<S> <C> <C>
1996...................................................... $ 447,166 $ 709,483
1997...................................................... 398,913 591,307
1998...................................................... 574,113 501,030
1999...................................................... 19,219 436,129
2000...................................................... 1,655 392,715
Thereafter................................................ -- 313,105
---------- ----------
1,441,066 $2,943,769
==========
Less, amount representing interest........................ (294,823)
----------
$1,146,243
==========
</TABLE>

Rent expense for the years ended December 31, 1994 and 1995 was $511,326
and $437,909, respectively.

Employment Agreement

The Company has entered into an employment agreement with its Chairman and
Chief Executive Officer which provides for a minimum annual salary of $160,000
and benefits and expires on December 31, 1999. In the event of disability, as
defined, the executive is entitled to twelve months base salary in addition to
earned base salary and benefits through the date of disability.

In the event of termination of the executive without cause, the Company is
liable for the remaining unpaid annual salary under the full terms of the
agreement plus a severance payment equal to 10% of the annual salary each year.

Litigation

The Company is involved in various legal matters resulting from the normal
course of business. Such legal matters, when ultimately determined, will not, in
the opinion of the management, have a material effect on the financial position
or the results of operations of the Company.

15. RELATED PARTIES

The majority shareholder of the Company is also the majority shareholder of
two other entities. The balance due to affiliate included as a current liability
in the December 31, 1995 balance sheet represents equipment lease payments due
to the affiliate.

F-16
<PAGE> 62

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

On March 20, 1995, the Company entered into an agreement with one of the
affiliates whereby the affiliate is required to make minimum net reductions of
$25,000 each quarter until the outstanding balance has been paid in full. The
outstanding balance due from this affiliate as of December 31, 1995 was $172,684
and the affiliate has complied with the quarterly reduction requirement.
Accordingly, the outstanding amounts due from this affiliate have been
classified as an asset on the accompanying balance sheet.

The Company has entered into an option agreement with the majority
shareholder pursuant to which the Company currently has the option to purchase
all of the outstanding common stock of Hot Rods by Boyd, an affiliate of the
Company, for up to $750,000, payable in shares of the Company's common stock,
valued at its then fair market value. This option is exercisable by the Company
commencing after delivery to it of audited financial statements of Hot Rods by
Boyd for the years ending December 31, 1995 and 1996, but in no event after
September 30, 1997, unless extended pursuant to the terms of the option
agreement. Until the option is exercised, any transactions between the Company
and Hot Rods by Boyd will be reviewed and approved by the outside board members
of the Company.

16. NET INCOME PER COMMON SHARE

Net income per share is based on the reported net income, with such
reported net income reduced for the accretion of the Redeemable Preferred Stock.
The resulting amount is presented below as income applicable to common
shareholders.

Such income applicable to common shareholders in each period is divided by
the weighted average number of outstanding common shares and common equivalent
shares in accordance with Securities and Exchange Commission Staff Accounting
Bulletin ("SAB") No. 83. The SAB requires that common stock issued by the
Company in the twelve months immediately preceding an initial public offering
plus the number of common equivalent shares which became issuable during the
same period pursuant to the issuance of common stock options and warrants (using
the modified treasury stock method) at prices substantially less than the
Offering Price be included in the calculation of common stock and common stock
equivalents as if they were outstanding for all periods presented.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
----------------------------------------------------- ---------------------------------

1993 1994 1995 1995 1996
--------------- --------------- ---------------- --------------- --------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income and net income per
share, before accretion of
Redeemable Preferred Stock...... $ 10 $ -- $ 675 $ 0.40 $ 948 $ 0.48 $ 160 $ 0.09 $ 360 $0.14
Adjustment for accretion of
Redeemable Preferred
Stock........................... -- -- (180) (0.11) (1,069) (0.55) (314) (0.18) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Net income (loss) applicable to
common shareholders and net
income per share................ $ 10 -- $ 495 $ 0.29 $ (121) $(0.07) $ (154) $(0.09) $ 360 $0.14
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
Weighted average number of:
Common shares..................... 1,317 1,317 1,886 1,634 2,490
Common equivalent shares.......... 354 384 74 63 165
------ ------ ------ ------ ------
Weighted average common shares and
common equivalent shares........ 1,671 1,701 1,960 1,697 2,655
====== ====== ====== ====== ======
</TABLE>

Primary and fully diluted per share amounts do not differ.

F-17
<PAGE> 63

BOYDS WHEELS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

17. CONCENTRATION OF CREDIT RISK

The Company has cash and cash equivalent deposits of $1,013,187 at an
investment firm at December 31, 1995 which are exposed to credit loss in the
event of nonperformance; however, the Company does not anticipate
nonperformance.

The Company's customers are concentrated in the specialty automotive
aftermarket industry. The Company's ten largest customers accounted for
approximately 60.0%, 84.6%, and 82.4% of net sales during 1993, 1994 and 1995,
respectively. The Company's five largest customers comprised 51.0% and 55.0% of
gross accounts receivable at December 31, 1994 and 1995, respectively. In 1993,
1994 and 1995, the Company derived approximately 11.1%, 26.3% and 39.3%,
respectively, of its net sales from international markets, substantially all of
which were in Japan. The Company reviews a customer's credit history before
extending unsecured credit. The Company establishes allowances for doubtful
accounts based upon factors surrounding the credit risk of specific customers,
historical trends, and other information. To reduce credit risk, the Company
generally requires a down payment on large orders. The accounting loss, should a
customer be unable to meet its obligation to the Company, would be equal to the
recorded account receivable.

18. SUBSEQUENT EVENTS

In February 1996, the Company entered into an agreement under which an
employee of the Company was released from his duties under an employment
contract. Under the agreement, the Company paid to this employee total
consideration of $275,000 consisting of $150,000 in consideration for a
five-year covenant not to compete and $125,000 for other compensation. Of such
consideration, $225,000 was paid in cash and the remaining $50,000 was paid in
shares of the Company's common stock. All other amounts due to/from the Company
and the employee pursuant to the employment contract were canceled. The above
transactions have been recognized in the December 31, 1995 financial statements.

Unaudited: in February 1996, the Company also finalized an Agreement for
the Purchase and Sale of Assets of Velocity Distribution Inc. (the "Velocity
Agreement"). Under the Velocity Agreement, the Company assumed the assets and
liabilities of Velocity Distribution Inc. and entered into a five-year covenant
not to compete with a former employee of Velocity Distribution Inc. for a total
amount of approximately $25,000.

F-18
<PAGE> 64

[PHOTOS]
<PAGE> 65

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

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, OR BY ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY THOSE TO WHICH IT
RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER
IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 10
Price Range for Common Stock and
Dividend Policy..................... 11
Dilution.............................. 11
Capitalization........................ 12
Selected Financial Data............... 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 14
Business.............................. 20
Management............................ 29
Certain Transactions.................. 34
Principal and Selling Shareholders.... 36
Description of Capital Stock.......... 38
Underwriting.......................... 42
Legal Matters......................... 43
Experts............................... 43
Additional Information................ 43
Index to Financial Statements......... F-1
</TABLE>

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

LOGO

BOYDS WHEELS, INC.

1,000,000 SHARES

COMMON STOCK
--------------------
PROSPECTUS
--------------------
, 1996

CRUTTENDEN ROTH

INCORPORATED

------------------------------------------------------
------------------------------------------------------
<PAGE> 66

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Underwriting Agreement (Exhibit 1 hereto) provides for indemnification
by the Underwriters of the Registrant and its officers and directors and by the
Registrant of the Underwriters for certain liabilities arising under the
Securities Act or otherwise.

