Edgar Filing: GIANT MOTORSPORTS INC

Competitive Workforce Development. A significant portion of the compensation we pay to our sales staff is commission based. We believe that commission-based compensation provides incentive for our salespersons to expend their greatest efforts to sell our products and services. Since their compensation is directly related to sales, our ability to hire successful salespersons is conditioned upon their belief that our dealerships will generate significant traffic and provide the inventory levels necessary to maximize sales opportunities. Our goal to build a “market leader” presence, proper inventory levels and an overall aggressive yet tactful approach, we believe, will attract the successful salespersons we need to sell our products and services.

Inventory Utilization. We believe that by housing our inventory in one large central facility, and distributing products from that facility to each of our dealerships on an as-needed basis, we will be able to deliver products to our customers faster than other dealerships, which are required to wait for delivery of out-of-stock products.

Marketing Efficiencies. With a regional presence, and the use of single creative themes, tested for effectiveness, we believe that we will be able to take advantage of semi-national and possibly national marketing opportunities which typically offer reduced advertising rates based on the utilization of economies of scale. We also plan to maximize our use of cooperative advertising.

E-Commerce and Mail Order Opportunities. We have developed e-commerce and mail order strategies for the sale of parts and accessories that will expand our customer base outside of our dealership territories. We believe that the expansion of our business, over the internet and through mail order business, will assist us in the development of a national presence and create customer interest to visit one of our “Super Stores,” although no assurance can be given that it will have such effect. We believe that increased efforts on internet and mail-order sales will increase revenues and also create additional opportunities for strategic business relationships with dealerships outside of the territories where our dealerships are located, although no assurance can be given.

Sales and Marketing

We currently market our products through television, radio, print and outdoor advertising. Advertising costs are funded primarily through cooperative advertising programs established by the manufacturers of the products. Under these programs, most dealers have access to approximately $100 per unit sold during the previous year. In addition, many of the larger and better performing dealership groups are able to access additional advertising funds for special circumstances from the manufacturers. It is our normal strategy to acquire and use the maximum amount of advertising funds available to us.

Floor Plan Financing

We are dependent to a significant extent on our ability to finance the purchase of inventory, which in the motorcycle and power sports retail industries involves significant sums of money in the form of floor plan financing. As of March 31, 2008, the Company had $23,354,779 of floor plan notes payable. Substantially all the assets of our dealerships are pledged to secure such indebtedness, which may impede our ability to borrow from other sources. We currently have floor plan facilities with a variety of lenders, including primarily GE Commercial Distribution Finance Corporation, Fifth Third Bank, Kawasaki Motors Finance Company, and American Honda Finance. Several of such lenders are associated with manufacturers with whom we have dealership agreements. Consequently, deterioration of our relationship with a manufacturer could adversely affect our relationship with the affiliated floor plan lender and vice versa.

Government Regulation

Our business is subject to federal, state and local laws, ordinances and regulations which establish various health and environmental quality standards, and liability related thereto, and provide penalties for violations of those standards. Under certain laws and regulations, a current or previous owner or operator of real property may be liable for the costs of removal and remediation of hazardous or toxic substances or wastes on, under, in or emanating from such property. Such laws typically impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances or wastes. Certain laws, ordinances and regulations may impose liability on an owner or operator of real property where on-site contamination discharges into waters of the state, including groundwater. Under certain other laws, generators of hazardous or toxic substances or wastes that send such substances or wastes to disposal, recycling or treatment facilities may be liable for remediation of contamination at such facilities. Other laws, ordinances and regulations govern the generation, handling, storage, transportation and disposal of hazardous and toxic substances or wastes, the operation and removal of underground storage tanks, the discharge of pollutants into surface waters and sewers, emissions of certain potentially harmful substances into the air and employee health and safety.

Business operations subject to such laws, ordinances, and regulations include the use, handling and contracting for recycling or disposal of hazardous or toxic substances or wastes, including environmentally sensitive materials such as motor oil, waste motor oil and filters, transmission fluid, antifreeze, refrigerants, waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing agents, gasoline and diesel fuels. Our business is also subject to other laws, ordinances and regulations as the result of the past or present existence of underground storage tanks at our properties. Certain laws and regulations, including those governing air emissions and underground storage tanks, have been amended so as to require compliance with new or more stringent standards as of future dates. We cannot predict what other environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted or what environmental conditions may be found to exist in the future. Compliance with new or more stringent laws or regulations, stricter interpretation of existing laws or the future discovery of environmental conditions may require additional expenditures on our part, some of which may be material.

Employees

As of June 16, 2008, we had approximately 145 employees (excluding our two executive officers), 50 of whom are employed at our Andrews Cycles dealership and the other 95 of whom are employed at our Chicago Cycles dealership. All of our employees were employed on a full-time basis including 2 executives, 75 salespersons, 6 administrative persons, 45 service technicians and 17 clerical persons. We are not a party to a collective bargaining agreement with our employees and we believe that our relationship with our employees is satisfactory.

Properties

Our principal executive offices are located at our 75,000 square foot facility at 13134 State Route 62, Salem Ohio 44460, which is also the offices and showroom for our Andrews Cycles dealership. We lease this facility from an affiliated entity controlled by Russell A. Haehn, our Chairman, Chief Executive Officer and a controlling shareholder. On October 1, 2006 we entered into a new lease for this facility, effective as of January 1, 2007 and continuing through December 2016, at a rental rate of $24,000 per month. The lease provides for two consecutive five-year renewal terms at a rental rate to be negotiated.

We also lease a 95,000 square foot retail facility in Skokie, Illinois, which is used for offices, a showroom and service facility for our Chicago Cycles dealership. We lease this facility from an unaffiliated third party under a ten-year lease with a ten year renewal option. The payments on the lease commenced in August 2005 at a monthly rent of $33,333 through May 2006 then increase to $40,000 per month from June 2006 through May 2007, $45,000 per month from June 2007 through May 2008, $46,667 from June 2008 through May 2009 and then increase 3% annually for the remaining term of the lease. We are also liable for a proportionate share of expenses and taxes over a specified amount.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion of our results of operations and financial condition should be read together with the consolidated financial statements and the notes to those statements included elsewhere in this prospectus. This discussion may contain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the results anticipated in any forward-looking statements as a result of a variety of factors, including those discussed in “Risk Factors” and elsewhere in this prospectus.

General.

Our goal is to become one of the largest dealers of power sports vehicles in the United States through acquisitions and internal growth.

The motorsports industry is highly fragmented with an estimated 4,000 retail stores throughout the United States. We are attempting to capitalize upon the consolidation opportunities available and increase our revenues and income by acquiring additional dealers and improving our performance and profitability.

We plan to maximize the operating and financial performance of our dealerships by achieving certain efficiencies that will enhance internal growth and profitability. By consolidating our corporate and administrative functions, we believe we can reduce overall expenses, simplify dealership management and create economies of scale.

We will specifically target dealers in markets with strong buyer demographics that, due to under-management or under-capitalization, are unable to realize their market share potential and can benefit substantially from our systems and operating strategy.

Together with our two wholly-owned subsidiaries, we own and operate two retail power sports superstores. Our core brands include Suzuki, Yamaha, Honda, Ducati, Kawasaki, and Polaris. Our superstores operate under the names “Andrews Cycles” and “Chicago Cycles.” Andrews Cycles is located in Salem, Ohio, has approximately 50 employees and operates from an approximately 75,000 square foot facility. Chicago Cycles is located in the Chicago metropolitan area, has approximately 95 employees and operates from an approximately 95,000 square foot facility in Skokie, Illinois, pursuant to a ten-year lease we entered into in October 2004.

Overview of Economic Trends.

Effects of Increasing Interest Rates

After a two-year period of measured increases in the federal discount rate, beginning in the third quarter of 2006 and continuing through the first quarter of 2008, the Federal Reserve reduced the primary discount rate to 2.50% through the middle of March 2008, and has recently reduced the federal discount rate to 2.00%. Since many of our customers depend on bank financing to purchase our motorcycles and other power sports equipment, changes in interest rates normally have a direct effect on our sales. Our revenue from sales of power sports products during the first quarter of 2008 was approximately 2.0% less than for the same period in 2007. During the first quarter of 2008, $4.2 million of the approximately $18.8 million of our power sports sales (22.3%) were financed. Although we have experienced some tightening of credit standards by various lenders, we believe it has not had a material effect on customers seeking financing. It also appears that the reductions in the interest rate have significantly reduced and possibly even eliminated the downward trend in sales. To the extent that the recent reduction in the federal discount rate results in corresponding reductions in consumer loan interest rates, we believe that this could result in an increase in sales of our motorcycles and other power sports products, since it will cost consumers less to finance their purchases. In the event that the Federal Reserve becomes more concerned about inflation in the next six to twelve months, this could result in a change in policy and a decision to commence measured increases in the federal discount rate next year. The uncertainties created in the consumer financing market as a result of corresponding additional increases in interest rates, could reasonably be expected to have a negative impact on the sale of motorcycles, due to the increased financing costs to our customers.

Effects of U.S. Credit Markets

During 2007, the U.S. credit markets had dealt with the effects of numerous defaults by homeowners on “sub-prime” mortgage loans. By December 2007 these defaults had also begun to increase with respect to mortgages considered to be of less credit risk than “sub-prime” mortgages. It is expected that mortgage default rates will continue to increase throughout the remainder of 2008. These defaults have not only had a materially adverse impact on the spending power of the borrowers of such defaulted mortgage loans, but have also reduced the value of investment portfolios containing securities affected by such mortgages. Furthermore, the mortgage defaults have lead to a credit crunch throughout the entire lending industry, significantly reducing purchasers’ discretionary spending power. Since motorcycle purchases, in the U.S. and, to a greater extent, purchases of ATV's, are normally purchases for entertainment and sport, and not necessarily for transportation, any significant reduction in discretionary spending power could have an adverse effect on sales of our motorcycles and other power sports products.

Effects of Increasing Fuel Costs

Fuel prices rose during the first quarter of 2008, but we believe that, with oil prices at approximately $135 per barrel, the oil prices may have reached a peak. In addition, we believe that there will be a lessening demand for oil in 2009. Fuel costs still, however, remain high which will likely result in many consumers considering the use of motorcycles and scooters as alternative forms of transportation to automobiles, since motorcycles and scooters provide significantly better gas mileage than automobiles resulting in substantially lower fuel costs. While this may have a positive effect on our sales, the effect of fuel prices is not enough to counter the overall economic factors that have resulted in a reduction in motorcycle sales throughout the industry.

Reduction in Production by Manufacturers

We believe that certain manufacturers of the motorcycles and ATVs we sell recently have begun to reduce the number of units they manufacture, in order to avoid larger inventory levels at the end of the selling seasons, resulting in less product being available for the remainder of 2008. Because of our position in the market, we believe that we are generally able to receive a larger allocation of motorcycles than many other dealers. Since obtaining larger allocations normally results in potentially higher sales margins and the ability to minimize discounts, the result could lead to a material increase in our profits, provided that there are a sufficient number of customers willing to pay higher prices for these more limited produced models.

Overall Impact on our Future Earnings

Notwithstanding our downturn in sales during the first quarter of 2008 as compared to the first quarter of 2007, we intend to continue to evaluate and analyze our business decisions through effective inventory engagement, as described in greater detail under the heading Inventory Management, included elsewhere in this MD&A. Assuming that gas prices continue their recent increases, we foresee promising opportunities to increase our sales of motorcycles and scooters as consumers again face substantial increases in gas prices, and give greater consideration to the purchase of motorcycles and scooters which provide significantly greater gas mileage than automobiles. Additionally, as described in the preceding paragraphs, changes in interest rates and the health of the U.S. economy, particularly the availability of credit and the discretionary spending power of potential customers, all will have an impact on our future earnings. Furthermore, in the event that we are able to successfully integrate additional dealerships and/or new brands into our existing business, we believe that this could result in greater sales margins and an even greater increase in earnings. These greater sales margins would be created by the consolidation of expenses through the implementation of our superstore business plan, resulting in greater earnings per unit sold. While it is management's intent to pursue the goals described herein, we cannot assure you that these goals will be achieved at any level.

