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EX-32.1 - VIPER POWERSPORTS INCv167437_ex32-1.htm
EX-31.2 - VIPER POWERSPORTS INCv167437_ex31-2.htm
EX-31.1 - VIPER POWERSPORTS INCv167437_ex31-1.htm

Washington, D.C. 20549



For the quarterly period ended September 30, 2009

Commission File No. 000-51632

(Exact name of small business issuer as specified in Its charter)
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
10895 Excelsior Blvd, Ste. 203, Hopkins, Minnesota
(Address of principal executive offices)
(Zip Code)

(952) 938-2481
(Issuer’s telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule l2b-2 of the Exchange Act). Yes ¨   No x

The number of shares of common stock outstanding was 11,803,013 as of October 31, 2009.

Transitional Smaller Business Disclosure Format (check one): Yes ¨   No x



Item 1.
Financial Statements
Item 2.
Management’s Discussion and Analysis
Item 3.
Controls and Procedures
Item 6.
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1



Item 1:  Financial Statements
Viper Powersports Inc.
(A Development Stage Company)
Consolidated Balance Sheets
September 30, 2009
December 31, 2008
Current assets
  $ 34,420     $ 368  
Accounts receivable
    262,467       -  
Inventory and supplies
    704,003       756,600  
Prepaid expenses and other assets
    58,968       18,648  
Total current assets
    1,059,858       775,616  
Fixed assets:
Office and computer equipment
    120,766       119,835  
Manufacturing and development equipment
    274,693       273,759  
    101,799       101,799  
Leasehold improvements
    90,446       90,446  
    587,704       585,839  
Accumulated depreciation
    (504,540 )     (430,709 )
Total fixed assets
    83,164       155,130  
Rental deposit and other assets
    4,010       4,010  
Total assets
  $ 1,147,032     $ 934,756  
Current liabilities
Accounts payable
  $ 397,283     $ 209,313  
Accrued liabilities
    109,155       51,781  
Shareholder note
    452,535       76,601  
Other notes payable
    225,357       275,357  
Current portion of capital leases
    4,360       4,360  
Total current liabilities
    1,188,690       617,412  
Long-term liabilities
Capital leases, less current portion
    1,920       4,219  
Total long-term liabilities
    1,920       4,219  
Total liabilities
    1,190,610       621,631  
Stockholders' equity
Preferred stock; $0.001 par value; 20,000,000  shares authorized, 0 issued and outstanding for both years
    -       -  
Common stock; $0.001 par value; 25,000,000  shares authorized, 11,414,163 and 7,721,163 issued and outstanding, respectively
    11,414       7,721  
Additional paid-in capital
    31,498,359       30,133,157  
Accumulated deficit
    (31,553,351 )     (29,827,753 )
Total Stockholders' Equity
    (43,578 )     313,125  
Total liabilities and stockholders' equity
  $ 1,147,032     $ 934,756  

See accompanying notes to the unaudited consolidated financial statements



Viper Powersports Inc.
(A Development Stage Company)
Consolidated Statements of Operations
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
Cumulative from
November 18, 2002 (Date
of Inception) through
Sept. 30, 2009
Revenues (net of returns)
  $ 141,039     $ 1,629     $ 373,669     $ 4,371     $ 1,085,481  
Cost of revenues
    140,618       688       280,149       1,376       859,837  
Gross profit
    421       941       93,520       2,995       225,644  
Operating expenses
Research and development costs
    114,049       35,382       183,136       134,915       5,102,379  
Selling, general and administrative
    343,760       59,141       1,577,332       917,920       18,418,859  
Loss on impairment of assets
    -       -       -       -       7,371,689  
Total operating expenses
    457,809       94,523       1,760,468       1,052,835       30,892,927  
Loss from operations
    (457,388 )     (93,582 )     (1,666,948 )     (1,049,840 )     (30,667,283 )
Other income (expense)
Interest expense
    (28,705 )     (19,049 )     (61,085 )     (120,970 )     (1,212,125 )
Loss on sale of asset
    -       -       -       -       (18,994 )
Other income
    -       -       2,435       29,792       345,051  
Total other income (expense)
    (28,705 )     (19,049 )     (58,650 )     (91,178 )     (886,068 )
Net loss
  $ (486,093 )   $ (112,631 )   $ (1,725,598 )   $ (1,141,018 )   $ (31,553,351 )
Loss per common share - basic
  $ (0.04 )   $ (0.02 )   $ (0.18 )   $ (0.24 )        
Weigthed average common shares outstanding - basic
    11,091,404       5,194,600       9,395,078       4,778,981          

See accompanying notes to the unaudited consolidated financial statements.