The Registrant's Amended and Restated Articles of Incorporation ("Articles
of Incorporation") provide that, to the fullest extent permitted by California
law, the Registrant's directors will not be liable for monetary damages for
breach of the directors' fiduciary duty of care to the Registrant or its
shareholders. This provision in the Articles of Incorporation does not eliminate
the duty of care and in appropriate circumstances equitable remedies such as an
injunction or other forms of nonmonetary relief would remain available under
California law. Each director will continue to be subject to liability for
breach of the director's duty of loyalty to the Registrant, for acts or
omissions involving intentional misconduct or knowing and culpable violations of
law, for acts or omissions that a director believes to be contrary to the best
interests of the Registrant or its shareholders or that involve the absence of
good faith on the part of the director, for any transaction from which the
director derived an improper personal benefit, for acts or omissions involving a
reckless disregard for the director's duty to the Registrant or its shareholders
when the director was aware or should have been aware of a risk of serious
injury to the Registrant or its shareholders, for acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the Registrant or its shareholders, for improper
transactions between the director and the Registrant, for improper distributions
to shareholders and loans to directors and officers or for acts or omissions by
the director in his or her capacity as an officer of the Registrant.

The inclusion of the above provision in the Articles of Incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter shareholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefitted the Registrant and its
shareholders. At present, there is no litigation or proceeding pending involving
a director of the Registrant as to which indemnification is being sought, nor is
the Registrant aware of any threatened litigation that may result in claims for
indemnification by any director.

The Registrant's Articles of Incorporation authorizes the Registrant to
indemnify its directors and officers to the fullest extent permitted by
California law, including circumstances in which indemnification is otherwise
discretionary under California law. The Registrant entered into indemnification
agreements with certain of its directors and officers that require the
Registrant to indemnify such directors and officers to the fullest extent
permitted by law. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable.

II-1
<PAGE> 67

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee....................... $ 4,601
NASD Filing Fee........................................................... 1,834
Nasdaq Filing Fee......................................................... 17,500*
Underwriter's Nonaccountable Expense Allowance............................ 150,000*
Printing Expenses......................................................... 60,000*
Legal Fees and Expenses................................................... 50,000*
Accounting Fees and Expenses.............................................. 30,000*
Blue Sky Filing Fees and Expenses......................................... 10,000*
Warrant Agent, Transfer Agent and Registrar Fees.......................... 10,000*
Miscellaneous............................................................. 41,065*
--------
TOTAL........................................................... $375,000*
========
</TABLE>

- ---------------
* Estimated.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

Since May 17, 1993, the Registrant has sold and issued the following
unregistered securities:

1. In May 1993, the Company granted to Brad Fanshaw, the former President
and former director of the Company, options to purchase 71,429 shares of Common
Stock at an exercise price of $1.00 per share, the fair market value of the
Company's Common Stock as of the date of grant, as determined by the Board of
Directors of the Company. The issuance of these options was deemed to be exempt
from registration under the Securities Act by virtue of Section 4(2) of the
Securities Act.

2. In September 1993, the Registrant privately sold for cash $660,000
principal amount of 9% Convertible Promissory Notes due June 30, 1996 (the
"Notes") to certain accredited or sophisticated investors. The sale of the Notes
was deemed to be exempt from registration under the Securities Act by virtue of
Rule 504 promulgated under Section 3(b) of the Securities Act.

3. In connection with the September 1993 private placement of Notes, the
Registrant issued to officers of the placement agent, in consideration for their
efforts in the private placement, warrants to purchase (the "Note Placement
Agent Warrants") an aggregate of 9,328 shares of Common Stock, at a price of
$4.25 per share. The Note Placement Agent Warrants are currently exercisable and
expire in September 1999. The issuance of the Note Placement Agent Warrants was
deemed to be exempt from registration under the Securities Act by virtue of
Section 4(2) of the Securities Act.

4. In November 1994, the Board of Directors of the Registrant issued
706,668 shares of Series A Redeemable Preferred Stock to Karl Kantarjian in
exchange for 706,668 shares of Common Stock issued to Mr. Kantarjian in 1988. In
consideration for exchanging his shares of Common Stock for Series A Redeemable
Preferred Stock, Mr. Kantarjian received a warrant (the "Kantarjian Warrant") to
purchase 10,000 shares of Common Stock at $6.25 per share. The Kantarjian
Warrant is currently exercisable and expires on November 3, 1996. The issuance
of Series A Redeemable Preferred Stock and the Kantarjian Warrant were deemed to
be exempt from registration under the Securities Act by virtue of Section 4(2)
of the Securities Act.

5. In November 1994, the Registrant sold to certain accredited or
sophisticated investors 609,998 "Units," each Unit consisting of one share of
the Registrant's Common Stock and one warrant to purchase one share of the
Registrant's Common Stock. Of the total Units issued, 177,857 were issued upon
conversion of $622,500 in principal amount of Notes. The Registrant received
cash for the remainder of the Units issued. The issuance of the Units was deemed
to be exempt from registration under the Securities Act by virtue of Rule 506
promulgated thereunder.

II-2
<PAGE> 68

6. In connection with the 1994 Private Placement, the Registrant issued to
officers of the placement agent warrants to purchase an aggregate of 85,714
shares of Common Stock, which effective as of the closing of the Registrant's
initial public offering, were converted into 35,714 shares of Common Stock at a
price equal to $3.50 per share. The issuance of the Unit Placement Agent
Warrants was deemed to be exempt from registration under the Securities Act by
virtue of Section 4(2) of the Securities Act.

7. In September 1995, the Registrant granted options to purchase 207,500
shares of Common Stock at an exercise price of $6.25 per share, in November
1995, the Registrant granted options to purchase 40,000 shares of Common Stock
at an exercise price of $7.25 per share and in April 1996 the Registrant granted
options to purchase 5,000 shares of Common Stock at an exercise price of $6.25
per share to certain key officers and employees. In addition, options to
purchase 3,000 shares of the Registrant's Common Stock were granted to each of
the Registrant's Non-Employee Directors under the provisions of the Registrant's
1995 Stock Option Plan. The grant of all such options was deemed to be exempt
from registration under the Securities Act by virtue of Section 4(2) of the
Securities Act.

8. In connection with the departure of an employee of Registrant, in
February 1996, the Registrant issued 5,263 shares of the Registrant's Common
Stock. The issuance of this common stock was deemed to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the
Securities Act.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------------------------------------------------------------------------
<S> <C> <C>
1.1+ -- Form of Underwriting Agreement by and among the Registrant, certain Selling
Shareholders of the Registrant and Cruttenden Roth Incorporated.
3.1** -- Articles of Incorporation as filed with the California Secretary of State on
April 27, 1988.
3.2** -- Amended and Restated Articles of Incorporation filed with the California
Secretary of State on December 12, 1991.
3.3** -- Amended and Restated Articles of Incorporation filed with the California
Secretary of State on October 13, 1994.
3.4** -- Certificate of Determination of Preferences of Series A Redeemable Preferred
Stock of Registrant filed with the California Secretary of State on November
2, 1994.
3.5** -- Agreement of Merger by and between Registrant and Boyds Ultra Violet, Inc.
filed with the California Secretary of State on November 2, 1994.
3.6** -- Bylaws of the Registrant, as amended and restated.
4.1** -- Form of Warrant held by Robert E. Fitzgerald to purchase 10,560 shares of
Common Stock and Ty Rogers to purchase 2,640 shares of Common Stock.
4.2** -- Warrant held by Karl Kantarjian to purchase 10,000 shares of Common Stock
dated as of November 3, 1994.
4.3** -- Form of 9% Convertible Promissory Note due June 30, 1996.
4.4** -- Form of Warrant issued in 1994 Private Placement held as of the date hereof
by Mr. Fitzgerald.
4.5** -- Option to Purchase Common Stock by and between the Registrant and Brad
Fanshaw dated as of May 19, 1993.
4.6** -- 1995 Stock Option Plan.
4.7** -- Representatives' Warrant Agreement by and between the Registrant, Cruttenden
Roth Incorporated and Black & Company, Inc.
4.8 -- Form of Representative's Warrant Agreement by and between the Registrant and
Cruttenden Roth Incorporated.
</TABLE>