Loan Transactions.

On April 30, 2004, we paid $1,675,000 of the purchase price for Chicago Cycles by issuing to Kings Motorsports a 6% $1,675,000 aggregate principal amount note (the "Note"). We repaid all outstanding principal and interest on the Note remaining due and payable, on October 13, 2005.

To fund the amount payable at closing for Chicago Cycles, we borrowed $1,250,000 from The Fifth Third Bancorp Bank (the “Bank”), pursuant to a term loan. This loan, which initially matured on May 31, 2004, was refinanced with the Bank through a term loan amortized over a 72 month period, and was payable in full on May 31, 2007, bearing interest at prime plus one percent (6.25% as of March 31, 2008). This loan was renewed on October 25, 2007 under the same terms and conditions with a maturity date of August 31, 2010. Our payment obligations under this term loan also are personally guaranteed by Russell Haehn and Gregory Haehn. This loan is also secured by a first priority lien on all of our assets (including, without limitation, the Chicago Cycles assets). As of March 31, 2008, the outstanding amount of this term loan, including accrued interest thereon, was $555,600.

On April 20, 2004, pursuant to a $500,000 aggregate principal amount promissory note bearing interest at the rate of fourteen (14%) percent per annum (the “Bridge Note”), we received, from a third party (the “Bridge Lender”), an aggregate principal amount bridge loan (the “Bridge Loan”). All outstanding principal on the Bridge Note was due on October 15, 2004. To secure the repayment of principal and interest on the Bridge Note, each of Russell Haehn and Gregory Haehn (i) pledged to the Bridge Lender 150,000 shares (300,000 shares in the aggregate) of common stock owned by each of them, and (ii) guaranteed all of our payment obligations to the Bridge Lender . As partial consideration for the Bridge Loan, we issued to the Bridge Lender a five-year warrant to purchase 100,000 shares of common stock, at an exercise price of $2.25 per share. We also granted the Bridge Lender certain piggyback registration rights with respect to the shares of common stock underlying the warrant. We used the $500,000 Bridge Loan proceeds for working and operating capital. On October 15, 2004, we repaid $250,000 of the principal amount outstanding under the Bridge Loan. Pursuant to a letter agreement entered into with the Bridge Lender on October 6, 2004, payment of the remaining $250,000 of principal and all accrued interest thereon was extended until January 15, 2005. We paid the Bridge Lender $2,500 in consideration for the extension. In September 2005, the Bridge Lender assigned its rights to $50,000 of the $250,000 principal amount then outstanding to an affiliate of the Bridge Lender , who in turn converted it into Series A Shares and Series A Warrants in our September 2005 Private Placement. On September 20, 2005, we used net proceeds from our September 2005 Private Placement, in the amount of $203,383 to repay the remaining outstanding principal amount of the Bridge Loan and all accrued and unpaid interest thereon.

On December 20, 2005, the Bridge Lender provided us with a new bridge loan in the principal amount of $250,000 (the "2005 Bridge Loan"). In connection with the 2005 Bridge Loan we issued to the Bridge Lender a $250,000 principal amount promissory note providing for interest at the rate of fifteen percent (15%) per annum (the "2005 Bridge Note"). Interest on the 2005 Bridge Note is payable monthly, and all outstanding principal and accrued but unpaid interest was due and payable on March 20, 2006. In March 2006 we repaid $25,000 of the outstanding principal amount and at March 31, 2006, the outstanding principal amount was $225,000. We obtained a ninety (90) day extension for the payment of the remaining $225,000. In consideration for this extension we paid the Bridge Lender $2,500. On June 29, 2006 we repaid an additional $25,000 of the outstanding principal amount and at September 20, 2006, the outstanding principal amount was $200,000. On September 20, 2006, we obtained another sixty (60) day extension for the payment of the remaining $200,000 due on November 20, 2006. We did not pay any additional consideration to the third party for such extension. Payment of the 2005 Bridge Note was further extended to June 15, 2007 in consideration for our payment of $2,250 to the Bridge Lender for both this extension and the extension for repayment of the 2006 Bridge Note discussed below. We have continued to make all interest payments on the 2005 Bridge Loan, when due and payable, and intend to make such interest payments on a timely basis during any further extension thereof.

On October 27, 2006, Russell Haehn, the Company's Chairman and Chief Executive Officer provided a working capital loan to the Company in the amount of $350,000. This loan is evidenced by a promissory note (the “Note”) in the principal amount of $350,000 payable on demand any time after October 26, 2007. The Note bears interest at a rate of 6% per annum and the outstanding principal amount and all accrued interest are payable upon demand or sooner if prepaid by the Company. The balance as of March 31, 2008 is $119,551.

On December 4, 2006, the Bridge Lender provided us with an additional bridge loan in the principal amount of $250,000 (the “2006 Bridge Loan”). In connection with the 2006 Bridge Loan we issued to the Bridge Lender a $250,000 principal amount promissory note providing for interest at the rate of fifteen and one-half percent (15.5%) per annum (the "2006 Bridge Note"). Interest on the 2006 Bridge Note is payable monthly, and all outstanding principal and accrued but unpaid interest was due and payable on March 4, 2007. Payment of the 2006 Bridge Note was extended to June 15, 2007 in consideration for our payment of $2,250 to the Bridge Lender for both this extension and the extension for repayment of the 2005 Bridge Note discussed above. We have continued to make all interest payments on the 2006 Bridge Loan, when due and payable, and intend to make such interest payments on a timely basis during any further extension thereof. In consideration of a 1% fee on the principal sum, on December 1, 2007, we executed a note to for $320,000, which includes the balance of $70,000 from the Bridge Loan and the balance of $250,000 from the 2005 Bridge Loan (the “2007 Note”). The 2007 Note bears interest at a rate of 15.5% per annum with a maturity date of August 31, 2008. The principal balance remaining at March 31, 2008 is $295,000.

We also have obtained a revolving line of credit with the Bank, in the maximum amount of $250,000. This line of credit bears interest at the rate of prime plus one percent (6.25% as of March 31, 2008), and has no stipulated repayment terms. As of March 31, 2008, the amount of principal and interest outstanding on this credit line was $249,863. This line of credit is secured by a lien on substantially all of our assets.

Financing Activities.

In September 2005, the Company sold to accredited investors, in a private placement offering (the “September 2005 Private Placement”), 2,870 Series A Shares and warrants to purchase up to of 5,740,000 shares of common stock (the “Series A Warrants”), resulting in the receipt by the Company of $2,870,000 of gross proceeds including the repayment of $50,000 of indebtedness outstanding under the Bridge Loan from HSK Funding, Inc., by the conversion of that amount into Series A Shares and Series A Warrants. These securities are convertible into shares of common stock. After deduction of all offering expenses for the September 2005 Private Placement, including the placement agent's commissions and nonaccountable expense allowance, the Company received net proceeds of $2,485,163. The Company used these net proceeds for debt repayment, legal fees, and general working capital purposes. As of March 31, 2008, 420 Series A Shares were converted into 938,500 shares of our common stock. Additionally, during 2007 and through March 31, 2008, we issued an aggregate of 1,564,816 shares of common stock to the holders of our Series A Shares, in lieu of cash dividends.

Anticipated Funding of Operations.

The amount required to fund the growth of our ongoing operations, as well as the means by which we obtain this funding, will be wholly dependent on the magnitude and timeframes we set for any growth in our business. Based on our current expected growth in the next 12 to 24 months, we expect to fund our ongoing operations as follows:

Cash Flow from Operations

Although we incurred a loss in the first quarter of 2008, sales in April were equal to or marginally better than sales for April in 2007. Prior to this first quarter loss, we increased our cash flow from operations for an 18 month period through a consistent plan of reducing operating costs and increasing profit margins on our sales. We intend to continue this policy throughout the remainder of 2008 and we remain optimistic that we can reach profitability levels similar to 2007, although no assurances can be made that we will attain such profitability levels or be profitable at all. We believe that by keeping our operating costs at the reduced levels we achieved in 2007, and continuing to increase our profit margins, we will continue to generate sufficient cash flow from operations to fund our business for at least the next twelve months. To the extent that we experience a significantly weaker sales climate during the remainder of 2008, our ability to continue to generate such cash flow could be impaired, notwithstanding our reduced operating costs and increased profit margins.

Bank Financing

We currently have a revolving credit line with Fifth Third Bancorp in a total available amount of $250,000 of which $249,863 was funded at March 31, 2008.

Equity Financing

Although it is not our intention to raise additional funds through the sale of our equity securities to directly fund our working capital needs, to the extent that sales of our power sports products continue at the levels experienced in 2007 and/or the growth of our business involves either the acquisition of other power sports dealers or the acquisition of significant assets out of the ordinary course of our business, such as acquiring inventory of a new brand of motorcycles, we will most likely be required to raise additional funds through the sale of common stock or preferred stock to consummate any of these acquisitions. It could be difficult for us to raise funds in amounts and on terms sufficient to fund any of these proposed acquisitions.

Funding of Future Acquisitions

Given our experience in financing the purchase of the Chicago Cycles assets, we believe that the terms of future acquisitions, to the extent that they involve significant amounts of debt financing, will require substantially longer periods of time for repayment, which we anticipate to be at least 48 months, in order for these acquisitions to be financially viable for us. We intend to give careful consideration to these terms when deciding whether to acquire debt financing in connection with future acquisitions.

Results of Operations.

Year ended December 31, 2007 Compared to Year ended December 31, 2006:

	2007			2006			Increase (Decrease)			% Change
Total Revenues	$	98,696,692		$	100,751,786			(2,055,094	)		(2.0	)%
Cost of Sales	$	84,109,662		$	86,340,024			(2,230,362	)		(2.6	)%
Operating Expenses	$	12,190,626		$	13,294,060		$	(1,103,434	)		(8.3	)%
Income from Operations	$	2,396,404		$	1,117,702		$	1,278,702			114.4	%
Other Income and (Expense)	$	(1,098,960	)	$	(1,371,000	)	$	(272,040	)		(19.8	)%
Income (Loss) before Provision (Benefit) for Income Taxes	$	1,297,444		$	(253,298	)	$	1,550,742			NM ¹
Net Income (Loss) before Preferred Dividends	$	766,444		$	(181,198	)	$	947,642			NM ¹

1 - Not Meaningful

Total Revenues:

Total revenues for the year ended December 31, 2007 were $98,696,692 representing a decrease of $2,055,094 (-2.0%) from the $100,751,786 reported for the year ended December 31, 2006. This decrease in revenues was, we believe, primarily attributable to a substantial reduction in the purchase of motorcycles experienced by most dealers. Sales at our Salem facilities were most affected, representing substantially all of our decrease in revenues between the applicable periods. While it is difficult to determine, with certainty, the reasons for the significant decrease in the sales of motorcycles and other power sports vehicles during 2007, we believe that this reduction in revenues between the two periods is primarily attributable to overall economic factors which have resulted in a reduction in motorcycle sales throughout the industry. We have experienced mixed results so far in 2008, with our Salem store showing a significant weakness in sales, while sales in Chicago are flat.

Cost of Sales:

Cost of sales for the year ended December 31, 2007 decreased by $2,230,362 (-2.6%) to $84,109,662 during the year ended December 31, 2007, as compared to $86,340,024 for the same period in 2006. This decrease in cost of sales was primarily attributable to a corresponding decrease in sales during 2007 compared with 2006.