Viper Powersports Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Nine Months Ended September 30,
Cumulative from
November 18, 2002 (Date
of Inception) through
September 30, 2009
Cash flows from operating activities:
Net loss
  $ (1,725,598 )   $ (1,141,018 )   $ (31,553,351 )
Adjustments to reconcile net loss to net cash provided by operating activities:
    73,831       68,648       574,152  
Common stock and warrants issued for compensation and services
    683,698       73,133       8,255,056  
Impairment loss
    -       -       7,371,689  
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable
    (262,467 )     -       (263,734 )
Decrease (increase) in supplies and inventory
    77,597       (110,256 )     (709,227 )
Decrease (increase) in prepaid expenses
    (40,320 )     (3,456 )     (99,931 )
Increase (decrease) in accounts payable
    187,970       (67,468 )     522,289  
Increase (decrease) in accrued liabilities
    57,374       86,767       144,884  
Net cash provided by (used in) operating activities
    (947,915 )     (1,093,650 )     (15,758,173 )
Cash flows from investing activities:
Proceeds from sale of fixed asses
    -       -       18,994  
Funding from Thor Performance for engine development
    -       -       150,000  
Purchase of intellectual property
    -       -       (35,251 )
Purchase of fixed assets
    (1,865 )     (1,472 )     (825,790 )
Net cash provided by (used in) investing activities
    (1,865 )     (1,472 )     (692,047 )
Cash flows from financing activities:
Net proceeds from sale of stock
    660,197       961,867       10,298,301  
Proceeds from note payable
    -       87,084       250,000  
Payments on stockholder loans and capital leases
    (52,299 )     (210,978 )     (653,935 )
Proceeds from loans from stockholders
    375,934       417,000       6,590,274  
Net cash provided by (used in) financing activities
    983,832       1,254,973       16,484,640  
Net change in cash and cash equivalents
    34,052       159,851       34,420  
Cash, beginning of period
    368       2,110       -  
Cash, end of period
  $ 34,420     $ 161,961     $ 34,420  
Supplemental Non-Cash Financing Activities and Cash Flow Information:
Common Stock issued for accounts payable (expenses)
  $ -     $ 350,000     $ 1,323,698  
Common stock issued for accrued liabilities (expenses)
  $ -     $ -     $ 553,521  
Preferred stock issued for debt
  $ -     $ -     $ 1,957,500  
Common stock issued for debt
  $ -     $ -     $ 4,382,020  
Common stock issued for inventory
  $ 25,000     $ -     $ 25,000  
Common stock issued for software (assets)
  $ -     $ -     $ 50,000  
Common stock issued for engine development technology and engine development obligation of $150,000
  $ -     $ -     $ 7,341,437  
Equipment acquired via capital lease
  $ -     $ -     $ 304,740  
Stock warrants issued with convertible debt
  $ -     $ -     $ 132,201  
Interest paid
  $ 61,085     $ 120,970     $ 720,132  
Income taxes paid
  $ -     $ -     $ -  

See accompanying notes to the unaudited consolidated financial statements



Viper Powersports Inc.

A.  Basis of Presentation

The consolidated balance sheet as of September 30, 2009, the consolidated statements of operations for the three and nine month periods ended September 30, 2009 and 2008 and the consolidated statements of cash flows for the nine month periods ended September 30, 2009 and 2008 have been prepared by Viper Powersports Inc. , (the ‘Company”) without audit. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position, the consolidated balance sheet as of September 30, 2009 and results of operations and cash flows for the three and nine month periods ended September 30, 2009 and 2008 presented herein have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 2008.

B. Going Concern

The accompanying unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has current revenues of $373,669 for the nine months ended September 30, 2009 and has a negative working capital position of $128,833 as of September 30, 2009.  Current cash and cash available is not sufficient to fund operations beyond a short period of time. These conditions create uncertainty as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

C.  Recent Financing

During the third quarter of 2009 the company sold to accredited investors 2,975,000 shares of common stock at $.10 per share for a net total of $297,500.

D. Prior Period Restatement

During the review of third quarter’s financial statements, the Company became aware that the second quarter financial statements were materially misstated. The misstatement was the result of certain equity transactions, of stock issued for services, and warrant agreements not being correctly recorded during second quarter. A restatement of financial statements for the period ending June 30, 2009 will be filed subsequent to the filing of the current period ending September 30, 2009. The numbers for third quarter have been adjusted to correctly reflect the misstatement in second quarter.  The impact on common stock was an increase of 1,645,500 (6,582,000 pre-stock split shares) shares issued.  Common stock increased by $6,582 and additional paid in capital increased by $520,753 and retained earning reflected an increased loss of $527,335 to account for the increased expense for services.



Item 2: Management’s Discussion and Analysis

The following discussion should be read and considered along with our consolidated financial statements and related notes included in this 1O-Q. These financial statements were prepared in accordance with United States Generally Accepted Accounting Principles (U.S. GAAP). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in these forward-looking statements as a result of various factors including those set forth in the “Risk Factors” section of our Form 10-K filing for December 31, 2008.

Business Development Overview

Viper Powersports Inc., formerly ECCO Capital Corporation (“ECCO”), was incorporated in Nevada in 1980 under a former name.   ECCO ceased all active operation in 2001 and remained inactive until its stock exchange acquisition of Viper Motorcycle Company in early 2005, incident to which it changed it name to Viper Powersports Inc.