II-3
<PAGE> 69

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------------------------------------------------------------------------
<S> <C> <C>
5.1* -- Opinion of Rutan & Tucker, LLP.
10.1* -- Loan Agreement, Security Agreement and Promissory Notes each dated April 19,
1996 between the Registrant and Eldorado Bank.
10.2* -- Close End Vehicle Lease Agreement between the Registrant and Eldorado Bank
Leasing dated March 18, 1996.
10.3* -- Close End Vehicle Lease Agreement between the Registrant and Eldorado Bank
Leasing dated March 18, 1996.
10.4* -- Equipment Lease Agreement between the Registrant and Stunson Equipment Inc.
dated January 30, 1996.
10.5** -- Letter dated March 20, 1995 memorializing agreement between Registrant and
Hot Rods by Boyd concerning inter-company account balance.
10.6** -- Standard Industrial Lease between Registrant and A & P Leasing Registrant
dated April 9, 1992 (8350 Cerritos Avenue).
10.7** -- Standard Industrial Lease between Registrant and Currie Family Trust dated
July 17, 1994 (8402 Cerritos Avenue).
10.8** -- Standard Industrial Lease between Registrant and Currie Family Trust dated
October 1, 1994 (8400 Cerritos Avenue).
10.9** -- Standard Industrial/Commercial Single-Tenant Lease between Boyd and Diane
Coddington and Duane and Carole Logsdon dated June 15, 1992 (8380 Cerritos
Avenue and 10541 Ashdale Street).
10.10** -- Assignment of Real Property Lease Rights of Boyd and Diane Coddington to
Registrant dated September 29, 1994 (8380 Cerritos Avenue and 10541 Ashdale
Street), and Assignment of Equipment Lease Rights.
10.11** -- Standard Industrial/Commercial Single-Tenant Lease between Registrant and
Hopper Shop Equipment Sales dated January 11, 1995. (8250 Cerritos Avenue).
10.12** -- Letter Agreements between Registrant and Codde, Inc. to lease a tractor and
trailer, dated January 1, 1995 and May 1, 1995.
10.13** -- Equipment Lease between Registrant and Financial Federal Credit, dated March
10, 1995.
10.14** -- Equipment Lease between Registrant and Financial Federal Credit, dated March
22, 1995.
10.15** -- Textron Financial Corp. Master Lease Schedule, Master Lease Agreement and
Guaranty, dated August 14, 1992.
10.16** -- Master Lease Schedule by and between Citicorp Leasing Inc. and Registrant
dated January 23, 1995.
10.17** -- Automobile purchase agreement between Boyd Coddington and Richard Hibbard
Chevrolet, Inc., dated May 23, 1994.
10.18** -- Guaranty of Boyd and Diane Coddington and Hot Rods by Boyd to Financial
Federal Credit, dated March 10, 1995.
10.19** -- Marketing/Promotion Agreement by and among the Registrant, Boyd Coddington
and Hot Rods by Boyd, Inc.
10.20** -- Option Agreement by and among the Registrant, Boyd and Diane Coddington and
Hot Rods by Boyd, Inc.
10.21** -- Employment Agreement by and between the Registrant and Boyd Coddington.
</TABLE>

II-4
<PAGE> 70

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------------------------------------------------------------------------
<S> <C> <C>
10.22*** -- Agreement for the Purchase and Sale of Assets among the Registrant, Velocity
Distribution, Inc., Brad Fanshaw, Charlotte Fanshaw, Boyd Coddington and
Diane Coddington (Portions omitted pursuant to an application for
confidential treatment pursuant to Rule 406).
10.23*** -- Settlement Agreement and General Release dated February 15, 1996 (Portions
omitted pursuant to an application for confidential treatment pursuant to
Rule 406).
10.24** -- Equipment Lease between Registrant and Financial Federal Credit dated July
21, 1995.
10.25* -- Standard Industrial/Commercial Single-Tenant Lease between the Registrant and
Flam Properties, Ltd. dated July 26, 1995.
10.26* -- Guaranty of Boyd Coddington to Flam Properties, Ltd. dated July 26, 1996.
10.27* -- Commercial Lease between the Registrant and Custom Pipe & Coupling Inc. dated
.
10.28* -- Standard Industrial/Commercial Multi-Tenant Lease among the Registrant, Gary
Hollander, Susan Henson, Kevin Henson Trust and Hollander Glass dated August
15, 1995.
11.1 -- Computation of Earnings Per Share (included in Note 16 to the Registrant's
Financial Statements at page F-17).
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2* -- Consent of Rutan & Tucker, LLP (included in the opinion to be filed as
Exhibit 5).
24.1 -- Power of Attorney (included on page II-7).
27.1+ -- Financial Data Schedule.
</TABLE>

- ---------------
* To be filed by amendment.

** Incorporated by reference from the Registration Statement on Form SB-2 of
Boyds Wheels, Inc. (Registration No. 33-94064-LA).

*** Incorporated by reference from the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1995 (Commission File No. 0-26738)

+ Previously filed.

ITEM 28. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide the Underwriter at
the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or preceding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-5
<PAGE> 71

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1), or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to: (i) include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
reflect in the prospectus any facts or events arising after the effective date
of this Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement; (iii) include any
material information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to such
information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

II-6
<PAGE> 72

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing on Form SB-2 and authorized this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Stanton, State of California, on the 22nd day of
May, 1996.

BOYDS WHEELS, INC.

By: /s/ Boyd Coddington

------------------------------------
Boyd Coddington
Chairman and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and directors
of Boyds Wheels, Inc., a California corporation, which is filing a Registration
Statement on Form SB-2 with the Securities and Exchange Commission, Washington
D.C., under the provisions of the Securities Act of 1933, as amended, hereby
constitute and appoint Boyd Coddington and Rex A. Ours, and each of them, their
true and lawful attorneys-in-fact and agents; with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments to the
Registration Statement, including a Prospectus or an amended Prospectus therein,
and all other documents in connection therewith to be filed with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all interests and purposes as they might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

In accordance with the requirements of the Securities Act of 1933, as
amended, this Amendment No. 1 to Registration Statement has been signed by the
following persons in the capacities and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- --------------
<S> <C> <C>
/s/ BOYD CODDINGTON Chairman of the Board of May 22, 1996
- --------------------------------------------- Directors, and Chief Executive
Boyd Coddington Officer (Principal Executive
Officer)
/s/ REX A. OURS Secretary, Chief Financial May 22, 1996
- --------------------------------------------- Officer Principal Financial and
Rex A. Ours Accounting Officer)
/s/ CURT BARWICK Director May 22, 1996
- ---------------------------------------------
Curt Barwick
/s/ MARCUS SORENSON Director May 22, 1996
- ---------------------------------------------
Marcus Sorenson
</TABLE>