Operating Expenses:

Operating expenses for the year ended December 31, 2007 were $12,190,626, a decrease of $1,103,434 (-8.3%) over $13,294,060 for same period in 2006. The aggregate decrease in such costs was principally related to an approximate decrease in marketing costs in the amount of $896,121 and an approximate decrease in insurance costs in the amount of $184,677, which was partially offset by an approximate increase in rental costs in the amount of $238,239 during the year ended December 31, 2007 compared to the same period in 2006.

Income from Operations:

We had income from operations before other income and (expenses) for the year ended December 31, 2007 of $2,396,404 compared to income from operations of $1,117,702 for the same period in 2006, which reflects an increase of $1,278,702 (114.4%). This increase in income from operations during the year ended December 31, 2007 as compared to the same period in 2006, is a result of an increase in gross margins to 14.7% for the year ended December 31, 2007 from 14.3% for the same period in 2006, coupled with a significant reduction in total operating expenses to $12,190,696 for the year ended December 31, 2007 from $13,294,060 for the same period in 2006, a decrease of $1,103,434. Depreciation and amortization increased slightly, and was approximately $441,481 for the year ended December 31, 2007, as compared to $432,338 for the same period in 2006.

Other Income and (Expense):

Other expenses for the year ended December 31, 2007 decreased $272,040 (-19.8%) to $1,098,960 from $1,371,000 for the same period in 2006. This decrease in other expenses was primarily attributable to a decrease in net interest expense to $1,272,885 in 2007 from $1,413,383 in 2006, slightly offset by a loss on the sale of a vehicle of $19,539. Other income increased approximately $172,581 as a result of rebate income and other immaterial miscellaneous income.

Income (Loss) before Provision (Benefit) for Taxes:

We had income before provision for taxes for the year ended December 31, 2007 of $1,297,444, as compared with a loss before benefit for taxes of $253,298 for the same period in 2006. This increase in income before provisions for taxes is primarily attributable to a decrease in net interest expense of approximately $131,000 as a result of reduced interest rates, an increase in income from operations of approximately $1,279,000, and an increase in other income of approximately $173,000.

Net Income (Loss) before Preferred Dividends:

We had a net income before preferred dividends of $766,444 for the year ended December 31, 2007, as compared to a net loss of $181,198 for the same period in 2006. The Company realized a net income for the year ended December 31, 2007 as compared to a net loss for the same period in 2006 is primarily attributable to the same factors described with respect to income before provision for taxes.

Three Months Ended March 31, 2008 Compared With Three Months Ended March 31, 2007.

	March 31, 2008			March 31, 2007			Increase (Decrease)			% Change
Total Revenues	$	19,286,899		$	20,905,904		$	(1,619,005	)		(7.74	)%
Cost of Sales	$	16,904,499		$	18,428,636		$	(1,524,137	)		(8.27	)%
Operating Expenses	$	2,948,908		$	2,792,780		$	156,128			5.59	%
Income (Loss) from Operations	$	(566,508	)	$	(315,512	)	$	250,996			79.55	%
Other Income and (Expense)	$	(231,273	)	$	(411,721	)	$	(180,448	)		(43.83	)%
Income (Loss) before Provision (Benefit) for Income Taxes	$	(797,781	)	$	(727,233	)	$	70,548			9.70	%
Net Income (Loss) before Preferred Dividends	$	(539,781	)	$	(473,733	)	$	66,048			13.94	%

Total Revenues:

Total revenues for the three months ended March 31, 2008 were $19,286,899 representing a decrease of 1,619,005 (7.74%) from the $20,905,904 reported for the three months ended March 31, 2007. Our sales were primarily negatively impacted by a reduction in ATV sales, which have been down approximately 25% over the last two years industry wide.

Cost of Sales:

Cost of sales for the three months ended March 31, 2008 decreased by $1,524,137 (-8.27%) to $16,904,499, compared to $18,428,636 for the same period in 2007. This decrease reflects the reduction in sales.

Operating Expenses:

Selling, general and administrative expenses for the three months ended March 31, 2008 were $2,948,908, an increase of $156,128 (5.59%) from $2,792,780 for the same period in 2007. The aggregate increase in such costs for the period ended March 31, 2008 as compared to the same period in 2007 was primarily attributable to the following increases in expenses: (i) payments to certain independent contractors who provided services to the Company during such periods in the amount of $70,672; (ii) advertising costs in the amount of $37,078; (iii) utilities in the amount of $21,592; (iv) travel and entertainment in the amount of $23,960; (v) professional fees in the amount of $18,034; (vi) employee benefits in the amount of $17,210; and (vii) bank fees in the amount of $14,075.

Income (Loss) from Operations:

We had a loss from operations before other income (expense) for the three months ended March 31, 2008 of $566,508, as compared to a loss from operations of $315,512 for the same period in 2007, which reflects an increase in losses of $250,996 (79.55%). The increase in the loss from operations before other income (expense) is a result of a combination of lower sales, a reduction in gross profit, and an increase in expenses.

Other Income and (Expenses):

Other expenses for the three months ended March 31, 2008 decreased $180,448 (-43.83%) to $231,273 from $411,721 for the same period in 2007. This decrease in other expenses was primarily attributable to a reduction in interest expense in the amount of $149,745 as a result of a reduction in our inventory and a reduction of the interest rates applicable to our floor plan financing.

Loss before Provision (Benefit) for Taxes:

We had a loss before benefit for taxes, for the three months ended March 31, 2008 of $797,781, as compared with a loss before benefit for taxes of $727,233 for the same period in 2007, which represents an increase of $70,548 (9.70%). This increase in loss before benefit for taxes is primarily attributable to the loss from operations, offset by the reduction in interest expense.

Loss before Preferred Dividends:

We had a net loss before preferred dividends of $539,781 for the three months ended March 31, 2008, as compared to a net loss before preferred dividends of $473,733 for the same period in 2007. This reflects an increased reduction in losses before preferred dividends of $66,048 (13.94%) between these comparable periods. This reduction in net loss before preferred dividends during the three months ended March 31, 2008 as compared to the same period in 2007 is primarily attributable to the same reasons as described above in our loss before benefit for taxes. The change in benefit for income taxes did not have a material effect on the change in loss before preferred dividend for the three months ended March 31, 2008, as compared to the same period in 2007, as we received a benefit for income taxes of approximately $250,000 for the period in both 2008 and 2007.

Liquidity and Capital Resources.

Our primary source of liquidity has been cash generated by operations and borrowings under various credit facilities. As of March 31, 2008, we had $483,351 in cash and cash equivalents, compared to $919,784 as of March 31, 2007. Until required for operations, our policy is to invest excess cash in bank deposits and money market funds. Net working capital as of March 31, 2008 was $973,829, compared to ($458,527) as of March 31, 2007.

The Company receives floor plan financing from six different motorcycle manufacturers for whom the Company sells the manufacturers' products. The Company uses such floor plan financing to assist it in financing and carrying the Company's inventory necessary to achieve the Company's sales goals. Such manufacturers' collateral includes all unit inventory, plus a general lien on all assets of Andrews Cycles and Chicago Cycles.

The Company has acquired the loans described under the heading Loan Transactions above. As a result of the September 2005 Private Placement, the Company also raised additional cash from financing activities of approximately $2,485,000 for use in connection with its operations. As a result of weaker sales during 2006, the Company borrowed an additional $250,000 in December 2006 from the Bridge Lender. Additionally, in the future the Company may attempt to raise additional financing through the sale of its debt and/or equity securities for expansion of its business, including acquisitions of other dealers and distribution rights for brands.

As of March 31, 2008, we had outstanding indebtedness payable within 12 months in an aggregate amount of approximately $28.1 million. Of this amount, approximately $24.7 million is payable to financial institutions in repayment of loans and other credit facilities provided to us and approximately $3.4 million relates to outstanding trade payables. In the event that we are unable to repay all or any portion of these outstanding amounts from cash from operations, we would be required to (i) seek one or more extensions for the payment of such amounts, (ii) refinance such debt to the extent available, (iii) raise additional equity capital or (iv) consummate any combination of the foregoing transactions.

Inventory Management.

We believe that successful inventory management is the most important factor in determining our profitability. In the power sports business, and particularly as it relates to the sale of motorcycles, there is normally a limited timeframe for the sale of current year models. For example, if we are unable to sell a significant portion of our 2008 models before the 2009 models are released, it could be very difficult for us to sell our remaining inventory of 2008 models. Therefore, our goal is to limit sales of carryover products (i.e. products that remain in inventory after the release of new models) to no more than 10% of our total sales each year. This is accomplished by making all of our purchasing decisions based on sales information for the prior year and then utilizing aggressive sales and marketing techniques during the early part of a model year in order to assure the timely sale of our products.

Management believes from information obtained within the industry that several motorcycle manufacturers have reduced their production in the model year 2008. A reduction in units produced will result in fewer units allocated to most dealerships. However, we believe that because of the number of units sold from our dealerships in 2007 and because allocation of units by dealerships is based upon the number of units a dealership sold during the prior year, we will not be adversely affected by the reduced production in 2008.

With respect to carryover models, while we attempt to limit carryover to 10% of total sales, we are able to benefit from cash incentives provided by manufacturers for most carryover products. These cash incentives minimize our need to reduce prices for carryover models, as our customers are provided with cash reimbursement directly from the manufacturers. Similarly, we are able to use the cash incentives provided on our carryover products to promote new models, as publicized offers of large cash rebates generate consumer interest resulting in greater showroom traffic.

Seasonality.

Our two main products - motorcycles and ATV's are subject to seasonality. Traditionally, the motorcycle season begins in late February or early March and runs until September. In September/October, the sale of ATV's increases while motorcycle sales decrease.

Impact of Inflation.

General inflation in the economy has driven the operating expenses of many businesses higher, and, accordingly we have experienced increased salaries and higher prices for supplies, goods and services. We continuously seek methods of reducing costs and streamlining operations while maximizing efficiency through improved internal operating procedures and controls. While we are subject to inflation as described above, our management believes that inflation currently does not have a material effect on our operating results, but there can be no assurance that this will continue to be so in the future.

Critical Accounting Policy and Estimates.

Our Management's Discussion and Analysis of Financial Condition and Results of Operations section discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, as promulgated by the PCAOB. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, fixed assets, inventory, accounts receivable, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Set forth below are the policies that we have identified as critical to our business operations and the understanding of our results of operations or that involve significant estimates. For detailed discussion of other significant accounting policies see Note A, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements, contained elsewhere in this Prospectus.

Intangibles and Long-lived Assets - Goodwill is tested for impairment on an annual basis, or more frequently if events or circumstances indicate that impairment may have occurred. The Company is subject to financial statement risk to the extent that intangible assets become impaired due to decreases in the fair market value of the related underlying business.

We estimate the depreciable lives of our property and equipment, including any leasehold improvements, and review them on an on-going basis. The Company believes that the long-lived assets are appropriately valued. However, the assumptions and estimates used may change, and the Company may be required to record impairment to reduce the carrying value of these assets.

Revenue Recognition: Vehicle Sales - The Company records revenue when vehicles are delivered and title has passed to the customer, when vehicle service or repair work is performed and/or when parts are delivered. Sales promotions that are offered to customers are accounted for as a reduction to the sales price at the time of sale. Incentives, rebates and holdbacks offered by manufacturers directly to the Company are recognized at the time of sale if they are vehicle specific, or as earned in accordance with the manufacturer program rules and are recorded as a reduction of cost of merchandise sold.