Effective March 31, 2005, Viper Powersports Inc. acquired all of the outstanding capital stock of Viper Motorcycle Company, a Minnesota corporation, resulting in Viper Motorcycle Company becoming a wholly-owned subsidiary of Viper Powersports Inc. For accounting and operational purposes, this acquisition was a recapitalization conducted as a reverse acquisition of Viper Powersports Inc. with Viper Motorcycle Company being regarded as the acquirer.  Consistent with reverse acquisition accounting, all of the assets, liabilities and accumulated deficit of Viper Motorcycle Company are retained on our financial statement as the accounting acquirer. Since Viper Powersports Inc. had no assets or liabilities at the time of this acquisition, its book value has been stated as zero on the recapitalized balance sheet.  The stock exchange for this reverse acquisition was affected on a one-for-one basis, resulting in the stockholders of Viper Motorcycle Company exchanging all of their outstanding capital stock for an equal and like amount of capital stock of Viper Powersports Inc. This resulted in the former shareholders of Viper Motorcycle Company acquiring approximately 94% of the resulting combined entity.

Viper Performance Inc. was incorporated by us in March 2005 as a wholly-owned Minnesota corporation. We organized and incorporated Viper Performance Inc. for the purpose of receiving and holding the engine development technology and related assets which we acquired from Thor Performance Inc.

As used herein, the terms “we”, “us”, “our”, and “the Company” refer to Viper Powersports Inc. and its two wholly-owned subsidiaries, unless the context indicates otherwise.

Since our inception in late 2002, we have been in the business of designing, developing and commencing commercial marketing and production of premium custom V-Twin motorcycles popularly known as “cruisers.”  Our motorcycles will be distributed and sold under our Viper brand through a nationwide network of independent motorcycle dealers.  Marketing of our motorcycles is targeted toward the upscale market niche of motorcycle enthusiasts who prefer luxury products and are willing to pay a higher price for enhanced performance, innovative styling and a distinctive brand.  We believe there is a consistently strong demand for upscale or luxury motorcycle products like our American-styled classic Viper cruisers and our premium V-Twin engines.  For example, the prestigious upscale Robb Report magazine publishes a Robb Report Motorcycling magazine bi-monthly, which is targeted exclusively to luxury motorcycle products.

We have completed the development and extensive testing of proprietary V-Twin engines including actual performance testing of the engines on our various motorcycles models, and we have been very satisfied with their performance while powering our cruisers during all kinds of street and highway running conditions.  Our proprietary V-Twin engines were designed and developed by Melling Consultancy Design (MCD), a leading professional engine design and development firm based in England.

After undergoing an extensive engine emissions testing program for an entire year conducted by a leading independent test laboratory, our proprietary V-Twin engines recently satisfactorily passed  and complied with all noise and pollution emissions requirements of both the federal Environmental  Protection Agency (EPA) and the more stringent emissions requirements of the California  Air Resources Board (CARB).  Satisfying these standards constitutes a touchstone achievement for the Company that we believe places us in a commanding competitive position in the upscale custom motorcycle market.

We commenced commercial marketing and production of Viper motorcycles in 2008, and we currently hold material orders from our Viper dealer base of ten first class motorcycle dealers.  Our initial material commercial shipment of Viper cruisers to our dealers took place in April 2009 in which we shipped three motorcycles to our dealers.  During the 3rd quarter the company shipped another seven motorcycles to the dealer network.



Operational Overview

We are a motorcycle company in the business of designing, developing, producing and marketing a line of premium custom V-Twin motorcycles popularly known as “cruisers.” Our motorcycles will be distributed and sold under our Viper brand through a nationwide network of independent motorcycle dealers. Marketing of our motorcycles is targeted toward the upscale market niche of motorcycle enthusiasts who prefer luxury products and are willing to pays higher price for enhanced performance, innovative styling and a distinctive brand. We believe there is a consistently strong demand for upscale or luxury products like our American-styled classic Viper cruisers and our premium V-Twin engines.

In 2004, we produced and sold to our initial dealer base a preliminary production run of our first cruiser model which was powered by a non-proprietary engine. These 2004 sales consisted of 25 motorcycles which generated revenues of approximately $600,000. We then discontinued any further production operations in order to concentrate on obtaining proprietary V-Twin engine technology as well as to complete certain other planned enhancements to our initial model. In early 2005, we completed the acquisition of our engine development technology to allow us to have our own V-Twin engines to power all Viper motorcycles. We completed extensive testing of our proprietary V-Twin engines and we have been very satisfied with their performance while powering our cruisers during all kinds of street and highway running conditions.

In February 2008, we attended and displayed our motorcycles at the leading annual dealer show for cruiser motorcycles in Cincinnati as well as the shows in Daytona and Myrtle Beach.  We have been and are currently devoting considerable marketing efforts toward recruiting and retaining additional independent dealers for our distribution network. Regarding commercial production, we have limited our production schedule to building sub-assemblies as we pursue additional funding to finalize procurement of the necessary production parts.