II-7
<PAGE> 73

EXHIBIT INDEX

<PAGE> 74

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------------------------------------------------------------------------
<S> <C> <C>
10.7** -- Standard Industrial Lease between Registrant and Currie Family Trust dated
July 17, 1994 (8402 Cerritos Avenue).
10.8** -- Standard Industrial Lease between Registrant and Currie Family Trust dated
October 1, 1994 (8400 Cerritos Avenue).
10.9** -- Standard Industrial/Commercial Single-Tenant Lease between Boyd and Diane
Coddington and Duane and Carole Logsdon dated June 15, 1992 (8380 Cerritos
Avenue and 10541 Ashdale Street).
10.10** -- Assignment of Real Property Lease Rights of Boyd and Diane Coddington to
Registrant dated September 29, 1994 (8380 Cerritos Avenue and 10541 Ashdale
Street), and Assignment of Equipment Lease Rights.
10.11** -- Standard Industrial/Commercial Single-Tenant Lease between Registrant and
Hopper Shop Equipment Sales dated January 11, 1995. (8250 Cerritos Avenue).
10.12** -- Letter Agreements between Registrant and Codde, Inc. to lease a tractor and
trailer, dated January 1, 1995 and May 1, 1995.
10.13** -- Equipment Lease between Registrant and Financial Federal Credit, dated March
10, 1995.
10.14** -- Equipment Lease between Registrant and Financial Federal Credit, dated March
22, 1995.
10.15** -- Textron Financial Corp. Master Lease Schedule, Master Lease Agreement and
Guaranty, dated August 14, 1992.
10.16** -- Master Lease Schedule by and between Citicorp Leasing Inc. and Registrant
dated January 23, 1995.
10.17** -- Automobile purchase agreement between Boyd Coddington and Richard Hibbard
Chevrolet, Inc., dated May 23, 1994.
10.18** -- Guaranty of Boyd and Diane Coddington and Hot Rods by Boyd to Financial
Federal Credit, dated March 10, 1995.
10.19** -- Marketing/Promotion Agreement by and among the Registrant, Boyd Coddington
and Hot Rods by Boyd, Inc.
10.20** -- Option Agreement by and among the Registrant, Boyd and Diane Coddington and
Hot Rods by Boyd, Inc.
10.21** -- Employment Agreement by and between the Registrant and Boyd Coddington.
10.22*** -- Agreement for the Purchase and Sale of Assets among the Registrant, Velocity
Distribution, Inc., Brad Fanshaw, Charlotte Fanshaw, Boyd Coddington and
Diane Coddington (Portions omitted pursuant to an application for
confidential treatment pursuant to Rule 406).
10.23*** -- Settlement Agreement and General Release dated February 15, 1996 (Portions
omitted pursuant to an application for confidential treatment pursuant to
Rule 406).
10.24** -- Equipment Lease between Registrant and Financial Federal Credit dated July
21, 1995.
10.25* -- Standard Industrial/Commercial Single-Tenant Lease between the Registrant and
Flam Properties, Ltd. dated July 26, 1995.
10.26* -- Guaranty of Boyd Coddington to Flam Properties, Ltd. dated July 26, 1996.
10.27* -- Commercial Lease between the Registrant and Custom Pipe & Coupling Inc. dated
.
</TABLE>

<PAGE> 75

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------------------------------------------------------------------------
<S> <C> <C>
10.28* -- Standard Industrial/Commercial Multi-Tenant Lease among the Registrant, Gary
Hollander, Susan Henson, Kevin Henson Trust and Hollander Glass dated August
15, 1995.
11.1 -- Computation of Earnings Per Share (included in Note 16 to the Registrant's
Financial Statements at page F-17).
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2* -- Consent of Rutan & Tucker, LLP (included in the opinion to be filed as
Exhibit 5).
24.1 -- Power of Attorney (included on page II-7).
27.1+ -- Financial Data Schedule.
</TABLE>

- ---------------
* To be filed by amendment.

** Incorporated by reference from the Registration Statement on Form SB-2 of
Boyds Wheels, Inc. (Registration No. 33-94064-LA).

*** Incorporated by reference from the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1995 (Commission File No. 0-26738)

+ Previously filed.

<PAGE> 1
EXHIBIT 4.8

REPRESENTATIVE'S WARRANT AGREEMENT
----------------------------------

THIS REPRESENTATIVE'S WARRANT AGREEMENT (the "Agreement"), dated as of
June __, 1996 is made and entered into by and between BOYDS WHEELS, INC., a
California corporation (the "Company") and CRUTTENDEN ROTH INCORPORATED (the
"Warrantholder").

The Company agrees to issue and sell, and the Warrantholder agrees to
purchase, for an aggregate purchase price of $52.50, warrants, as hereinafter
described (the "Warrants"), subject to adjustment pursuant to the terms hereof
(the "Shares") of the Company's Common Stock, no par value (the "Common
Stock"), in connection with a public offering (the "Public Offering") by the
Company of 1,000,000 shares of Common Stock pursuant to an underwriting
agreement (the "Underwriting Agreement"), dated as of June __, 1996 between the
Company and the Warrantholder as Representative of the several Underwriters
named in the Underwriting Agreement. The purchase and sale of the Warrants
shall occur on the Closing Date, as defined in the Underwriting Agreement, and
be subject to the conditions to the Underwriters' obligations to purchase
Common Stock thereunder.

In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
thereunder, the Company and the Warrantholder, for value received, hereby agree
as follows:

Section 1. TRANSFERABILITY AND FORM OF WARRANTS.

1.1 Registration. The Warrants shall be numbered and
shall be registered on the books of the Company when issued.

1.2 Transfer. The Warrants shall be transferable in
whole or in part only on the books of the Company maintained at its principal
office in Stanton, California, or wherever its principal office may then be
located, upon delivery thereof duly endorsed by the Warrantholder or by its
duly authorized attorney or representative, accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver new Warrants to the person or
persons entitled thereto.

1.3 Limitations on Transfer of the Warrants. Subject to
the provisions of Section 11, the Warrants shall not be sold, transferred,
assigned or hypothecated by the Warrantholder for a period of one year from the
date hereof, except to (i) one or more persons, each of whom on the date of
transfer is an officer or partner of the Warrantholder; (ii) a general
partnership or general partnerships, the general partners of which are the
Warrantholder and one or more persons, each of whom on the date of transfer is
an officer or partner of the Warrantholder; (iii) a successor to the
Warrantholder in merger or consolidation; (iv) a purchaser of all or
substantially all of the Warrantholder's assets; or (v) any person receiving
the Warrants from one or more of the persons listed in this subsection 1.3 at
such person's or persons' death pursuant to a will or trust or the laws of
intestate succession. The Warrants may be divided or combined, upon request to
the Company by the Warrantholder, into a certificate or certificates
representing the right to purchase the same aggregate number of Shares. Unless
the context indicates otherwise, the term "Warrantholder" shall include any
transferee or transferees of the Warrants pursuant to this subsection 1.3, and
the term "Warrants" shall include any and all warrants outstanding pursuant to
this Agreement, including those evidenced by a certificate or certificates
issued upon division, exchange, substitution or transfer pursuant to this
Agreement.

1.4 Form of Warrants. The text of the Warrants and of
the form of election to purchase Shares shall be substantially as set forth in
Exhibit A attached hereto. The number of Shares issuable upon exercise of the
Warrants is subject to adjustment upon the occurrence of certain events, all as
hereinafter provided. The Warrants shall be executed on behalf of the Company
by its President or by a Vice President, attested to by its Secretary or an
Assistant Secretary. A Warrant bearing the signature of an individual who was
at the time of signature the proper officer of the Company shall bind the
Company, notwithstanding that such individual shall
<PAGE> 2
have ceased to hold such office prior to the delivery of such Warrant or did
not hold such office on the date of this Agreement.

The Warrants shall be dated as of the date of signature
thereof by the Company either upon initial issuance or upon division, exchange,
substitution or transfer.

1.5 Legend on Shares. Each Warrant certificate and
certificate for Shares initially issued upon exercise of the Warrants shall
bear the following legend, unless, at the time of exercise, such Shares are
subject to a currently effective Registration Statement under the Act:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, EXCHANGED, HYPOTHECATED
OR TRANSFERRED IN ANY MANNER EXCEPT PURSUANT TO A REGISTRATION
OR AN EXEMPTION FROM SUCH REGISTRATION AND IN COMPLIANCE WITH
SECTION 11 OF THE AGREEMENT PURSUANT TO WHICH THEY WERE
ISSUED."

Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act of 1933, as amended (the "Act"), of the securities
represented thereby) shall also bear the above legend unless, in the opinion of
the Company's counsel, the securities represented thereby need no longer be
subject to such restrictions.