Revenue Recognition: Finance, Insurance and Extended Service Revenues - The Company arranges financing for customers through various financial institutions and receives a commission from the lender equal to the difference between the interest rates charged to customers and the interest rates set by the financing institution. The Company also receives commissions from the sale of various third party insurance products to customers and extended service contracts. These commissions are recorded as revenue at the time the customer enters into the contract. The Company is not the obligor under any of these contracts. In the case of finance contracts, a customer may prepay or fail to pay their contract, thereby terminating the contract. Customers may also terminate extended service contracts, which are fully paid at purchase, and become eligible for refunds of unused premiums. In these circumstances, a portion of the commissions the Company receives may be charged back based on the relevant terms of the contracts. The revenue the Company records relating to commissions is net of an estimate of the ultimate amount of charge backs the Company will be required to pay. Such estimates of chargeback experience are based on our historical chargeback expense arising from similar contracts. The Company also acts as the warrantor on certain extended service contracts and defers the revenue and recognizes it over the life of the contract on a straight-line basis.

Off-Balance Sheet Arrangements.

We have no off-balance sheet arrangements.

Contractual Obligations.

Not applicable.

Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

MANAGEMENT

Set forth below are the names, ages, and positions of each of our executive officers and directors, together with such person's business experience during the past five (5) years. Their business experience is based on information provided by each of them to us. Directors are to be elected annually at our annual meeting of shareholders and served in that capacity until the earlier of their resignation, removal or the election and qualification of their successor. Executive officers are elected annually by our Board of Directors to hold office until the earlier of their death, resignation, or removal.

NAME	AGE	POSITIONS HELD AND TENURE
Russell A. Haehn	60	Chairman, Chief Executive Officer, and Director since January 2004
Gregory A. Haehn	62	President, Chief Operating Officer, and Director since January 2004

Officers and Directors

Russell A. Haehn has been the Chairman, Chief Executive Officer, and Secretary of the Company since the acquisition of W.W. Cycles in January 2004, and holds the same positions with W.W. Cycles since such time. Prior to such acquisition, Mr. Haehn had been the Vice President and a director of W.W. Cycles since its inception in 1984. From 1990 to 2000, Mr. Haehn also was the founder, President, a director and the sole shareholder of Andrew Cycles Incorporated, which was an importer and exporter of motorcycles.

Gregory A. Haehn has been the President, Chief Operating Officer, Treasurer, and a director of the Company since the acquisition of W.W. Cycles, in January 2004, and holds the same positions with W.W. Cycles since such time. Mr. Haehn since its inception in 1998, also has been the President, director and sole shareholder of Yukon International Inc., a manufacturer, distributor and retailer of fitness equipment. From May 2000 to December 2000, Mr. Haehn was President of Interactive Marketing Technologies, Inc., a publicly-traded company in the direct marketing business. From 1988 to 1997, Mr. Haehn was the founder, President and sole shareholder of Midwest Motorsports Inc., a power sports dealership in Akron, Ohio which sold motorcycles. Additionally, from 1976 to 1997, Mr. Haehn was the President of Worldwide Auto Parts Inc., a leading regional auto parts supply business in Northeastern Ohio.

Russell Haehn and Gregory Haehn are brothers. The present term of office of each director will expire at the next annual meeting of shareholders.

Our executive officers are elected annually at the first meeting of our board of directors held after each annual meeting of shareholders. Each executive officer holds office until his successor is duly elected and qualified, until his resignation, or until removed in the manner provided by our bylaws.

Agreement to Appoint Additional Director

Until February 2011, we have agreed to appoint a designee of HCFP/Brenner Securities LLC, the placement agent in the September 2005 Private Placement, to serve on our board of directors. In the event that said placement agent does not exercise its right to appoint a designee to our board, it shall have the right to send a representative (who need not be the same individual from meeting to meeting) to observe each meeting of the board of directors. Except as provided herein, there are no arrangements between any director or director nominee of the Company and any other person pursuant to which he was, or will be, selected as a director.

Director Compensation

We have not paid any cash compensation to our directors for their service on the board of directors, and do not have any plans to do so in the near future. We do not currently maintain liability insurance coverage for the acts of our officers and directors, but we have agreed to obtain liability insurance in an amount not less than $1,500,000, on or around the date that said placement agent's designee commences services on our board, if this shall occur, and will include said placement agent's designee as an insured under such policy.

Significant Employees

Phillip A. Andrews has been the general manager of our W.W. Cycles subsidiary since 1984.

Paul Katsiadas is currently employed by our Chicago Cycles subsidiary as general manager and has served in that position since April 2007. From April 2006 through April 2007 Mr. Katsiadas was sales manager of Chicago Cycles. During the 12-year period prior to his employment with us, Mr. Katsiadas held several management positions within automobile dealerships.

Governance

The Company has not formally appointed an audit committee, and the entire board of directors (two persons) currently serves the function of an audit committee. The Company has not made a determination as to whether any of its directors would qualify as an audit committee financial expert.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the annual and long-term compensation paid for the fiscal years ended December 31, 2007 and 2006 to our Chairman and Chief Executive Officer; and President and Chief Operating Officer (collectively, the “Named Executive Officers”). No other officer received compensation in excess of $100,000 in any of those years.

Name and Positions	Fiscal Year		Salary ($)		Bonus ($)		Option Awards ($)		All Other Compensation ($)			Total ($)
Russell A. Haehn,		2007	$	106,000		-0-		-0-		220,715(1	)	$	326,715
Chairman and		2006		101,500		-0-		-0-		175,335(1	)		276,835
Chief Executive Officer

Gregory A. Haehn,		2007	$	71,700		-0-		-0-	$	21,200(2	)	$	92,900
President and		2006		71,600		-0-		-0-		34,430(2	)		106,030
Chief Operating Officer

(1)

Other compensation payable to Russell Haehn includes amounts payable to Mr. Haehn directly from manufacturers of certain of the products we sell, as an incentive to sell these products. The total amounts paid to Mr. Haehn during the years set forth in the above table were $208,715 in 2007 and $163,335 in 2006. Mr. Haehn also received an automobile allowance of $12,000 per year in each of those years.

(2)	Other compensation payable to Gregory Haehn reflects an automobile allowance of $12,000 in each of 2007 and 2006 and an aggregate of $9,200 paid to Mr. Haehn in 2007 and $22,430 in 2006 directly from manufacturers of certain of the products we sell, as an incentive to sell these products.

Outstanding Equity Awards at Fiscal Year-End

The following table provides information as to options held by each of the Named Executives at December 31, 2007. Based on the last reported sale price for our shares of common stock on December 31, 2007 of $0.25, as reported on the OTC Bulletin Board Service, none of the options listed in the following table were in the money on such date.

	Option Awards
Name	Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options Unexercisable		Option Exercise Price		Option Expiration Date

Russell A. Haehn		1,000,000		—	$	1.25		8/16/2009

Gregory A. Haehn		500,000		—	$	1.25		8/16/2009

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We lease our 75,000 square foot facility in Salem, Ohio from an affiliated entity controlled by Russell A. Haehn, our Chairman, Chief Executive Officer and a controlling shareholder. Pursuant to the terms of a lease, effective January 1, 2007, we lease this facility under a 5-year lease, with an additional 5-year term available, at a rental rate of $24,000 per month. We believe that the terms of this arrangement are no less favorable to us than those that would be available for a similar facility leased from a third party in a bona fide arms-length transaction.

We made loans in September and November of 2004, in an aggregate amount of approximately $66,000, to Marck's Real Estate, Inc, a corporation owned by Russell A. Haehn and the owner of our Salem, Ohio facilities. These loans were used by Marck's Real Estate to pay construction costs relating to the expansion of our Ohio facilities. We made additional loans to Marck's Real Estate in 2005, and at December 31, 2005 the aggregate outstanding amount of such loans was approximately $261,667. All loans to Russell Haehn and Marck's Real Estate were repaid as of March 31, 2006.

On October 27, 2006, Russell Haehn, our Chairman and Chief Executive Officer, provided a working capital loan to us in the amount of $350,000. This loan is evidenced by a promissory note (the “Note”) in the principal amount of $350,000 payable on demand any time after October 26, 2007. The Note bears interest at a rate of 6% per annum, and the outstanding principal amount and all accrued interest are payable upon demand or sooner, if prepaid by us. The outstanding principal balance of the loan as of March 31, 2008 was $119,551.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of June 16, 2008, we had a total of 12,948,316 shares of common stock issued and outstanding.

The following table sets forth information, as of June 16, 2008, with respect to the beneficial ownership of our common stock by: (i) all directors; (ii) the Named Executive Officers; (iii) all current executive officers and directors as a group; and (iv) each shareholder known by us to be the beneficial owner of more than 5% of our common stock.

Name	Number of Shares Owned Beneficially (1)		Approximate Percent of Class Owned (1)(2)(3)
Russell A. Haehn (4)(6)		5,785,000		41.5	%
Gregory A. Haehn (5)(6)		3,235,000		24.1	%

All Executive Officers and Directors, as a Group (two persons)		9,020,000		62.4	%

(1)

Beneficial ownership information is based on information provided to the Company. Except as indicated, and subject to community property laws when applicable, the persons named in the table above have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Except as otherwise indicated, the address of such persons is the Company's offices at 13134 State Route 62, Salem, Ohio 44460.

(2)

The percentages shown are calculated based upon 12,948,316 shares of common stock outstanding on June 16, 2008. The numbers and percentages shown include the shares of common stock actually owned as of June 16, 2008 and the shares of common stock that the person or group had the right to acquire within 60 days of June 16, 2008. In calculating the percentage of ownership, all shares of common stock that the identified person or group had the right to acquire within 60 days of June 16, 2008 upon the exercise of options and warrants are deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by such person or group, but are not deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by any other person.

(3)

Notwithstanding each person or group's beneficial ownership of the Company's common stock, since the Series A Shares are entitled to vote together with the common stock on all matters submitted to shareholders for their approval, each person's or groups percentage voting interest (assuming exercise of all options) is: Russell A. Haehn - 30.7%; Gregory A. Haehn - 17.6%; and all executive officers and directors as a group - 46.7%.

(4)	Includes a five-year non-qualified stock option, granted to Mr. Russell Haehn on August 16, 2004, to purchase up to 1,000,000 shares of common stock at an exercise price of $1.25 per share.

(5)	Includes (i) 2,655,000 shares of common stock owned directly by Mr. Gregory Haehn and (ii) 80,000 shares of common stock owned by Mr. Haehn's minor children. Does not include an additional 80,000 shares of common stock owned by two other of Mr. Gregory Haehn's children for which he disclaims any beneficial ownership. Also includes a five-year non-qualified stock option, granted to Mr. Gregory Haehn on August 16, 2004, to purchase up to 500,000 shares of common stock at an exercise price of $1.25 per share.

(6)	Russell Haehn and Gregory Haehn are brothers.

The Company is not aware of any arrangement which might result in a change in control in the future.

DESCRIPTION OF SECURITIES

The following summary is qualified in its entirety by reference to the Company's Restated Articles of Incorporation ("Articles") and its bylaws. The Company's authorized capital stock consists of 75,000,000 shares of common stock, $.001 par value per share, and 5,000,000 shares of preferred stock, $.001 par value per share.

Common Stock

As of June 16, 2008, we have 12,948,316 shares of common stock issued and outstanding. Each share of common stock is entitled to one vote at all meetings of shareholders. All shares of common stock are equal to each other with respect to liquidation rights and dividend rights. There are no preemptive rights to purchase any additional shares of common stock. Our Articles do not provide for cumulative voting in the election of directors. Because holders of common stock do not have cumulative voting rights, subject to the rights of the preferred stock to vote with the holders of common stock, holders or a single holder of more than 50% of the outstanding shares of common stock present and voting at an annual meeting at which a quorum is present can elect all of the Company's directors. In the event of liquidation, dissolution or winding up of the Company, holders of shares of common stock will be entitled to receive on a pro rata basis all assets of the Company remaining after satisfaction of all liabilities and all liquidation preferences, if any, granted to holders of our preferred stock.