During 2007 the company commenced limited commercial marketing and production of its motorcycles.  Incident thereto, in November 2007 the Company retained a licensed emissions certification laboratory to test its motorcycles and engines and certify its test results for compliance with the emission standards promulgated by the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB).  This independent test process was successfully completed in July 2008, and the Company received its official certification from the Environmental Protection Agency on December 4, 2008.
In October 2008, we relocated all of our operations and administration functions from Big Lake, MN to Hopkins, MN, a suburb of Minneapolis.  We lease our current Hopkins facility under a written 3 year lease at a monthly rental of $7,400 not including utilities.  The facility occupies 9,000 square feet in a modern one-story light industrial building.  We believe our Hopkins facility is adequate to support all our administrative, development, production assembly and warehousing needs for the foreseeable future.

Recent Restructuring

 The company, on September 3, 2009, declared a reverse 1-for-4 stock split whereby each currently outstanding four shares of common stock of the company shall be converted into one post-split share of common stock of the company having the same par value of $.001 per share, and that both the record date and the effective date of the reverse stock split shall be September 15, 2009, and further that there shall be no fractional shares issued incident to this reverse stock split, but rather any fractional shares shall be rounded up to the next full common share, all pursuant to Nevada revised statutes 78.207.  Per the effective date of this reverse stock split the authorized common shares of the company shall concurrently be reduced to Twenty-five Million (25,000,000) common shares.



Results of Operations


Since our 2002 inception, we have generated total revenues of $1,085,481 most of which occurred in 2004 before we discontinued offering a motorcycle with a non-proprietary engine. We anticipate that our future revenues for the next 12 months will be primarily from sale of Viper cruisers, although we expect to begin obtaining sales of our proprietary engines in the aftermarket by the second quarter of 2010. We anticipate receiving additional revenues from our planned line of custom parts and accessories for the motorcycle aftermarket as well as our Viper branded apparel and other merchandise.

We believe our future revenue stream will be most significantly affected by customer demand for Viper cruisers, performance of our proprietary V-Twin engines, our ability to timely manufacture our motorcycle products in response to dealer and customer orders, recruitment and retention of dealers who actively promote and sell our products, and dealer acceptance of our floor plan financing facility.

Operating Expenses

From our inception in November 2002 through September 30, 2009, we have incurred total operating expenses of $30,892,927 including $5,102,379 of research and development expenses and $18,418,859 of selling, general and administrative expenses.

Research and development expenses consist primarily of salaries and other compensation for development personnel, contract engineering costs for outsourced design or development, supplies and equipment related to design and prototype development activities, and costs of regulatory compliance or certifications.

Selling, general and administrative expenses consist primarily of salaries and other compensation for our management, marketing and administrative personnel, facility rent and maintenance, advertising and promotional costs including trade shows and motorcycle rallies, sales brochures and other marketing materials, dealer recruitment and support costs, development of accounting systems, consulting and professional fees, financing costs, public relations efforts and administrative overhead costs.

Comparison of Quarter and Nine months ended September 30, 2009 to Quarter and Nine months ended September 30, 2008.

Revenues and Gross Profit

Revenue for the three and nine month periods ending September 30, 2009 was $141,039 and $373,669 respectively as compared to $1,629 and $4,371 respectively in revenue for the three and nine month periods ending September 30, 2008.   This was due to the production and sale of seven motorcycles into the dealer network.  Last year at this time the company had not been able, due to cash flow, to produce any motorcycles

 Research and Development Expenses

Research and development increased by $78,667 to $114,049 for the three month period ending September 30, 2009 from $35,382 for the three month period ending September 30, 2008. This increase was due to development expense on the improvement to our engines by Ilmor engineering.  For the nine month period ending September 30, 2009,.research and development expense was $183,136 compared to $134,915 for the nine month period ending September 30, 2008.  The development expense began in the second quarter of 2009.

Selling, general and administrative expenses

Selling, general and administrative expenses increased to $343,760 for the three month period ending September 30, 2009 from $59,141 for the three month period ending September 30, 2008. The increase was due to increased expenses for a variety of expenses as we moved into sales, marketing and production of the motorcycles. For the nine month period ending September 30, 2009 general and administrative expense was $1,577,332 as compared to $917,920 for the nine month period ending September 30, 2008.



Loss from operations

Operational loss for the three month period ending September 30, 2009 was $457,388 compared to $93,582 for the three month period ending September 30, 2008. This increased loss in the 3rd quarter of 2009 was due to increased expenses for manpower, sales and marketing our motorcycles into the dealer network as well as engineering cost on the engine platform.  The operational loss for the nine month period ending September 30, 2009 was $,1,666,948 compared to $1,049,840 for the nine month period ending September 30, 2008.

Interest expense

Interest expense for the three month period ending September 30, 2009 was $28,705 compared to $19,049 for the three month period ending September 30, 2008. This increase during the 3rd quarter of 2009 was due to increased cost on our inventory line of credit.  Interest for the nine month period ending September 30, 2009 was $61,085 as compared to $120,970 for the nine month period ending September 30, 2008.