Section 2. EXCHANGE OF WARRANT CERTIFICATE. Any Warrant certificate
may be exchanged for another certificate or certificates entitling a
Warrantholder to purchase a like aggregate number of Shares as the certificate
or certificates surrendered then entitled such Warrantholder to purchase. Any
Warrantholder desiring to exchange a Warrant certificate shall make such
request in writing delivered to the Company, and shall surrender, properly
endorsed, with signatures guaranteed, the certificate evidencing the Warrant to
be so exchanged. Thereupon, the Company shall execute and deliver to the
person or persons entitled thereto a new Warrant certificate as so requested.

Section 3. TERM OF WARRANTS; EXERCISE OF WARRANTS.

(a) Subject to the terms of this Agreement, a
Warrantholder shall have the right, at any time during the period commencing at
9:00 a.m., Pacific Time, on ____________, 1997 and ending at 5:00 p.m., Pacific
Time, on ____________, 2001 (the "Termination Date"), to purchase from the
Company up to the number of fully paid and nonassessable Shares to which such
Warrantholder may at the time be entitled to purchase pursuant to this
Agreement, upon surrender to the Company, at its principal office, of the
certificate evidencing the Warrants to be exercised, together with the purchase
form on the reverse thereof duly filled in and signed, with signatures
guaranteed, and upon payment to the Company of the Warrant Price (as defined in
and determined in accordance with the provisions of this section 3 and sections
7 and 8 hereof), for the number of Shares in respect of which such Warrants are
then exercised.

(b) Payment of the aggregate Warrant Price shall be made
in cash, by check, or any combination thereof. Upon such surrender of the
Warrants and payment of such Warrant Price as aforesaid, the Company shall
issue and cause to be delivered with all reasonable dispatch to or upon the
written order of the Warrantholder and in such name or names as the
Warrantholder may designate a certificate or certificates for the number of
full Shares so purchased upon the exercise of the Warrant, together with cash,
as provided in Section 9 hereof, in respect of any fractional Shares otherwise
issuable upon such surrender. Such certificate or certificates shall be deemed
to have been issued and any person so designated to be named therein shall be
deemed to have become a holder of record of such securities as of the date of
surrender of the Warrants and payment of the Warrant Price, as aforesaid,
notwithstanding that the certificate or certificates representing such
securities shall not actually have been delivered or that the stock transfer
books of the Company shall then be

2
<PAGE> 3
closed. The Warrants shall be exercisable, at the election of a Warrantholder,
either in full or from time to time in part and, in the event that a
certificate evidencing the Warrants is exercised in respect of less than all of
the Shares specified therein at any time prior to the Termination Date, a new
certificate evidencing the remaining portion of the Warrants will be issued by
the Company.

Section 4. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes, if any, attributable to the initial issuance of the Warrants or
the securities comprising the Shares; provided, however, the Company shall not
be required to pay any tax which may be payable in respect of any secondary
transfer of the Warrants or the securities comprising the Shares.

Section 5. MUTILATED OR MISSING WARRANTS. In case the certificate or
certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
certificate or certificates, or in lieu of and substitution for the certificate
or certificates lost, stolen or destroyed, a new Warrant certificate or
certificates of like tenor and representing an equivalent right or interest,
but only upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction of such Warrant and a bond of indemnity, if requested,
also satisfactory in form and amount at the applicant's cost. Applicants for
such substitute Warrant certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.

Section 6. RESERVATION OF SHARES. There has been reserved, and the
Company shall at all times keep reserved so long as the Warrants remain
outstanding, out of its authorized Common Stock, such number of shares of
Common Stock as shall be subject to purchase under the Warrants. Every
transfer agent for the Common Stock and other securities of the Company
issuable upon the exercise of the Warrants will be irrevocably authorized and
directed at all times to reserve such number of authorized shares and other
securities as shall be requisite for such purpose. The Company will keep a
copy of this Agreement on file with every transfer agent for the Common Stock
and other securities of the Company issuable upon the exercise of the Warrants.
The Company will supply every such transfer agent with duly executed stock and
other certificates, as appropriate, for such purpose and will provide or
otherwise make available any cash which may be payable as provided in Section 9
hereof.

Section 7. WARRANT PRICE. The price per Share at which Shares shall
be purchasable upon the exercise of the Warrants (the "Warrant Price") shall be
$_________ subject to further adjustment pursuant to Section 8 hereof.

Section 8. ADJUSTMENT OF NUMBER OF SHARES. The number and kind of
securities purchasable upon the exercise of the Warrants and the Warrant Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:

8.1 Adjustments. The number of Shares purchasable upon
the exercise of the Warrants shall be subject to adjustment as follows:

(a) In case the Company shall (i) pay a dividend in
Common Stock or make a distribution in Common Stock, (ii) subdivide its
outstanding Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of shares of Common Stock, or (iv) issue by reclassification of
its Common Stock other securities of the Company, the number of Shares
purchasable upon exercise of the Warrants immediately prior thereto shall be
adjusted so that the Warrantholder shall be entitled to receive the kind and
number of Shares or other securities of the Company which it would have owned
or would have been entitled to receive immediately after the happening of any
of the events described above, had the Warrants been exercised immediately
prior to the happening of such event or any record date with respect thereto.
Any adjustment made pursuant to this subsection 8.1(a) shall become effective
immediately after the effective date of such event.

(b) In case the Company shall issue rights, options,
warrants or convertible securities to all or substantially all holders of its
Common Stock, without any charge to such holders, entitling them to

3
<PAGE> 4
subscribe for or purchase Common Stock at a price per share which is lower at
the record date mentioned below than the then Current Market Price (as defined
in Section 9), the number of Shares thereafter purchasable upon the exercise of
each Warrant shall be determined by multiplying the number of Shares
theretofore purchasable upon exercise of the Warrant by a fraction, of which
the numerator shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants or
convertible securities plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the denominator shall be the
number of shares of Common Stock outstanding immediately prior to the issuance
of such rights, options, warrants or convertible securities plus the number of
shares which the aggregate offering price of the total number of shares offered
would purchase at such Current Market Price. Such adjustment shall be made
whenever such rights, options, warrants or convertible securities are issued,
and shall become effective immediately upon issuance of such rights, options,
warrants or convertible securities.

(c) In case the Company shall distribute to all or
substantially all holders of its Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions out of earnings) or rights,
options, warrants or convertible securities containing the right to subscribe
for or purchase Common Stock (excluding those referred to in subsection 8.1(b)
above), then in each case the number of Shares thereafter purchasable upon the
exercise of the Warrants shall be determined by multiplying the number of
Shares theretofore purchasable upon exercise of the Warrants by a fraction, of
which the numerator shall be the then Current Market Price on the date of such
distribution, and of which the denominator shall be such Current Market Price
on such date minus the then fair value (determined as provided in subsection
(d) below) of the portion of the assets or evidences of indebtedness so
distributed or of such subscription rights, options, warrants or convertible
securities applicable to one share. Such adjustment shall be made whenever any
such distribution is made and shall become effective on the date of
distribution.

(d) For the purposes of the adjustments covered by
subsections 8.1(b) or (c) hereof, the Common Stock which the holders of any
rights, options, warrants or convertible securities shall be entitled to
subscribe for or purchase shall be deemed issued and outstanding as of the date
of such sale or issuance and the consideration received by the Company therefor
shall be deemed to be the consideration received by the Company for such
rights, options, warrants or convertible securities, plus the consideration or
premiums stated in such rights, options, warrants or convertible securities to
be paid for the Common Stock covered thereby. In case the Company shall sell
or issue Common Stock or rights, options, warrants or convertible securities
containing the right to subscribe for or purchase Common Stock for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then in determining the "price per share" of Common Stock and
the "consideration received by the Company" for purposes of the first sentence
of this subsection 8.1(d), the Board of Directors shall determine the fair
value of said property, and such determination, if reasonable and based upon
the Board of Directors' good faith business judgment, shall be binding upon the
Warrantholder. In determining the "price per share" of Common Stock, any
underwriting discounts or commissions shall not be deducted from the price
received by the Company for sales of securities registered under the Act.