All of our issued and outstanding common stock is, and, when distributed according to the terms of the offering will be, fully paid and non-assessable and are not subject to any future call.

The holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available therefore at such times and in such amounts as our board of directors may from time to time determine, subject to any approval required by holders of any class of preferred stock. Holders of common stock will share equally on a per share basis in any dividend declared by the board of directors. We have not paid any dividends on our common stock, to date, and do not anticipate paying any cash dividends our common stock in the foreseeable future.

Preferred Stock

General

The board of directors of the Company has the authority to divide the authorized preferred stock into series, the shares of each series to have such relative rights and preferences as shall be fixed and determined by the board of directors. The provisions of a particular series of authorized preferred stock, as designated by the board of directors, may include restrictions on the payment of dividends on common stock. Such provisions may also include restrictions on the ability of the Company to purchase shares of common stock or to purchase or redeem shares of a particular series of authorized preferred stock. Depending upon the voting rights granted to any series of authorized preferred stock, issuance thereof could result in a reduction in the voting power of the holders of common stock. In the event of any dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, the holders of the preferred stock will receive, in priority over the holders of common stock, a liquidation preference established by the board of directors, together with accumulated and unpaid dividends. Depending upon the consideration paid for authorized preferred stock, the liquidation preference of authorized preferred stock and other matters, the issuance of authorized preferred stock could result in a reduction in the assets available for distribution to the holders of common stock in the event of the liquidation of the Company.

Series A Shares

As of June 16, 2008, we have 2450 shares of preferred stock issued and outstanding, all of which have been designated as Series A convertible preferred stock (the "Series A Shares"). Additionally, HCFP/Brenner Securities LLC, the placement agent in our September 2005 Private Placement has an option to purchase 287 Series A Shares at a purchase price of $1,000 per share.

Rank. The Series A Shares rank senior to (1) the common stock and (2) each other class or series of preferred stock now or hereafter established by the board of directors, the terms of which do not expressly provide that it ranks senior to, or on a parity with, the Series A Shares as to dividend rights and rights on liquidation, winding-up, and dissolution of the Company.

Dividends. The holders of shares of Series A Shares receive dividends at the rate of $100.00 per Series A Share per annum, payable, at the option of the Company, in cash or shares of Common Stock, provided that, the dividend rate is reduced to $70.00 per Series A Share per annum at such time as and for as long as our shares of common stock issuable upon conversion of the Series A Shares are covered by an effective registration statement. In the event of certain defaults by the Company, the dividend rate will be increased to $200.00 per Series A Share until the default has been cured. Dividends will accrue and be payable semi-annually, in arrears, on the first day of March and September in each year, beginning March 2006. Dividends payable on the Series A Shares are cumulative and any accrued and unpaid dividends are included in the payment of a liquidation preference to the holders of Series A Shares, as described below.

Liquidation Preference. In the event of a liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of the Series A Shares are entitled to receive, after all payments to holders of any securities that rank senior to the Series A Shares, $1,000.00 per Series A Share, together with an amount equal to the dividends accrued and unpaid thereon (whether or not declared) to the date of final distribution to the holders of Series A Shares, without interest, before any payment shall be made or any assets distributed to the holders of any of the Company's securities that rank junior to the Series A Shares, including the common stock. After the full payment of the liquidation preference to the holders of Series A Shares, they are not entitled to any further participation in any distribution of the Company's assets. At the option of any holder of Series A Shares, a consolidation or merger of the Company with another corporation in which the Company is not the surviving entity, or a sale or transfer of all or part of the Company's assets for cash, securities or other property will be considered a liquidation, dissolution, or winding up of the Company.

Conversion.

Election to Convert. Each Series A Share may be converted at any time, at the election of the holder, into 2,000 shares of our common stock, subject to certain adjustments.

Mandatory Conversion. We have the right, in our sole discretion, to require that all of the outstanding Series A Shares be converted into shares of our common stock at the same conversion rate applicable to a conversion election. We have this right to require conversion at any time: (1) the last trade price of our common stock reported on the OTC Bulletin Board for each of the ten consecutive trading days ending two business days prior to the date of our conversion election exceeds $1.50 per share (subject to certain adjustments, including adjustments for anti-dilution) and (2) the common stock issuable upon conversion of the Series A Shares is covered by an effective registration statement during the entire ten-day period and through the date of the conversion.

Anti-Dilution Adjustments. Subject to certain exceptions, if we issue securities, in the future, at an effective price of less than $.50 per share of common stock (or the then current price as reduced by prior anti-dilution events), then the rate of conversion of the Series A Shares into our common stock will be reduced to the effective price of our common stock as issued. In addition, the rate of conversion may also be reduced as a result of certain recapitalization events, including (1) a split or reverse split of our shares of common stock and (2) the payment of a dividend in shares of our common stock (other than dividends payable on the Series A Shares in common Stock).

Voting Rights. Holders of the Series A Shares vote together with the holders of common stock as a single class on all matters submitted to shareholders for a vote and shall have a number of votes equal to 2,000 votes for each Series A Share, subject to certain adjustments. Additionally, the approval of the holders of a majority of the Series A Shares is required for the approval of the following matters:

(1) Any amendment, alteration, or repeal of the Articles or the certificate of designation relating to the Series A Shares, if such amendment, alteration or repeal adversely affects the rights, preferences or privileges of the Series A Shares, including the right to create, authorize or issue any series or shares of stock senior to or on parity with the Series A Shares, or to increase the amount of authorized capital stock of any such class;

(2) The creation, authorization, or issuance of any series or shares of capital stock convertible into common stock which is on parity with or senior to the Series A Shares in terms of liquidation, dividends, or otherwise;

(3) The merger, consolidation, or entering into a business combination, or similar transaction, other than if (i) the Company is the surviving entity and (ii) the shareholders of the Company prior to such transaction continue to hold a majority of the capital stock of the Company following the transaction;

(4) The incurrence or permission to exist of any inventory or equipment indebtedness or liens relating thereto, except that the Company may borrow in connection with institutional financing of inventory and equipment and mortgage financing in connection with acquisitions of real estate;

(5) The declaration or payment of any dividends on, purchase, redemption, or retirement for value, of any capital stock (other than the Series A Shares), or make any distribution of assets, capital stock, warrants, rights, options, indebtedness, or obligations to the Company's shareholders;

(6) The sale or other transfer of a material portion of the Company's assets; provided, however, that such a sale or other transfer will be permitted if (i) it is not of all or substantially all of the Company's assets and (b) is approved by a majority of the independent and disinterested members of the board of directors; and

(7) The entering into any transaction or agreement, or the amendment or modification of any existing agreement, with any officers, directors or principal shareholders of the Company, or any of their affiliates, which transaction, agreement amendment or modification is not approved by a majority of the independent and disinterested members of the board of directors.

Warrants

Series A Warrants

We issued warrants in our September 2005 Private Placement (the "Series A Warrants") to the investors who purchased Series A Shares, providing those shareholders the right to purchase up to an aggregate of 5,740,000 shares of our common stock, at an exercise price of $.50 per share, subject to certain adjustments. Additionally, the placement agent in our September 2005 Private Placement has an option to acquire Series A Warrants to purchase 574,000 shares of our common stock. The Series A Warrants, which are also being offered for resale by the Selling Shareholders under this prospectus, may be exercised at any time until September 16, 2010. Other material terms of the Series A Warrants are as follows:

(1) Listing. Upon the request of any holder of the Series A Warrants (following the holder's obtaining the written consent of HCFP/Brenner Securities LLC) or of said placement agent, we have agreed to use our best efforts to list the Series A Warrants on the OTC Bulletin Board and to provide for quotation on any other trading market or exchange on which our common stock becomes quoted or listed in the future.

(2) Anti-Dilution Adjustments. At any time prior to the listing of the Series A Warrants on the OTC Bulletin Board, the exercise price will be subject to similar adjustments as provided with respect to reductions in the conversion price, in the event of the issuance of additional securities at an effective price per share of common stock less than $.50 (or the then current exercise price as reduced by prior anti-dilution events). The exercise price is also subject to adjustment as a result of certain recapitalization events.

(3) Appointment of Warrant Agent. We are required, commencing on the first date that the Series A Warrants are listed on OTC Bulletin Board, to appoint a warrant agent for the purpose of maintaining the warrant register, in connection with the issuance of the common stock issuable upon the exercise of the Series A Warrants, exchanging the Series A Warrants, replacing the Series A Warrants or any or all of the foregoing. Upon said appointment, any registration, issuance, exchange, or replacement of the Series A Warrants, as the case may be, will be made at the office of the warrant agent.

(4) Redemption. Provided (i) that the shares of common stock underlying the Series A Warrants are registered for resale under an effective registration statement filed by the Company with the SEC and (ii) that the registration statement shall be effective thirty (30) days prior to the date of a notice of redemption, and remains effective until that date, and provided that the Company obtains the prior written consent of HCFP/Brenner Securities LLC to redeem the Series A Warrants, then upon not less than 14 business days' prior written notice to the each holder, the Series A Warrants may be redeemed by the Company at any time commencing six months after the date of effectiveness of the registration statement and prior to expiration of the Series A Warrants, in whole but not in part, at the Company's sole option, at the redemption price of $0.01 per share for every share of common stock purchasable upon exercise the Series A Warrants at the time of redemption, if the last sale price of a share of our common stock is at least $1.50 per share as adjusted for stock splits, dividends and the like, for all ten of the consecutive trading days ending within three business days prior to the date of the redemption notice. The sending of a redemption notice will not affect a holder's ability to exercise his or her Series A Warrants at any time prior to the date of redemption.

Registration Rights

In connection with the issuance of its securities in the September 2005 Private Placement, we entered into a registration rights agreement with the purchasers and the placement agent requiring us to file a registration statement to register (1) the shares of common stock into which the Series A Shares convert Warrants (including those Series A Shares that may be purchased pursuant to the placement agent's option); (2) the shares of common stock that may be paid as dividends on the Series A Shares; (3) the Series A Warrants (including those Series A Warrants that may be issued pursuant to the placement agent's option), and (4) the shares of common stock underlying the Series A Warrants (including those underlying the Series A Warrants issuable to the placement agent pursuant to its option), on a Form SB-2 Registration Statement (or comparable form) by on or about October 31, 2005 and ensure that such registration statement is effective no later than on or about January 16, 2005. If any of the above time periods were not met, or the registration statement is declared effective by the SEC, but the registered securities cannot be sold by a Selling Shareholder for any reason other than its own fault, then the Company will pay investors an amount in cash, as partial liquidated damages and not as a penalty, equal to 2% per month of the issue price until such deficiency is cured. In the event that the Registration Statement was not declared effective by January 16, 2006, we were required to pay investors in the September 2005 Private Placement, unless these investors agreed otherwise, an aggregate of $57,400 on such date, and an additional $57,400 each month thereafter until the Registration Statement was declared effective. Since the Registration Statement was declared effective on February 13, 2006, we paid these investors liquidated damages in an aggregate amount of $57,000.

Certain Rights of Holders of Common Stock

The Company is a Nevada corporation organized under Chapter 78 of the Nevada Revised Statutes ("NRS"). Accordingly, the rights of the holders of common stock are governed by Nevada law. Although it is impracticable to set forth all of the material provisions of the NRS, the following is a summary of certain significant provisions of the NRS that affect the rights of securities holders.