No income tax benefit was recorded regarding our net loss for the 3rd quarters of 2009 and 2008; since we could not determine that it was more likely than not that any tax benefit would be realized in the future.

Since we are just beginning commercial operations, our operations are subject to all of the risks inherent in the development of a new business enterprise, including the ultimate risk that we may never commence full-scale operations or that we may never become profitable. We do not expect to make material shipments of our motorcycles to dealers until spring of 2010. Our historic spending levels are not indicative of future spending levels since we are entering a period requiring increased spending for commercial operations including significant inventory purchases, increased marketing and dealer network costs, and additional general operating expenses. Accordingly, our losses could increase until we succeed in generating substantial product sales, which may never happen.

We currently employ 8 persons including our management, development, marketing and administrative personnel.  We expect to hire 2-3 assembly and administrative personnel during 2010 to support our anticipated commercial production and sales of Viper cruisers. Other than these additional anticipated personnel, we do not anticipate needing any additional personnel during the next twelve months. None of our employees belongs to a labor union, and we consider our relationship with our employees to be good.

Liquidity and Capital Resources

Since our inception, we have financed our development, capital expenditures, and working capital needs through sale of our common stock to investors in private placements and substantial loans from our principal shareholders. We raised a total of approximately $10.1 million through the sale of our common stock in private placements, and in excess of $6.3 million through loans from our principal shareholders.

As of September 30, 2009, we had cash resources of $34,420, total liabilities of $1,190,611, and a negative working capital position of $128,833.



Future Liquidity

Based on our current cash position, we have concerns about our ability to fund our ongoing operations. We anticipate obtaining additional needed financing through the proceeds from additional private placement of equity securities.

If we are unable to complete the proposed private placements or to obtain substantial additional funding through another source, we most likely would need to curtail significantly, or even cease, our ongoing and planned operations. Our future liquidity and capital requirements will be influenced materially by various factors including the extent and duration of our future losses, the level and timing of future sales and expenses, market acceptance of our motorcycle products, regulatory and market developments in our industry, and general economic conditions.

The report of our independent registered accounting firm for our audited financial statement ended December 31, 2008 states that there is substantial doubt about the ability of our business to continue as a going concern. Accordingly, our ability to continue our business as a going concern is in question.

Cash Flow Information

Net cash consumed by operating activities was $947,915 during the nine months ended September 30, 2009 compared to consuming cash in the amount of $1,093,650 for the Nine months ended September 30, 2008.  Net cash used in investing activities during the nine months ended September 30, 2009 was $1,865 compared to net cash used during the nine months ended September 30, 2008 of $1,472.  Cash generated from financing activities for the nine months ended September 30, 2009 was $983,832 compared to $1,254,973 for the nine months ended September 30, 2008.

Business Seasonality

Sales of motorcycles in the United States are affected materially by a pattern of seasonality experienced in the industry which results in lower sales during winter months in colder regions of the country. Accordingly, we anticipate that our sales will be greater during spring, summer and early fall months than during late fall and winter periods. We also expect our revenues and operating results could vary materially from quarter to quarter due to industry seasonality.



Recent Accounting Pronouncements

In June 2009 the FASB established the Accounting Standards Codification ("Codification" or "ASC") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). Rules and interpretive releases of the Securities and Exchange Commission ("SEC") issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

Statement of Financial Accounting Standards ("SFAS") SFAS No. 165 (ASC Topic 855), "Subsequent Events", SFAS No. 166 (ASC Topic 810), "Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140", SFAS No. 167 (ASC Topic 810), "Amendments to FASB Interpretation No. 46(R)", and SFAS No. 168 (ASC Topic 105), "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162" were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.

Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605), MultipleDeliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU's No. 2009-2 through ASU No. 2009-15 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

Risk Factors

Our business and any related investment in our common stock or other securities involves many significant risks. Any person evaluating our company and its business should carefully consider the following risks and uncertainties in addition to other information in this registration statement. Our business, operating results and financial condition could be seriously harmed due to one or more of the following risks.

Because of our early stage commercial status and the nature of our business, our securities are highly speculative.

Our securities are speculative and involve a high degree of risk and there is no assurance we will ever generate any material commercial revenues from our operations. Moreover, we do not expect to realize any material profits from our operations in the short term. Any profitability in the future from our business will be dependent upon realizing production and sales of our motorcycle products in material commercial quantities, which there is no assurance will ever happen.

We have a limited operating history primarily involved in product development, and we have only generated limited commercial revenues to date.

From our inception in late 2002 through September 30, 2009, we have experienced cumulative losses of approximately $31 Million, and we will continue to incur losses until we produce and sell our motorcycle products in sufficient volume to attain profitability, which there is no assurance will ever happen. Our operations are particularly subject to the many risks inherent in the early stages of a business enterprise and the uncertainties arising from the lack of a commercial operating history. There can be no assurance that our business plan will prove successful.