(e) No adjustment in the number of Shares purchasable
pursuant to the Warrants shall be required unless such adjustment would require
an increase or decrease of at least one percent in the number of Shares then
purchasable upon the exercise of the Warrants or, if the Warrants are not then
exercisable, the number of Shares purchasable upon the exercise of the Warrants
on the first date thereafter that the Warrants become exercisable; provided,
however, that any adjustments which by reason of this subsection 8.1(d) are not
required to be made immediately shall be carried forward and taken into account
in any subsequent adjustment.

(f) Whenever the number of Shares purchasable upon the
exercise of the Warrant is adjusted, as herein provided, the Warrant Price
payable upon exercise of the Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of the
Warrant immediately prior to such adjustment, and of which the denominator
shall be the number of Shares so purchasable immediately thereafter.

(g) Whenever the number of Shares purchasable upon the
exercise of the Warrants is adjusted as herein provided, the Company shall
cause to be promptly mailed to the Warrantholder by first class

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<PAGE> 5
mail, postage prepaid, notice of such adjustment and a certificate of the chief
financial officer of the Company setting forth the number of Shares purchasable
upon the exercise of the Warrants and the Warrant Price after such adjustment,
a brief statement of the facts requiring such adjustment and the computation by
which such adjustment was made.

(h) For the purpose of this subsection 8.1, the term
"Common Stock" shall mean (i) the class of stock designated as the Common Stock
of the Company at the date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value,
or from no par value to par value. In the event that at any time, as a result
of an adjustment made pursuant to this Section 8, the Warrantholder shall
become entitled to purchase any securities of the Company other than Common
Stock, (i) if the Warrantholder's right to purchase is on any other basis than
that available to all holders of the Company's Common Stock, the Company shall
obtain an opinion of an independent investment banking firm valuing such other
securities and (ii) thereafter the number of such other securities so
purchasable upon exercise of the Warrants shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Shares contained in this Section 8.

(i) Upon the expiration of any rights, options, warrants
or conversion privileges, if such shall not have been exercised, the number of
Shares purchasable upon exercise of the Warrants, to the extent the Warrants
have not then been exercised, shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may be)
on the basis of (A) the fact that the only shares of Common Stock so issued
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion privileges, and (B)
the fact that such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
consideration, if any, actually received by the Company for the issuance, sale
or grant of all such rights, options, warrants or conversion privileges whether
or not exercised; provided, however, that no such readjustment shall have the
effect of decreasing the number of Shares purchasable upon exercise of the
Warrants by an amount in excess of the amount of the adjustment initially made
in respect of the issuance, sale or grant of such rights, options, warrants or
conversion privileges.

8.2 No Adjustment for Dividends. Except as provided in
subsection 8.1, no adjustment in respect of any dividends or distributions out
of earnings shall be made during the term of the Warrants or upon the exercise
of the Warrants.

8.3 No Adjustment in Certain Cases. No adjustments shall
be made pursuant to Section 8 hereof in connection with the issuance of the
Common Stock sold as part of the public sale pursuant to the Underwriting
Agreement or the issuance of Shares upon exercise of the Warrants. No
adjustments shall be made pursuant to Section 8 hereof in connection with the
exercise of the presently outstanding warrants to purchase up to __________
shares of Common Stock held by certain investors.

8.4 Preservation of Purchase Rights upon
Reclassification, Consolidation, etc. In case of any consolidation of the
Company with or merger of the Company into another corporation or in case of
any sale or conveyance to another corporation of the property, assets or
business of the Company as an entirety or substantially as an entirety, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholder an agreement that the Warrantholder shall have
the right thereafter upon payment of the Warrant Price in effect immediately
prior to such action to purchase, upon exercise of the Warrants, the kind and
amount of shares and other securities and property which it would have owned or
have been entitled to receive after the happening of such consolidation,
merger, sale or conveyance had the Warrants been exercised immediately prior to
such action. In the event of a merger described in Section 368(a)(2)(E) of the
Internal Revenue Code of 1986, in which the Company is the surviving
corporation, the right to purchase Shares under the Warrants shall terminate on
the date of such merger and thereupon the Warrants shall become null and void,
but only if the controlling corporation shall agree to substitute for the
Warrants its warrant which entitles the holder thereof to purchase upon its
exercise the kind and amount of shares and other securities and property which
it would have owned or been entitled to receive had the Warrants been exercised
immediately prior to such

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merger. Any such agreements referred to in this subsection 8.4 shall provide
for adjustments, which shall be as nearly equivalent as may be practicable to
the adjustments provided for in Section 8 hereof. The provisions of this
subsection 8.4 shall similarly apply to successive consolidations, mergers,
sales or conveyances.

8.5 Par Value of Shares of Common Stock. Before taking
any action which would cause an adjustment effectively reducing the portion of
the Warrant Price allocable to each Share below the then par value (if any) per
share of the Common Stock issuable upon exercise of the Warrants, the Company
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable Common Stock upon exercise of the Warrants.

8.6 Independent Public Accountants. The Company may
retain a firm of independent public accountants of recognized national standing
(which may be any such firm regularly employed by the Company) to make any
computation required under this Section 8, and a certificate signed by such
firm shall be conclusive evidence of the correctness of any computation made
under this Section 8.

8.7 Statement on Warrant Certificates. Irrespective of
any adjustments in the number of securities issuable upon exercise of Warrants,
Warrant certificates theretofore or thereafter issued may continue to express
the same number of securities as are stated in the similar Warrant certificates
initially issuable pursuant to this Agreement. However, the Company may, at
any time in its sole discretion (which shall be conclusive), make any change in
the form of Warrant certificate that it may deem appropriate and that does not
affect the substance thereof; and any Warrant certificate thereafter issued,
whether upon registration of transfer of, or in exchange or substitution for,
an outstanding Warrant certificate, may be in the form so changed.

Section 9. FRACTIONAL INTERESTS; CURRENT MARKET PRICE. The Company
shall not be required to issue fractional Shares on the exercise of the
Warrants. If any fraction of a Share would, except for the provisions of this
Section 9, be issuable on the exercise of the Warrants (or specified portion
thereof), the Company shall pay an amount in cash equal to the then Current
Market Price multiplied by such fraction. For purposes of this Agreement, the
term "Current Market Price" shall mean (i) if the Common Stock is traded in the
over-the-counter market and not in The Nasdaq Stock Market nor on any national
securities exchange, the average of the per share closing bid prices of the
Common Stock on the 30 consecutive trading days immediately preceding the date
in question, as reported by Nasdaq or an equivalent generally accepted
reporting service, or (ii) if the Common Stock is traded in The Nasdaq Stock
Market or on a national securities exchange, the average for the 30 consecutive
trading days immediately preceding the date in question of the daily per share
closing prices of the Common Stock in The Nasdaq Stock Market or on the
principal stock exchange on which it is listed, as the case may be. For
purposes of clause (i) above, if trading in the Common Stock is not reported by
Nasdaq, the bid price referred to in said clause shall be the lowest bid price
as reported in the "pink sheets" published by National Quotation Bureau,
Incorporated. The closing price referred to in clause (ii) above shall be the
last reported sale price or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, in either case
in The Nasdaq Stock Market or on the national securities exchange on which the
Common Stock is then listed.

Section 10. NO RIGHTS AS SHAREHOLDER; NOTICES TO WARRANTHOLDER.
Nothing contained in this Agreement or in the Warrants shall be construed as
conferring upon the Warrantholder or its transferees any rights as a
shareholder of the Company, including the right to vote, receive dividends,
consent or receive notices as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other matter.
If, however, at any time prior to the expiration of the Warrants and prior to
their exercise, any one or more of the following events shall occur:

(a) any action which would require an adjustment pursuant
to Section 8.1 (except subsection 8.1(h)) or 8.4; or

(b) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger or sale
of its property, assets and business as an entirety or substantially
as an entirety) shall be proposed;

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<PAGE> 7
then the Company shall give notice in writing of such event to the
Warrantholder, as provided in Section 14 hereof, at least 20 days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the shareholders entitled to any relevant dividend,
distribution, subscription rights or other rights or for the determination of
shareholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to mail or receive such notice
or any defect therein shall not affect the validity of any action taken with
respect thereto.