Control Share Statute

Sections 78.378 - 78.3793 of the NRS constitute Nevada's control share statute, which set forth restrictions on the acquisition of a controlling interest in a Nevada corporation which does business in Nevada (directly or through an affiliated corporation) and which has 200 or more shareholders, at least 100 of whom are shareholders of record and residents of Nevada. A controlling interest is defined as ownership of common stock sufficient to enable a person directly or indirectly and individually or in association with others to exercise voting power over at least 20% but less than 33.3% of the common stock, or at least 33.3% but less than a majority of the common stock, or a majority or more of the common stock. Generally, any person acquiring a controlling interest must request a special meeting of shareholders to vote on whether the shares constituting the controlling interest will be afforded full voting rights, or something less. The affirmative vote of the holders of a majority of the common stock, exclusive of the control shares, is binding. If full voting rights are not granted, the control shares may be redeemed by the corporation under certain circumstances. The Company does not believe the foregoing provisions of the Nevada statutes are presently applicable to it because it does not presently have the requisite number of shareholders and does not conduct business in Nevada; however, if in the future it does satisfy these requirements, then such provisions may apply.

Business Combination Statute

Sections 78.411 - 78.444 of the NRS set forth restrictions and prohibitions relating to certain business combinations and prohibitions relating to certain business combinations with interested shareholders. These sections generally prohibit any business combination involving a corporation and a person that beneficially owns 10% or more of the common stock of that corporation (an "Interested Shareholder") (A) within five years after the date (the "Acquisition Date") the Interested Shareholder became an Interested Shareholder, unless, prior to the Acquisition Date, the corporation's board of directors had approved the combination or the purchase of shares resulting in the Interested Shareholder becoming an Interested Shareholder; or (B) unless five years have elapsed since the Acquisition Date and the combination has been approved by the holders of a majority of the common stock not owned by the Interested Shareholder and its affiliates and associates; or (C) unless the holders of common stock will receive in such combination, cash and/or property having a fair market value equal to the higher of (a) the market value per share of common stock on the date of announcement of the combination or the Acquisition Date, whichever is higher, plus interest compounded annually through the date of consummation of the combination less the aggregate amount of any cash dividends and the market value of other dividends, or (b) the highest price per share paid by the Interested Shareholder for shares of common stock acquired at a time when he owned 5% or more of the outstanding shares of common stock and which acquisition occurred at any time within five years before the date of announcement of the combination or the Acquisition Date, whichever results in the higher price, plus interest compounded annually from the earliest date on which such highest price per share was paid less the aggregate amount of any cash dividends and the market value of other dividends. For purposes of these provisions, a "business combination" is generally defined to include (A) any merger or consolidation of a corporation or a subsidiary with or into an Interested Shareholder or an affiliate or associate; (B) the sale, lease or other disposition by a corporation to an Interested Shareholder or an affiliate or associate of assets of that corporation representing 5% or more of the value of its assets on a consolidated basis or 10% or more of its earning power or net income; (C) the issuance by a corporation of any of its securities to an Interested Shareholder or an affiliate or associate having an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of that corporation; (D) the adoption of any plan to liquidate or dissolve a corporation proposed by or under an agreement with the Interested Shareholder or an affiliate or associate; (E) any receipt by the Interested Shareholder or an affiliate, except proportionately as a Shareholder, of any loan, advance, guarantee, pledge or other financial assistance or tax credit or other tax advantage; and (F) any recapitalization or reclassification of securities or other transaction that would increase the proportionate shares of outstanding securities owned by the Interested Shareholder or an affiliate. Sections 78.411-78.444 of the NRS are presently applicable to the Company.

Mergers, Consolidations, and Sales of Assets

Nevada law provides that an agreement of merger or consolidation, or the sale or other disposition of all or substantially all of a corporation's assets, must be approved by the affirmative vote of the holders of a majority of the voting power of a corporation (except that no vote of the shareholders of the surviving corporation is required to approve a merger if certain conditions are met, unless the articles of incorporation of that corporation states otherwise, and except that no vote of shareholders is required for certain mergers between a corporation and a subsidiary), but does not require the separate vote of each class of stock unless the corporation's articles of incorporation provides otherwise (except that class voting is required in a merger if shares of the class are being exchanged or if certain other rights of the class are affected). The Company's certificate of designation of its Series A Shares alters these provisions of Nevada law by providing for the requirement of the approval of the holders of a majority of the Series A Shares, voting separately as a class for: (1) the merger, consolidation or entering into a business combination or similar transaction, other than if (a) the Company is the surviving entity and (b) the shareholders of the Company prior to such transaction continue to hold a majority of the capital stock of the Company following the transaction; and (2) the sale, transfer or disposal of a material portion of the Company's assets; provided, however, that such a sale, transfer or other disposition will be permitted if (a) it is not of all or substantially all of the Company's assets and (b) is approved by a majority of the independent and disinterested members of the Company's board of directors.

Directors; Removal of Directors

Under Nevada law, the number of directors may be fixed by, or determined in the manner provided in, the articles of incorporation or bylaws of a corporation, and the board of directors may be divided into classes as long as at least 25% in number of the directors are elected annually. Nevada law further requires that a corporation have at least one director. Directors may be removed under Nevada law with or without cause by the holders of not less than a majority of the voting power of the corporation, unless a greater percentage is set forth in the articles of incorporation.

Amendments to Bylaws

The Company’s bylaws may be amended by the board of directors, or by the shareholders with respect to any bylaw adopted by the shareholders.

Appraisal Rights

The Nevada statutes provide dissenting or objecting security holders with the right to receive the fair value of their securities in connection with certain extraordinary corporate transactions. These appraisal rights are available with respect to certain mergers and share exchanges and in connection with the granting of full voting rights to control shares acquired by an interested shareholder. However, unless the transaction is subject to the control share provisions of the Nevada statutes, a shareholder of a Nevada corporation may not assert dissenters' rights, in most cases, if the stock is listed on a national securities exchange or held by at least 2,000 shareholders of record (unless the articles of incorporation of the corporation expressly provide otherwise or the security holders are required to exchange their shares for anything other than shares of the surviving corporation or another publicly held corporation that is listed on a national securities exchange or held of record by more than 2,000 shareholders). The Company's certificate of designation of its Series A Shares alters these provisions of Nevada law by providing each holder of Series A Shares, at its option, the right to elect to treat a consolidation or merger of the Company with another corporation in which the Company is not the surviving entity, or a sale or transfer of all or part of the Company's assets for cash, securities or other property as a liquidation event, which would entitle such shareholder to payment for its Series A Shares based on the liquidation preference amount of the Series A Shares.

Cumulative Voting

Under the Nevada statutes, the articles of incorporation of a corporation may provide for cumulative voting, which means that the shareholders are entitled to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote and then cast the product for a single candidate or distribute the product among two or more candidates. Cumulative voting is not available to shareholders of a Nevada corporation, unless its articles of incorporation expressly provide for that voting right. The Company's Articles do not contain a provision permitting shareholders to cumulate their votes when electing directors.

Indemnification of Directors, Officers and Controlling Persons

Section 78.7502 of the Nevada Revised Statutes requires a corporation to indemnify a director or officer who has been successful on the merits or otherwise in defense of any proceeding to which he or she is made a party by reason of his or her service as a director or officer. Nevada law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, fines, settlements and reasonable expenses (including attorneys’ fees) actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service as directors or officers (including a proceeding brought by or in the right of the corporation), but only if: (i) their liability is not the result of a breach of fiduciary duties involving intentional misconduct, fraud or a knowing violation of law or (ii) they acted in good faith and in a manner which they reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A Nevada corporation may not indemnify directors or officers for final, non-appealable, adverse judgments in a suit by or in the right of the corporation unless a court orders determines that indemnification would be fair and reasonable, but then only for expenses.

In addition, Section 78.751 of the Nevada Revised Statutes permits a corporation, if provided in its Articles of Incorporation or By-laws, to advance reasonable expenses to a director or officer before a final disposition of a proceeding, but only upon the corporation’s receipt of a written undertaking by or on behalf of the director or officer to repay the amount paid or reimbursed by the corporation if it is ultimately determined that he or she was not entitled to indemnification.

Our Articles provide for the indemnification of any person entitled to indemnification pursuant to the Nevada Revised Statutes to the fullest extent permitted thereunder.

Each Selling Shareholder has agreed to indemnify the Company against certain liabilities incurred in connection with this offering as the result of claims made under the Securities Act of 1933, the Securities Exchange Act of 1934, or state law.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed 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.

LEGAL MATTERS

The validity of the issuance of the shares of common stock offered by this prospectus has been passed upon for the Company by Gusrae, Kaplan, Bruno & Nusbaum, PLLC, New York, New York.

EXPERTS

The consolidated financial statements of Giant Motorsports, Inc. as of December 31, 2007 and 2006 and for the years then ended, as listed below, included in this prospectus and the Registration Statement have been included herein in reliance upon the report of Bagell Josephs, Levine & Company, LLC, independent certified public accountants, given on the authority of said firm as an expert in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

The Company has filed under the Securities Act with the Securities and Exchange Commission a Registration Statement on Form S-1 with respect to its shares of common stock and Series A Warrants offered hereby. This prospectus supplements and amends the prospectus that was filed as a part of the Registration Statement. As permitted by the rules and regulations of the Commission, this prospectus omits certain information contained in the Registration Statement, and reference is hereby made to the Registration Statement for further information with respect to the Company and its common stock and the Series A Warrants.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Reports filed with the SEC pursuant to the Exchange Act, including proxy statements, annual and quarterly reports, and other reports filed by the Company can be inspected and copied at the public reference facilities maintained by the SEC at the Headquarters Office, 100 F. Street N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. You can request copies of these documents upon payment of a duplicating fee by writing to the SEC. The Company's filings are also available on the SEC's internet site ( http://www.sec.gov ).

No person has been authorized to give any information or to make any representation other than as contained or incorporated by reference in this prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by the Company. Neither the delivery of this prospectus nor any sale of common stock made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any date subsequent to the date hereof. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy the securities offered by this prospectus to any person or by anyone in any jurisdiction in which it is unlawful to make such an offer or solicitation.

	Total Number of Common Shares into which Convertible or Exercisable		Total Number of Shares upon issuance of Additional Stock at $0.375 per share		Total Number of Shares upon issuance of Additional Stock at $0.25 per share		Total Number of Shares upon issuance of Additional Stock at $0.175 per share

Series A Shares		4,900,000		7,300,000		10,948,000		21,896,000

Series A Warrants		6,314,000		8,400,000		12,628,000		25,256,000

Total		11,214,000		15,700,000		23,576,000		47,152,000

	Three Months Ended March 31,						Year Ended December 31,
	2008 (Unaudited)			2007 (Unaudited)			2007		2006
Consolidated Statements of Income
Sales	$	18,832,426		$	20,034,116		$	95,699,650	$	97,637,103
Operating Expenses		2,948,908			2,792,780			12,190,626		13,294,060
Net Income (Loss) attributable to Common Stockholders		(629,001	)		(566,436	)		581,157		(454,724	)
Basic Earnings (Loss) per share		(0.05	)		(0.05	)		0.05		(0.04	)
Diluted Earnings (Loss) per share		(0.05	)		(0.05	)		0.02		(0.04	)
Weighted Average Shares Outstanding
- Basic		12,621,504			11,936,889			12,225,073		11,090,020
- Diluted		12,621,504			11,936,889			28,904,647		11,090,020

	As of March 31,				As of December 31,
	2008 (Unaudited)		2007 (Unaudited)		2007		2006
Balance Sheet Data
Cash and cash equivalents	$	483,351	$	817,595	$	919,784	$	156,530
Accounts receivable, net		3,727,613		3,580,012		3,421,107		3,803,718
Inventories		24,242,500		20,656,889		25,626,033		21,267,135
Deferred tax assets		280,000		361,000		22,000		113,900
Prepaid expenses		14,078		33,831		28,069		10,131
Fixed Assets, net		1,559,015		1,904,693		1,666,828		2,004,274
Total other Assets		1,734,550		1,729,950		1,734,550		1,729,950
Total Assets		32,041,107		29,098,852		33,418,371		29,085,638
Total Liabilities		28,178,795		25,936,936		29,016,278		25,449,989
Total Stockholders’ Equity		3,862,312		3,161,916		4,402,093		3,635,649

	·	large purchases or sales of common stock;

	·	actual or anticipated announcements of new products or services by us or competitors;

	·	acquisitions of new dealerships;

	·	investor perception of our business prospects or the motorcycle/power sports industry in general;

	·	general conditions in the markets in which we compete; and

	·	economic and financial conditions.