Our business plan will encounter serious delays or even result in failure if we are unable to obtain significant additional financing when needed, since we are required to make significant and continuing expenditures to satisfy our future business plan.

Our ability to become commercially successful will depend largely on our being able to continue raising significant additional financing. If we are unable to obtain additional financing through equity or debt sources as needed, we would not be able to succeed in our commercial operations which eventually would result in a failure of our business.



Our ability to generate future revenues will depend upon a number of factors, some of which are beyond our control.

These factors include the rate of acceptance of our motorcycle products, competitive pressures in our industry, effectiveness of our independent dealer network, adapting to changes in the motorcycle industry, and general economic trends. We cannot forecast accurately what our revenues will be in future periods.

We have very limited experience in commercial production or sales of our products.

Our operations have been limited primarily to designing and developing our products, testing them after development, establishing our initial distribution network of independent dealers, obtaining suppliers for our components, outsourcing future production of certain components, and reorganizing our company. These past activities only provide a limited basis to assess our ability to commercialize our motorcycle products successfully.

We have limited experience in manufacturing motorcycle products.

Our motorcycles must be designed and manufactured to meet high quality standards in a cost-effective manner. Because of our lack of experience in manufacturing operations, we may have difficulty in timely producing or outsourcing motorcycle products in a volume sufficient to cover orders from our dealers. Any material manufacturing delays could frustrate dealers and their customers and lead to a negative perception of Viper products or our company. If we are unable to manufacture effectively in terms of quality, timing and cost, our ability to generate revenues and profits will be impaired.

We depend upon a limited number of outside suppliers for our key motorcycle parts and components.

Our heavy reliance upon outside vendors and suppliers for our components involves risk factors such as limited control over prices, timely delivery and quality control. We have no written agreements to ensure continued supply of parts and components. Although alternate suppliers are available for our key components, any material changes in our suppliers could cause material delays in production and increase production costs. We are unable to determine whether our suppliers will be able to timely supply us with commercial production needs. There is no assurance that any of our vendors or suppliers will be able to meet our future commercial production demands as to volume, quality or timeliness.

We will be highly dependent upon our Viper distribution network of independent motorcycle dealers.

We depend upon our Viper dealers to sell our products and promote our brand image. If our dealers are unable to sell and promote our products effectively, our business will be harmed seriously. We currently have agreements with only seven dealers. We must continue to recruit and expand our dealer base to satisfy our projected revenues. If we fail to timely obtain new dealers or maintain our relationship with existing dealers effectively, we could be unable to achieve sufficient sales to support our operations.

Our dealers are not required to sell our products on an exclusive basis and also are not required to purchase any minimum quantity of Viper products. The failure of dealers to generate sales of our products effectively would impair our operations seriously and could cause our business to fail.

We also depend upon our dealers to service Viper motorcycles. Any failure of our dealers to provide satisfactory repair services to purchasers of Viper products could lead to a negative perception of the quality and reliability of our products.

Sales of Viper motorcycles are substantially dependent upon our ability to provide and maintain a source of reliable "floor plan" financing to our dealers.

We have a significant agreement with a leading financial institution to provide floor plan financing to our dealers for their purchase of Viper products. Under this floor plan facility, we will receive payment for our motorcycles upon their shipment to our dealers. If we are unable to continue effective floor plan financing for our dealers, they would have to pay cash or obtain other financing to purchase Viper products, which most likely would result in substantially lower sales of our products, and lack of sufficient cash flow to support our business.

We will face significant challenges in obtaining market acceptance of Viper products and establishing our Viper brand.

Our success depends primarily on the acceptance of our products and the Viper brand by motorcycle purchasers and enthusiasts. Virtually all potential customers are not familiar with or have not seen or driven Viper motorcycles. Acceptance of our products by motorcyclists will depend on many factors including price, reliability, styling, performance, uniqueness, service accessibility, and our ability to overcome existing loyalties to competing products.



Our business model of selling Viper motorcycles to upscale purchasers at premium prices may not be successful.

Sales of our premium motorcycle products are targeted toward a limited number of upscale purchasers willing to pay a higher price for Viper products. Suggested retail prices of our motorcycles will be considerably higher than most premium models of our competitors. If we are unable to attract and obtain sufficient motorcyclists willing to pay the higher prices of our products, our business model would not succeed and our business would likely fail.

 We may experience significant returns or warranty claims.

Since we have a minimal history of commercial sales of our products, we have no material data regarding the performance or maintenance requirements of Viper products. Accordingly, we have no basis on which we can currently predict warranty costs. If we experience significant warranty service requirements or product recalls, potential customers may not purchase our products. Any significant warranty service requirements or product recalls would increase our costs substantially and likely reduce the value of our brand.

Our exposure to product liability claims could harm us seriously.

Given the nature of motorcycle products, we expect to encounter product liability claims against us from time to time for personal injury or property damage. If such claims become substantial, our brand and reputation would be harmed seriously. These claims also could require us to pay substantial damage awards.