Section 11. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.

(a) The Warrantholder agrees that prior to making any
disposition of the Warrants or the Shares, other than to persons or entities
identified in clauses (i) through (v), inclusive, of Section 1.3, the
Warrantholder shall give written notice to the Company describing briefly the
manner in which any such proposed disposition is to be made; and no such
disposition shall be made if the Company has notified the Warrantholder that in
the opinion of counsel reasonably satisfactory to the Warrantholder a
registration statement or other notification or post-effective amendment
thereto (hereinafter collectively a "Registration Statement") under the Act is
required with respect to such disposition and no such Registration Statement
has been filed by the Company with, and declared effective, if necessary, by,
the Securities and Exchange Commission (the "Commission").

(b) The Company shall be obligated to the owners of the
Warrants and the Shares to file a Registration Statement as follows:

(i) Whenever during the four-year period beginning on
_____________, 1997 and ending on ______________, 2001, the Company proposes to
file with the Commission a Registration Statement (other than on Form S-4 or as
to securities issued pursuant to an employee benefit plan or a transaction
subject to Rule 145 promulgated under the Act), it shall, at least 30 days
prior to each such filing, give written notice of such proposed filing to the
Warrantholder and each holder of Shares at their respective addresses as they
appear on the records of the Company, and shall offer to include and shall
include in such filing any proposed disposition of the Shares upon receipt by
the Company, not less than 10 days prior to the proposed filing date, of a
request therefor setting forth the facts with respect to such proposed
disposition and all other information with respect to such person reasonably
necessary to be included in such Registration Statement. In the event that the
managing underwriter for said offering advises the Company in writing that the
inclusion of such securities in the offering would be detrimental to the
offering, such securities shall nevertheless be included in the Registration
Statement, provided that the Warrantholder and each holder of Warrants and
Shares desiring to have their Shares included in the Registration Statement
agree in writing, for a period of 90 days following such offering, not to sell
or otherwise dispose of such Shares pursuant to such Registration Statement,
which Registration Statement the Company shall keep effective for a period of
at least nine months following the expiration of such 90-day period.

(ii) In addition to any Registration Statement pursuant to
subsection (i) above, during the four-year period beginning on _____________,
1997 and ending on _______________, 2001, the Company will, as promptly as
practicable (but in any event within 60 days), after written request (the
"Request") by Cruttenden Roth Incorporated, or by a person or persons holding
(or having the right to acquire by virtue of holding the Warrants) at least 50%
of the shares of Common Stock which have been (or may be) issued upon exercise
of the Warrants, prepare and file at its own expense a Registration Statement
with the Commission and appropriate Blue Sky authorities sufficient to permit
the public offering of the Shares and will use its best efforts at its own
expense through its officers, directors, auditors and counsel, in all matters
necessary or advisable, to cause such Registration Statement to become
effective as promptly as practicable and to maintain such effectiveness so as
to permit resale of the Shares covered by the Request until the earlier of the
time that all such Shares have been sold or the expiration of ninety (90) days
from the effective date of the Registration Statement; provided, however, that
the Company shall only be obligated to file and have declared effective one
such Registration Statement under this Section 11(b)(ii). If a Registration
Statement is filed pursuant to this Section 11(b)(ii) but not declared
effective, or is not kept effective for the Minimum Period, then it shall not
be deemed to be a Registration Statement meeting the requirements hereunder.

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<PAGE> 8
(c) All fees, disbursements and out-of-pocket expenses
(other than Warrantholders' brokerage fees and commissions and legal fees of
counsel to the Warrantholder, if any) in connection with the filing of any
Registration Statement under Section 11(b) (or obtaining the opinion of counsel
and any no-action position of the Commission with respect to sales under Rule
144) and in complying with applicable securities and Blue Sky laws shall be
borne by the Company. The Company at its expense will supply any Warrantholder
and any holder of Shares with copies of such Registration Statement and the
prospectus included therein and other related documents any opinions and
no-action letters in such quantities as may be reasonably requested by the
Warrantholder or holder of Shares.

(d) The Company shall not be required by this Section 11
to file such Registration Statement if, in the opinion of counsel for the
Warrantholders and holders of Shares and the Company (or, should they not
agree, in the opinion of another counsel experienced in securities law matters
acceptable to counsel for such holders and the Company), the proposed public
offering or other transfer as to which such Registration Statement is requested
is exempt from applicable federal and state securities laws and would result in
all purchasers or transferees obtaining securities which are not "restricted
securities," as defined in Rule 144 under the Act.

(e) The provisions of this Section 11 and Section 12
hereof shall apply to the extent as provided herein if the Company chooses to
file an Offering Statement under Regulation A promulgated under the Act.

(f) The Company agrees that until all Shares have been
sold under a Registration Statement or pursuant to Rule 144 under the Act, it
will keep current in filing all materials required to be filed with the
Commission in order to permit the holders of such securities to sell the same
under Rule 144.

Section 12. INDEMNIFICATION.

(a) In the event of the filing of any Registration
Statement with respect to the Shares pursuant to Section 11 hereof, the Company
agrees to indemnify and hold harmless the Warrantholder and any holder of such
Shares and each person, if any, who controls the Warrantholder or any holder of
such Shares within the meaning of the Act, against any losses, claims, damages
or liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), to which the Warrantholder or any
holder of such Shares or such controlling person may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any such
Registration Statement, or any related preliminary prospectus, final
prospectus, or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus,
final prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by such
Warrantholder or the holder of such Shares specifically for use in the
preparation thereof. This indemnity will be in addition to any liability which
the Company may otherwise have.

(b) The Warrantholder and the holders of the Shares agree
that they will, severally and not jointly, indemnify and hold harmless the
Company, each other person referred to in subparts (1), (2) and (3) of Section
11(a) of the Act in respect of the Registration Statement and each person, if
any, who controls the Company within the meaning of the Act, against any
losses, claims, damages or liabilities (which shall, for all purposes of this
Agreement, include but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such
director, officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such Registration
Statement, or any related preliminary prospectus, final prospectus or amendment
or supplement

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thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by the
Warrantholder or such holder of Shares specifically for use in the preparation
thereof. This indemnity agreement will be in addition to any liability which
the Warrantholder or such holder of Shares may otherwise have.

(c) Promptly after receipt by an indemnified party under
this Section 12 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 12, notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which it may have to any
indemnified party. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified,
reasonably assume the defense thereof, subject to the provisions herein stated,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 12 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel
reasonably satisfactory to the indemnified party; provided that if the
indemnified party is a Warrantholder or a holder of Shares or a person who
controls a Warrantholder or a holder of Shares within the meaning of the Act,
the fees and expenses of such counsel shall be at the expense of the
indemnifying party if (i) the employment of such counsel has been specifically
authorized in writing by the indemnifying party or (ii) the named parties to
any such action, including any impleaded parties, include both a Warrantholder
or a holder of Shares or such controlling person and the indemnifying party and
a Warrantholder or a holder of Shares or such controlling person shall have
been advised by such counsel that there may be one or more legal defenses
available to a Warrantholder or a holder of Shares or controlling person which
are not available to or in conflict with any legal defenses which may be
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of a
Warrantholder or a holder of Shares or such controlling person, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for the Warrantholders, the holders of the Shares
and controlling persons, which firm shall be designated in writing by a
majority in interest of such holders and controlling persons based upon the
value of the securities included in the Registration Statement). No settlement
of any action against an indemnified party shall be made without the consent of
the indemnified and the indemnifying parties, which shall not be unreasonably
withheld in light of all factors of importance to such parties.