	BID				ASK
Quarter Ended	High		Low		High		Low

3/31/06		.94		.90		.75		.62
6/30/06		.63		.45		.62		.35
9/30/06		.63		.38		.60		.38
12/31/06		.60		.17		.60		.17
3/31/07		.16		.16		.24		.24
6/30/07		.30		.30		.33		.33
9/30/07		.25		.25		.40		.40
12/31/07		.28		.25		.29		.29
3/31/08		.23		.23		.23		.23

	Page

Prospectus Summary		1

Risk Factors		5

A Note About Forward-Looking Statements		11

Use of Proceeds		11

Market for Common Equity and Related Stockholder Matters		12

Selected Consolidated Financial Data		13

Supplementary Financial Information - Selected Quarterly Financial Data		14

Selling Shareholders		15

Plan of Distribution		21

Business		23

Management’s Discussion and Analysis and Results of Operations		29

Management		39

Executive Compensation		41

Certain Relationships and Related Transactions		42

Security Ownership of Certain Beneficial Owners and Management		43

Description of Securities		44

Legal Matters		50

Experts		50

Where You Can Find More Information		51

	2003		2004		2005		2006		2007
Net Sales (1)	$	45,217,270	$	77,615,237	$	103,117,471	$	97,637,103	$	95,699,650
Income from Continuing Operations		852,831		2,168,256		631,526		1,117,702		2,396,404
Income from Continuing Operations Per Share		0.11		0.21		0.06		0.10		0.19
Total Assets		14,303,028		24,017,727		25,832,117		29,085,638		33,418,371
Long-term Debt Obligations		547,073		2,636,027		1,498,479		1,513,665		796,510
Preferred Stock		—		—		2,870		2,450		2,450
Cash Dividends Declared per Common		—		—		—		—		—

Quarter ending:	Total Revenues		Gross Profit		Net Income (Loss)			Earnings (Loss) per share

3/31/2006		18,389,637		2,547,420		(1,067,874	)		(0.11	)
6/30/2006		39,370,426		5,999,793		1,143,956			0.11
9/30/2006		24,866,822		3,717,076		(248,673	)		(0.02	)
12/31/2006		18,124,901		2,147,473		(282,133	)		(0.02	)
3/31/2007		20,905,904		2,477,268		(566,436	)		(0.05	)
6/30/2007		35,307,143		6,207,384		1,387,934			0.11
9/30/2007		23,098,906		3,854,961		458,093			0.04
12/31/2007		19,384,739		2,047,417		(698,434	)		(0.06	)
3/31/2008		19,286,899		2,382,400		(629,001	)		(0.05	)

Selling Shareholders	Shares Beneficially Owned Prior to Offering (1)(2)						Number of Warrants Offered by this Prospectus		Number of Shares Offered by this Prospectus (4)			Shares Beneficially owned After the Offering (5)
	Number			Percent(3)								Number		Percent
Shirley Stone Koffman		634,467	(6)		4.9	%		100,000		400,000			—		—
Meadowbrook Opportunity Fund LLC		646,120	(7)		4.99	%		300,000		1,200,000	(7)		—		—
Vestal Venture Capital		634,467	(8)		4.9	%		1,740,000		6,764,300	(8)		—		—
Richard Molinsky		100,000			*			100,000		100,000	(9)		—		—
Robert A. Melnick		100,000			*			100,000		100,000	(10)		—		—
Milton Koffman		634,467	(11)		4.9	%		400,000		1,600,000	(11)		—		—
Israel Feit		200,000			1.5	%		100,000		373,696	(12)		—		—
Edward J. Gutman		200,000			1.7	%		200,000		200,000	(13)		—		—
Burton I. Koffman and Ruthanne Koffman, as joint tenants with a right of survivorship		634,467	(14)		4.9	%		1,000,000		4,000,000	(14)		—		—
Durban Investment Group, LLC		455,413			3.4	%		200,000		793,418	(15)		—		—
Tech-Aerofoam Products, Inc.		634,467	(16)		4.9	%		1,000,000		4,000,000	(16)		—		—
James Scibelli		461,996			3.5	%		200,000		800,000	(17)		—		—
Dov Schwartz		230,998			1.7	%		100,000		400,000	(18)		—		—
Albert Nocciolino		461,995			3.5	%		200,000		800,000	(19)		—		—
HCFP/Brenner Securities LLC		634,467	(20)		4.9	%		574,000		2,296,000	(20)		—		—
Thomas A. Gallo		460,000			3.7	%		—		250,000	(21)		—		—

John S. Arnone	350,000	2.7	%	—	250,000	(22)	—	—
Brendan C. Rempel	360,000	2.7	%	—	250,000	(23)	—	—
Moneta Capital Advisors, Inc.	220,000	1.7	%	—	220,000	(24)	—	—
HSK Funding, Inc.	100,000	*		—	100,000	(25)	—	—
Moira Stodden	10,000	*		—	10,000	(26)	—	—
Douglas Gass	10,000	*		—	10,000	(27)	—	—
Albert A. Auer	10,000	*		—	10,000	(28)	—	—

Audited Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2007 and 2006	F-3
Consolidated Statements of Income (Loss) for the years ended December 31, 2007 and 2006	F-5
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2007 and 2006	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2007 and 2006	F-7
Notes to Consolidated Financial Statements	F-9

Unaudited Condensed Consolidated Financial Statements:

Condensed Consolidated Balance Sheet as of March 31, 2008 (Unaudited) and December 31, 2007 (Audited)	F-29
Condensed Consolidated Statements of Income for the Three Months ended March 31, 2008 (Unaudited) and 2007 (Unaudited)	F-31
Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2008 (Unaudited) and 2007 (Unaudited)	F-32
Notes to Condensed Consolidated Unaudited Financial Statements	F-33

	2007		2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	919,784	$	156,530
Accounts receivable, net		3,421,107		3,803,718
Inventories		25,626,033		21,267,135
Deferred tax assets		22,000		113,900
Prepaid expenses		28,069		10,131
TOTAL CURRENT ASSETS		30,016,993		25,351,414

FIXED ASSETS, NET		1,666,828		2,004,274

OTHER ASSETS
Intangibles, net		1,688,950		1,688,950
Deposits		45,600		41,000
TOTAL OTHER ASSETS		1,734,550		1,729,950
	$	33,418,371	$	29,085,638

	2007			2006
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current portion of long-term debt	$	796,510		$	1,513,665
Notes payable, floor plans		24,748,401			20,885,887
Note payable, officer		119,551			352,500
Accounts payable, trade		1,055,932			1,987,152
Accrued expenses		583,102			493,939
Accrued income taxes		436,200			-
Customer deposits		834,594			196,246
TOTAL CURRENT LIABILITIES		28,574,290			25,429,389

DEFERRED TAX LIABILITIES		13,500			20,600

LONG-TERM DEBT, Net of current portion		428,488			-
TOTAL LIABILITIES		29,016,278			25,449,989

COMMITMENTS

STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value, authorized 5,000,000 shares 5,000 shares designated Series A Convertible, $1,000 stated value 2,450 shares issued and outstanding at December 31, 2007 and 2006		2,450,000			2,450,000
Common Stock, $.001 par value, authorized 75,000,000 shares 12,452,651 and 11,791,747 shares issued and outstanding at December 31, 2007 and 2006, respectively		12,453			11,792
Additional paid-in capital		2,053,218			1,868,592
Additional paid-in capital - Options		93,426			93,426
Additional paid-in capital - Warrants		1,724,800			1,724,800
Additional paid-in capital - Beneficial conversions		1,303,400			1,303,400
Issuance cost on Preferred Series A convertible		(786,762	)		(786,762	)
Retained earnings (deficit)		(2,448,442	)		(3,029,599	)
TOTAL STOCKHOLDERS' EQUITY		4,402,093			3,635,649
	$	33,418,371		$	29,085,638

	2007			2006
REVENUES
Sales	$	95,699,650		$	97,637,103
Finance, insurance and extended service revenues		2,997,042			3,114,683
TOTAL REVENUES		98,696,692			100,751,786

COST OF SALES		84,109,662			86,340,024
GROSS PROFIT		14,587,030			14,411,762

OPERATING EXPENSES
Selling expenses		7,973,104			8,313,676
General and administrative expenses		4,217,522			4,980,384
		12,190,626			13,294,060
INCOME FROM OPERATIONS		2,396,404			1,117,702

OTHER INCOME AND (EXPENSE)
Other income, net		193,464			20,883
Interest expense, net		(1,272,885	)		(1,413,383	)
Gain (loss) on sale of assets		(19,539	)		21,500
		(1,098,960	)		(1,371,000	)

INCOME (LOSS) BEFORE PROVISION (BENEFITS) FOR TAXES		1,297,444			(253,298	)

PROVISION (BENEFIT) FOR TAXES		531,000			(72,100	)
INCOME (LOSS) BEFORE PREFERRED DIVIDENDS		766,444			(181,198	)

PREFERRED DIVIDENDS		(185,287	)		(273,526	)

NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS	$	581,157		$	(454,724	)

BASIC INCOME (LOSS) PER SHARE		0.05		$	(0.04	)

DILUTED INCOME (LOSS) PER SHARE	$	0.02		$	(0.04	)

WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC		12,225,073			11,090,020
DILUTED		28,904,647			11,090,020

	Preferred Stock						Common Stock				Paid-in		Paid-in capital -			Paid-in capital -			Paid-in capital - Beneficial			Issuance costs preferred			Retained earnings
	Shares			Amount			Shares		Amount		capital		Options			Warrants			conversion			series A			(Deficit)			Total

Balance, December 31, 2005		2,870			2,870,000			10,445,000		10,445		641,277		109,442			2,020,480			1,526,840			(786,762	)		(2,574,875	)		3,816,847

Conversion of Series A preferred stock		(420	)		(420,000	)		938,500		939		954,197		(16,016	)		(295,680	)		(223,440	)		-			-			-

Common shares dividends issued		-			-			408,247		408		273,118		-			-			-			-			(273,526	)		-

Net loss for the year ended December 31, 2006		-			-			-		-		-		-			-			-			-			(181,198	)		(181,198	)

Balance, December 31, 2006		2,450			2,450,000			11,791,747		11,792		1,868,592		93,426			1,724,800			1,303,400			(786,762	)		(3,029,599	)		3,635,649

Common shares dividends issued		-			-			660,904		661		184,626		-			-			-			-			(185,287	)		-

Net income for the year ended December 31, 2007		-			-			-		-		-		-			-			-			-			766,444			766,444

Balance, December 31, 2007		2,450		$	2,450,000			12,452,651	$	12,453	$	2,053,218	$	93,426		$	1,724,800		$	1,303,400		$	(786,762	)	$	(2,448,442	)	$	4,402,093