Although we intend to obtain adequate product liability insurance, we may be unable to obtain coverage at a reasonable cost or in a sufficient amount to cover future losses from product liability claims. Any successful claim against us for uninsured liabilities or in excess of insured liabilities would most likely harm our business seriously.

Our success will be substantially dependent upon our current key employees and our ability to attract, recruit and retain additional key employees.

Our success depends upon the efforts of our current executive officers and other key employees, and the loss of the services of one or more of them could impair our growth materially. If we are unable to retain current key employees, or to hire and retain additional qualified key personnel when needed, our business and operations would be adversely affected substantially. We do not have "key person" insurance covering any of our employees, and we have no written employment agreement with a key employee.

Our success depends substantially on our ability to protect our intellectual property rights, and any failure to protect these rights would be harmful to us.

The future growth and success of our business will depend materially on our ability to protect our trademarks, trade names and any future patent rights, and to preserve our trade secrets. We hold trademark rights for our logo design and we have applied for certain additional trademark protection. There is no assurance, however, that any future or current trademark registrations will result in a registered and protectable trademark. Moreover, there is no assurance that challenges to our brands and marks will not be successful. If one or more challenges against us are successful, we could be forced to discontinue use of our motorcycle brands, which would cause serious harm to our business and brand image.

We have applied for various patents covering unique features of both our motorcycles and our V-Twin engines, but we do not expect to obtain any significant patent protection. We will rely mainly upon trade secrets, proprietary know-how, and continuing technological innovation to compete in our market. There is no assurance that our competitors will not independently develop technologies equal to or similar to ours, or otherwise obtain access to our technology or trade secrets. Our competitors also could obtain patent rights that could prevent, limit or interfere with our ability to manufacture and market our products. Third parties also may assert infringement claims against us, which could cause us to incur costly litigation to protect and defend our intellectual property rights. Moreover, if we are judged to have infringed rights of others, we may have to pay substantial damages and discontinue use of the infringing product or process unless they are re-designed to avoid the infringement. Any claim of infringement against us would involve substantial expenditures and divert the time and effort of our management materially.
We will face intense competition from existing motorcycle manufacturers already well established and having much greater customer loyalty and financial, marketing, manufacturing and personnel resources than us.

In our premium heavyweight motorcycle market, our main competitor is Harley-Davidson Inc. which dominates the market for V-Twin cruiser motorcycles. Other significant competitors include Suzuki, Honda, Yamaha, Kawasaki, Ducati, Triumph, BMW, Moto Guzzi and Polaris with its Victory motorcycle line. We also face particularly direct competition from a number of V-Twin custom cruiser manufacturers concentrating on the same upscale market niche where we are situated, including Big Dog, American IronHorse, Bourget’s Bike Works and others. Additional competition exists from the numerous small companies and individuals throughout the country which build "one-off" custom cruisers from non-branded parts and components available from third parties. We also expect additional competitors to emerge from time to time in the future. There is no assurance that we will be able to compete successfully against current and future competitors.



Introduction of new models of motorcycles by our competitors could materially reduce demand for our products.

Products offered in our industry often change significantly due to product design and performance advances, safety and environmental factors, or changing tastes of motorcyclists. Our future success will depend materially on our ability to anticipate and respond to these changes. If we cannot introduce acceptable new models on a regular basis or if our new models fail to compete effectively with those of our competitors, our ability to generate revenues or achieve profitability would be impaired substantially.

Purchase of recreational motorcycles is discretionary for consumers, and market demand for them is influenced by factors beyond our control.

Viper motorcycles represent luxury consumer products and accordingly market demand for them depends on a number of economic factors affecting discretionary consumer income. These factors are beyond our control and include employment levels, interest rates, taxation rates, consumer confidence levels, and general economic conditions. Adverse changes in one or more of these factors may restrict discretionary consumer spending for our products and thus harm our growth and profitability.

Viper motorcycles also must compete with other power sport and recreational products for the discretionary spending of consumers.

Our business is subject to seasonality which may cause our quarterly operating results to fluctuate materially.

Motorcycle sales generally are seasonal in nature since consumer demand is substantially lower during colder seasons in North America. We may endure periods of reduced revenues and cash flows during off-season periods, requiring us to layoff or terminate employees from time to time. Seasonal fluctuations in our business could cause material volatility in the public market price of our common stock.

When we sell our products in international markets, we will encounter additional factors which could increase our cost of selling our products and impair our ability to achieve profitability from foreign business.

Our marketing strategy includes future sales of Viper products internationally, which will subject our business to additional regulations and other factors varying from country to country. These matters include export requirement regulations, foreign environmental and safety requirements, marketing and distribution factors, and the effect of currency fluctuations. We also will be affected by local economic condition in international markets as well as the difficulties related to managing operations from long distances. There is no assurance we will be able to successfully market and sell Viper products in foreign countries.

We must comply with numerous environmental and safety regulations.