Section 13. CONTRIBUTION. In order to provide for just and
equitable contribution under the Act in any case in which (i) a Warrantholder
or any holder of the Shares or controlling person makes a claim for
indemnification pursuant to Section 12 hereof but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 12 hereof
provide for indemnification in such case or (ii) contribution under the Act may
be required on the part of any Warrantholder or any holder of the Shares or
controlling person, then the Company and any Warrantholder or any such holder
of the Shares or controlling person shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all costs of
defense and investigation and all attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue

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<PAGE> 10
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company on the one hand or a Warrantholder or holder of Shares or controlling
person on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and such holders of such securities and such controlling persons
agree that it would not be just and equitable if contribution pursuant to this
Section 13 were determined by pro rata allocation or by any other method which
does not take account of the equitable considerations referred to in this
Section 13. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this Section 13 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

Section 14. NOTICES. Any notice pursuant to this Agreement by
the Company or by a Warrantholder or a holder of Shares shall be in writing and
shall be deemed to have been duly given on the date of delivery or refusal
indicated on the return receipt if delivered or mailed by certified mail,
return receipt requested:

(a) If to a Warrantholder or a holder of Shares,
addressed to Cruttenden Roth Incorporated, 18301 Von Karman, Suite
100, Irvine, California, Attention: Corporate Finance Department.

(b) If to the Company addressed to it at 8380 Cerritos
Avenue, Stanton California 90680, Attention: President.

Each party may from time to time change the address to which notices to it are
to be delivered or mailed hereunder by notice in accordance herewith to the
other party.

Section 15. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Warrantholders, or the
holders of Shares shall bind and inure to the benefit of their respective
successors and assigns hereunder.

Section 16. MERGER OR CONSOLIDATION OF THE COMPANY. The Company
will not merge or consolidate with or into any other corporation or sell all or
substantially all of its property to another corporation, unless the provisions
of Section 8.4 are complied with.

Section 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
statements contained in any schedule, exhibit, certificate or other instrument
delivered by or on behalf of the parties hereto, or in connection with the
transactions contemplated by this Agreement, shall be deemed to be
representations and warranties hereunder. Notwithstanding any investigations
made by or on behalf of the parties to this Agreement, all representations,
warranties and agreements made by the parties to this Agreement or pursuant
hereto shall survive.

Section 18. APPLICABLE LAW. This Agreement shall be deemed to be
a contract made under the laws of the State of California and for all purposes
shall be construed in accordance with the laws of said State.

Section 19. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company, the Warrantholders and the holders of Shares any legal or
equitable right, remedy or claim under this Agreement. This Agreement shall be
for the sole and exclusive benefit of the Company, the Warrantholders and the
holders of Shares.

Section 20. AMENDMENTS. This Agreement may be amended only by a
written instrument executed by duly authorized representatives of the Company
and Cruttenden Roth Incorporated.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year first above written.

BOYDS WHEELS, INC.

By:___________________________________

Name:_________________________________

Title:________________________________

CRUTTENDEN ROTH INCORPORATED

By:___________________________________

Name:_________________________________

Title:________________________________

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Exhibit A

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
EXCHANGED, HYPOTHECATED OR TRANSFERRED IN ANY MANNER EXCEPT PURSUANT TO A
REGISTRATION OR AN EXEMPTION FROM SUCH REGISTRATION AND IN COMPLIANCE
WITH SECTION 11 OF THE AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED.

Warrant Certificate No. _____

REPRESENTATIVE'S WARRANTS TO PURCHASE 52,500 _________ SHARES OF COMMON STOCK

VOID AFTER 5:00 P.M.,
PACIFIC TIME, ON ______________ , 2001

BOYDS WHEELS, INC.

INCORPORATED UNDER THE LAWS
OF THE STATE OF CALIFORNIA

This certifies that, for value received, _____________________ the
registered holder hereof or assigns (the "Warrantholder"), is entitled to
purchase from BOYDS WHEELS, INC. (the "Company"), at any time during the period
commencing at 9:00 a.m., Pacific Time, on _______________ 1997, and before 5:00
p.m., Pacific Time, on ______________, 2001 at the purchase price per share of
$______________ (the "Warrant Price"), the number of Shares of Common Stock of
the Company set forth above (the "Shares"). The number of Shares issuable upon
exercise of each Warrant evidenced hereby and the Warrant Price shall be subject
to adjustment from time to time as set forth in the Representative's Warrant
Agreement referred to below.

The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form attached hereto
duly executed (with a signature guarantee as provided thereon) and simultaneous
payment of the Warrant Price at the principal office of the Company. Payment of
such price shall be made at the option of the Warrantholder in cash, by check,
or any combination thereof.

The Warrants evidenced hereby represent the right to purchase an aggregate
of up to ________________________ (__________) Shares, subject to certain
adjustments, and are issued under and in accordance with a Representative's
Warrant Agreement, dated as of ________________, 1996 (the "Representative's
Warrant Agreement"), between the Company and Cruttenden Roth Incorporated and
are subject to the terms and provisions contained in the Representative's
Warrant Agreement, to all of which the Warrantholder by acceptance hereof
consents.

Upon any partial exercise of the Warrants evidenced hereby, there shall be
signed and issued to the Warrantholder a new Warrant Certificate in respect of
the Shares of Common Stock as to which the Warrants evidenced hereby shall not
have been exercised. These Warrants may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed for one or
more new Warrants of the same aggregate number of Shares of Common Stock as
evidenced by the Warrant or Warrants exchanged. No fractional Shares of Common
Stock will be issued upon the exercise of rights to purchase hereunder, but the
Company shall pay the cash value of any fraction upon the exercise of one or
more Warrants. These Warrants are transferable at the office of the Company in
the manner and subject to the limitations set forth in the Representative's
Warrant Agreement.

This Warrant Certificate does not entitle any Warrantholder to any of the
rights of a stockholder of the Company.

BOYDS WHEELS, INC.

By:__________________________________

Dated: _______________, 1996

ATTEST:

1
<PAGE> 13
BOYDS WHEELS, INC.
PURCHASE FORM
BOYDS WHEELS, INC.
8380 Cerritos Avenue
Stanton, California 90680

The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
____________ Shares of Common Stock (the "Shares") provided for therein, and
requests that certificates for the Shares be issued in the name of:

_______________________________________________________________
(Please Print or Type Name, Address and Social Security Number)

_______________________________________________________________

and, if said number of Shares shall not be all the Shares purchasable
hereunder, that a new Warrant Certificate for the balance of the Shares
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Warrantholder or his Assignee as below indicated and delivered
to the address stated below.

Dated: __________________________

Name of Warrantholder
or Assignee: ______________________________________________
(Please Print)

Address: ______________________________________________

______________________________________________

Signature: ______________________________________________

Note: The above signature must correspond with the name as written upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.

Signatures Guaranteed: ____________________________________

(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)

ASSIGNMENT
(To be signed only upon assignment of Warrants)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto the assignee named below all of the rights of the undersigned represented
by the attached Warrant with respect to the number of Shares covered by the
Warrant set forth below:

(Name and Address of Assignee Must Be Printed or Typewritten)

<TABLE>
<CAPTION>
Social Security No.
Name of Assignee or Tax I.D. No. Address No. of Shares
<S> <C> <C> <C>

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

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

-------------------------------------------------
</TABLE>

and does hereby irrevocably constitute and appoint _______________________
Attorney to transfer said Warrants on the books of the Company, with full power
of substitution in the premises.

<TABLE>
<S> <C> <C>
Dated:
----------------------------- ---------------------------------------
Signature of Registered Holder
</TABLE>

<PAGE> 14
Note: The signature on this assignment must correspond with the name as it
appears upon the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change whatever.

Signature Guaranteed:_______________________________________________

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form SB-2
(File No. 333-4029) of our report dated March 14, 1996 on our audits of the
financial statements of Boyds Wheels, Inc. We also consent to the references to
our firm under the captions "Selected Financial Data" and "Experts."

COOPERS & LYBRAND L.L.P.

Newport Beach, California

May 23, 1996