	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	766,444		$	(181,198	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		441,481			432,558
Provision for doubtful accounts		35,373			48,977
Deferred federal income taxes (credit)		84,800			(145,400	)
(Gain) on sale of fixed assets		(184	)		(21,500	)
Loss on disposal of fixed assets		19,723			-
Decrease in accounts receivable, net		347,238			992,938
Increase in accounts receivable, employees		-			4,775
(Increase) in inventories		(4,358,898	)		(4,492,066	)
Decrease in income taxes receivable		-			119,500
(Increase) decrease in prepaid expenses		(17,938	)		64,124
Increase in customer deposits		638,348			109,195
Increase in floor plan liability		3,862,514			3,726,168
(Decrease) in accounts payable trade		(931,220	)		(383,217	)
Increase (decrease) in accrued expenses		525,363			(160,478	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		1,413,044			114,376

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets		(73,482	)		(542,865	)
Proceeds from sale of fixed assets		7,000			21,500
Decrease in accounts receivable affiliates		-			261,667
(Increase) in deposits		(4,600	)		-
NET CASH (USED IN) INVESTING ACTIVITIES		(71,082	)		(259,698	)

CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowings on note		-			200,000
Payments on long-term debt		(345,759	)		(284,814	)
Payments received from officer loan		(232,949	)		159,365
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(578,708	)		74,551
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		763,254			(70,771	)

CASH AND CASH EQUIVALENTS, beginning of Year		156,530			227,301

CASH AND CASH EQUIVALENTS, end of Year	$	919,784		$	156,530

	2007		2006
OTHER SUPPLEMENTARY CASH FLOW INFORMATION
Debt incurred for acquisition of sales agreement	$	-	$	100,000
Debt incurred for acquisition of vehicles and equipment	$	57,092	$	-
Interest paid	$	1,272,885	$	1,445,662
Income taxes paid	$	10,000	$	-
Preferred stock dividends paid in common stock	$	185,287	$	273,526

Fixtures, and equipment			3-7 years
Vehicles			5 years
Leasehold Improvements			10-39 years

	Gross Carrying
	Amount
Goodwill	$	1,588,950
Licensing Agreement		100,000
TOTAL	$	1,688,950

	Years Ended December
	2007		2006

Net income (loss) attributed to common shares	$	581,157	$	(454,724	)

Weighted-average common shares outstanding (Basic)		12,225,073		11,090,020

Weighted-average common stock equivalents:
Warrants		16,114,000		0
Options		565,574		0

Weighted-average common shares outstanding (diluted)		28,904,647		11,090,020

	2007		2006
A/R-Customers and dealers	$	1,771,686	$	2,129,416
A/R-Manufacturers		787,201		805,279
A/R-Employees		25,994		4,649
Contracts in transit		861,226		889,374
		3,446,107		3,828,717
Allowance for doubtful accounts		25,000		25,000
	$	3,421,107	$	3,803,718

	2007		2006
Parts and accessories	$	2,188,250	$	1,974,482
Vehicles		23,437,783		19,292,653
TOTALS	$	25,626,033	$	21,267,135

	2007			2006
Fixtures and equipment	$	2,132,504		$	2,151,547
Vehicles		619,002			429,195
Leasehold improvements		813,150			572,776
		3,564,656			3,153,518
Less accumulated depreciation		(1,505,658	)		(1,149,244	)
NET FIXED ASSETS	$	1,666,828		$	2,004,274

	2007		2006
Kawasaki Motors Finance Company floor plan agreement provides for borrowings up to $2,300,000. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (ranging from 8.5% to 9.5% at December 31, 2007 and 11.25% to 12.75% at December 31, 2006). Principal payments are due upon the sale of the specific units financed.	$	2,291,608	$	2,187,507

GE Commercial Distribution Finance floor plan agreement for Yamaha units provides for borrowings up to $1,900,000. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (ranging from 7.5% at December 31, 2007 and 6% to 11.25% at December 31, 2006). Principal payments are due upon the sale of the specific units financed.		2,595,894		2,715,618

GE Commercial Distribution finance floor plan agreement for Suzuki units provides for borrowings up to $150,000. The manufacturer at its discretion may increase the borrowings. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (ranging from 7.5% to 15% at December 31, 2007 and 8.25% to 9.25% at December 31, 2006). Principal payments are due upon the sale of the specific units financed.		6,448,146		4,719,465

Polaris Acceptance floor plan agreement provides for borrowings up to $600,000. The manufacturer at its discretion may increase the borrowings. The agreement is collateralized by specific units financed. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (ranging from 12% to 16.5% at December 31, 2007 and 13% to 17.25% at December 31, 2006). Principal payments are due the earlier of date of sale or one year after financing.		413,700		289,338

Fifth Third Bank floor plan agreement provides for borrowings up to $2,500,000. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (7.25% at December 31, 2007 and 8.53% at December 31, 2006, respectively). Principal payments are due upon the sale of the specific units financed.	2,725,631	2,041,303

American Honda Finance floor plan agreement provides for borrowings up to $200,000. The manufacturer at its discretion may increase the borrowings. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan. (9.33% at December 31, 2007 and 9.25% at December 31, 2006, respectively). Principal payments are due upon the sale of the specific units financed.	856,782	1,232,277

GE Commercial Distribution Finance floor plan agreement for Ducati units provides for borrowings up to $800,000. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (ranging from 9.5% to 10.50% at December 31, 2007, and 4.8% to 12.25% at December 31, 2006). Principal payments are due upon the sale of the specific units financed.	798,764	356,021

GE Commercial Distribution Finance floor plan agreement for Yamaha units provides for borrowings up to $2,100,000. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (ranging from 7.5% to 10.5% at December 31, 2007 and 8.25% to 11.25% at December 31, 2006). Principal payments are due upon the sale of the specific units financed.	1,210,118	1,824,710

GE Commercial Distribution Finance floor plan agreement for Suzuki units provides for borrowings up to $150,000. The manufacturer at its discretion may increase the borrowings. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (ranging from 7.5% to 8.5% at December 31, 2007 and 3.6% to 9.25% at December 31, 2006). Principal payments are due upon the sale of the specific units financed.	3,545,557	3,400,375

Fifth Third Bank floor plan agreement provides for borrowing up to $2,500,000. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (7.25% at December 31, 2007 and 8.53% at December 31, 2006). Principal payments are due upon the sale of the specific units financed.		2,062,177		728,883

Kawasaki Motors Finance Company floor plan agreement provides for borrowings up to $1,500,000. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (ranging from 10.5% to 18% at December 31, 2007 and 18% at December 31, 2006). Principal payments are due upon the sale of the specific units financed.		1,494,424		1,358,910

GE Commercial Distribution Finance floor plan agreement for Special Product units provides for borrowings up to $150,000. The manufacturer at its discretion may increase the borrowings. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (10.5% at December 31, 2007). Principal payments are due upon the sale of the specific units financed.		45,015		-0-

GE Commercial Distribution Finance floor plan agreement for CPI units provides for borrowings up to $250,000. Interest is payable monthly and fluctuates with prime and varies based on the type of unit financed and the length of time the unit remains on the floor plan (ranging from 9% to 10.5% at December 31, 2007 and 10.25% at December 31, 2006 ). Principal payments are due upon the sale of the specific units financed.		260,585		31,480
TOTALS	$	24,748,401	$	20,885,887

	2007		2006

A $450,000 note payable with HSK Funding bearing interest at 15% at December 31, 2006.	$	-0-	$	450,000

A $330,000 note payable with HSK Funding bearing interest at 15.5% at December 31, 2007.	$	320,000	$	-0-

Note payable to bank bearing interest at 9.96%, payable in monthly installments of $929, through May 2011, collateralized by vehicle.		32,170		-0-

Note payable to bank bearing interest at 6.95%, payable in monthly installments of $897, through June 2009, collateralized by vehicle.		15,285		-0-

A $250,000 revolving line of credit at a bank bearing interest at a variable rate of prime plus 1% (8.25% and 9.25% at December 31, 2007 and 2006, respectively). The loan is collateralized by substantially all the Company’s assets and the building owned personally by an officer.		249,863		249,863

Note payable to bank bearing interest at prime plus 1% payable in monthly principal installments of $17,360 plus interest, through August 2010. The note is collateralized by substantially all Company’s assets, and shareholder guarantees.		607,680		781,280

Note payable to bank bearing interest at 8.6%, payable in monthly installments of $537, through May 2007, collateralized by vehicle.		-0-		2,522

Note payable to Champion Cycle for the purchase of their Kawasaki license bearing interest at 5%, payable in monthly installments of $10,000 plus interest through June 2007.		-0-		30,000
		1,224,998		1,513,665
Less current maturities		796,510		1,513,665
TOTALS	$	428,488	$	-0-

YEAR ENDING	AMOUNT
2008	$	796,510
2009		222,776
2010		201,181
2011		4,531
2012		-0-
TOTAL	$	1,224,998

Income taxes (credit) consisted of the following:	2007		2006
Federal:
Current	$	492,750	$	(92,700	)
Deferred		38,250		20,600

TOTALS	$	531,000	$	(72,100	)

	2007			2006
Deferred tax assets - current and long-term:
Allowance for doubtful accounts and net operating loss carryforward	$	22,000		$	113,900

Deferred tax liabilities - long-term:
Depreciation		(38,250	)		(20,600	)
TOTALS	$	(16,250	)	$	(93,300	)

	March 31, 2008		December 31, 2007
	Unaudited		Audited
CURRENT ASSETS
Cash and cash equivalents	$	483,351	$	919,784
Accounts receivable, net		3,727,613		3,421,107
Inventories		24,242,500		25,626,033
Deferred tax assets		280,000		22,000
Prepaid expenses		14,078		28,069
TOTAL CURRENT ASSETS		28,747,542		30,016,993

FIXED ASSETS, NET		1,559,015		1,666,828

OTHER ASSETS
Intangibles, net		1,688,950		1,688,950
Deposits		45,600		45,600
TOTAL OTHER ASSETS		1,734,550		1,734,550
TOTAL ASSETS	$	32,041,107	$	33,418,371

	2008			2007
	(Unaudited)			(Unaudited)
REVENUES
Sales	$	18,832,426		$	20,034,116
Finance, insurance and extended service revenues		454,473			871,788
TOTAL REVENUES		19,286,899			20,905,904

COST OF SALES		16,904,499			18,428,636
GROSS PROFIT		2,382,400			2,477,268

OPERATING EXPENSES
Selling expenses		1,871,343			1,790,171
General and administrative expenses		1,077,565			1,002,609
		2,948,908			2,792,780
LOSS FROM OPERATIONS		(566,508	)		(315,512	)

OTHER INCOME AND (EXPENSE)
Other income, net		35,593			4,706
Gain on sale of asset		-			184
Interest expense, net		(266,866	)		(416,611	)
		(231,273	)		(411,721	)

LOSS BEFORE BENEFIT FOR TAXES		(797,781	)		(727,233	)

BENEFIT FOR INCOME TAXES		(258,000	)		(253,500	)

LOSS BEFORE PREFERRED DIVIDENDS		(539,781	)		(473,733	)

PREFERRED DIVIDENDS		89,220			92,703
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS	$	(629,001	)	$	(566,436	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.05	)	$	(0.05	)

WEIGHTED AVERAGE SHARES OUTSTANDING

BASIC AND DILUTED		12,621,504			11,936,889

	Three Months Ended
	March 31,			March 31,
	2008			2007

Net income (loss) attributed to common shares	$	(629,001	)	$	(566,436	)

Weighted-average common shares outstanding (Basic)		12,621,504			11,936,889

Weighted-average common stock equivalents:
Warrants		-			-
Options		-			-
Weighted-average common shares outstanding		12,651,504			11,936,889

	March 31,			December 31,
	2008			2007
Deferred tax assets - current and long term:
Allowance for doubtful account and net operating loss carryforward	$	280,000		$	22,000

Deferred tax liabilities - long term		(426,200	)		(38,250	)
TOTALS	$	(146,200	)	$	(16,250	)