Our business is governed by numerous federal and state regulations governing environmental and safety matters with respect to motorcycle products and their use. These many regulations generally relate to air, water and noise pollution and to motorcycle safety matters. Compliance with these regulations could increase our production costs, delay introduction of our products and substantially impair our ability to generate revenues and achieve profitability.

Use of motorcycles in the United States is subject to rigorous regulation by the Environmental Protection Agency (EPA), and by state pollution control agencies. Any failure by us to comply with applicable environmental requirements of the EPA or relevant state agencies could subject us to administratively or judicially imposed sanctions including civil penalties, criminal prosecution, injunctions, product recalls or suspension of production.

Motorcycles and their use are also subject to safety standards and rules promulgated by the National Highway Traffic Safety Administration (NHTSA). We could suffer harmful recalls of our motorcycles if they fail to satisfy applicable safety standards administered by the NHTSA.

We do not intend to pay any cash dividends on our common stock.

We have never declared or paid any cash dividends on our common stock and we do not anticipate paying any cash dividends in the foreseeable future.



The price of our common stock may be volatile and fluctuate significantly in our over-the-counter trading market, and an investor’s shares could decline in value.

Our common stock trades in the over-the-counter (OTC) market, and has not experienced a very active trading market. There is no assurance a more active trading market for our common stock will ever develop, or be sustained if it emerges. Unless an active trading market is developed for our common stock, it will be difficult for shareholders to sell our common stock at any particular price or when they wish to make such sales.

The market price of our common stock may fluctuate significantly, making it difficult for any investor to resell our common stock at an attractive price or on reasonable terms. Market prices for securities of early stage companies such as us have historically been highly volatile due to many factors not affecting more established companies. Moreover, any failure by us to meet estimates of financial analysts is likely to cause a decline in the market price of our common stock.

Our current management and principal shareholders control our company, and they may make material decisions with which other shareholders disagree.

Our executive officers and directors and principal shareholders affiliated with them own a substantial majority of our outstanding capital stock. As a result, these persons acting as a group have the ability to control transactions requiring stockholder approval, including the election or removal of directors, significant mergers or other business combinations, changes in control of our company, and any significant acquisitions or dispositions of assets.

Additional shares of our authorized capital stock which are issued in the future will decrease the percentage equity ownership of existing shareholders, could also be dilutive to existing shareholders, and could also have the effect of delaying or preventing a change of control of our company.

Under our Articles of Incorporation, we are authorized to issue up to 100,000,000 shares of common stock and 20,000,000 shares of preferred stock. Our board of directors has the sole authority to issue remaining authorized capital stock without further shareholder approval. To the extent that additional authorized preferred or common shares are issued in the future, they will decrease existing shareholders’ percentage equity ownership and, depending upon the prices at which they are issued, could be dilutive to existing shareholders.

Issuance of additional authorized shares of our capital stock also could have the effect of delaying or preventing a change of control of our company without requiring any action by our shareholders, particularly if such shares are used to dilute the stock ownership or voting rights of a person seeking control of our company.

Off-Balance Sheet Arrangements

Other than a guarantee of our floor plan financing by a principal shareholder and another guaranty of our bank credit facility by one of our directors, we have no off-balance sheet arrangements.



Forward-Looking Statements

This quarterly report on Form I0-Q contains “forward-looking statements” within the meaning of the Securities Act of /933 and the Securities Exchange Act of 1934. Statements expressing expectations regarding our future and projections we make relating to products, sales, revenues and earnings are typical of such statements. All forward-looking statements are subject to the risks and uncertainties inherent in attempting to predict the future. Our actual results may differ materially from those projected, stated or implied in our forward-looking statements as a result of many factors, including, but not limited to, our overall industry environment, customer and dealer acceptance of our products, effectiveness of our dealer network, failure to develop or commercialize new products, delay in the introduction of products, regulatory certification matters, production and or quality control problems, warranty and/or product liability matters, competitive pressures, inability to raise sufficient working capital, general economic conditions and our financial condition.

Our forward-looking statements speak only as of the date they are made by us. We undertake no obligation to update or revise any such statements to reflect new circumstances or unanticipated events as they occur, and you are urged to review and consider all disclosures we make in this and other reports that discuss risk factors germane to our business, including those risk factors in our Form 10-K for the period ended December 31, 2008



Item 3. Controls and Procedures

Evaluation of disclosure controls and procedures

The Company’s Chief Executive and Chief Financial Officer, John R. Silseth and Jerome L. Posey, have reviewed the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon this review, these two officers believe that the Company’s disclosure controls and procedures are effective in ensuring that information that is required to be disclosed by the Company in reports that it files under the Securities Exchange Act of 1934 is recorded, processed and summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission.

Changes in internal controls

There were no changes in the Company’s internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.




Item 6. Exhibits

See Index of Exhibits.




Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duty authorized.
/s/ Jerome L. Posey  
    Jerome L. Posey  
Principal Financial Officer
November 20, 2009
Hopkins, Minnesota



Form 10-Q for
Quarter Ended September 30, 2009
Commission File No. 000-51632

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002