SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                    For the fiscal year ended August 31, 1998
                         Commission File Number 0-22813
                        North Atlantic Acquisition Corp.
                 (Name of Small Business Issuer in Its Charter)

     Delaware                                              13-3853272
------------------------                            ---------------------------
(State of Incorporation)                            (Small Business Issuer
                                                   I.R.S. Employer I.D. Number)
5 East 59th Street, 3rd Floor
New York, New York                                           10022
---------------------------------------                -----------------
(Address of principal executive offices)                   (Zip Code)

                                 (212) 486-4444
                  ---------------------------------------------
                 (Issuer's Telephone Number Including Area Code)

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                 Class A Common Stock, $.01 par value per share
                Redeemable Class A Common Stock Purchase Warrants
                 Class B Common Stock, $.01 par value per share
                   Units of Class A Common Stock and Warrants

Check  whether  the Issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirement for the past 90 days. Yes X No___

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the best of the  registrant's  knowledge,  in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. Yes X No___

Issuer's revenues for the fiscal year ended August 31, 1998 were $411,393.

As of December 1, 1998,  the aggregate  market value of the common stock held by
nonaffiliates of the Registrant was approximately $9,228,375.

As of December 1, 1998, there were 906,000 shares of Class A Common Stock,  $.01
par value per share, and 150,000 shares of Class B Common Stock,  $.01 par value
per share, outstanding.

Transitional Small Business Disclosure Format (check one): Yes___  No   X   

Documents Incorporation by Reference: None.

                                  
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PART I

Item 1.  DESCRIPTION OF BUSINESS

General

         North Atlantic  Acquisition  Corp.  ("NAAC") was organized on August 9,
1995 as a Specialized Merger and Acquisition Allocated Risk Transaction company,
to  acquire  by  purchase,   merger,   combination   or   otherwise   ("Business
Combination") an operating business ("Target Business").

         Since its inception, NAAC has not engaged in any substantive commercial
business  and its sole  activities  have been to evaluate  and select a suitable
Target   Business  and  to  structure,   negotiate  and  consummate  a  Business
Combination  with a Target  Business.  On August 27, 1997,  NAAC  consummated an
initial  public  offering  ("IPO") in which it sold 800,000  Units at $10.00 per
Unit, each Unit consisting of one share of Class A Common Stock,  $.01 par value
("Class A Common Stock"),  and one Class A Common Stock Purchase Warrant ("Class
A Warrant"),  and 150,000 shares of Class B Common Stock, $.01 par value ("Class
B Common  Stock")at  $10.00 per share. As more fully described  below, on August
18, 1998,  NAAC signed an  Agreement  and Plan of Merger and  Reorganization  to
acquire Moto Guzzi Corp., a leading  Italian  manufacturer  of  performance  and
luxury motorcycles and motorcycle parts.

Characteristics  of  a  Specialized   Merger  and  Acquisition   Allocated  Risk
Transaction Company

         A Specialized Merger and Acquisition Allocated Risk Transaction company
has  certain   shareholder   protections  not  ordinarily  found  in  companies.
Immediately  after the  consummation of the first Business  Combination by NAAC,
these special provisions will no longer apply.

Offering Proceeds Held in Escrow Account

         NAAC  consummated the IPO on August 27, 1997 and received net proceeds,
after  commissions  and expenses,  of  approximately  $8,100,000.  Approximately
$8,000,000  of the net  proceeds  was  placed in an escrow  account  with  Chase
Manhattan  Bank,  N.A.  ("Escrow  Account")  until the  earlier  of  NAAC's  (i)
consummation of a Business  Combination or (ii) redemption of the Class A Common
Stock  (other than the Class A Common  Stock  issued  prior to the IPO  "Pre-IPO
Shares").  As of November  30, 1998 there was  approximately  $8,520,995  in the
Escrow  Account.  The remaining net proceeds of the IPO which were not placed in
the Escrow  Account  have been used by NAAC to  identify,  evaluate and select a
suitable  Target  Business,  to structure,  negotiate and  consummate a Business
Combination, and for general, administrative and organizational expenses.

Fair Market Value of Target Business

         NAAC is not  permitted  to  acquire a Target  Business  unless the fair
market  value of such  business  (as  determined  by the NAAC board of directors
based upon  standards  generally  accepted by the financial  community,  such as
earnings and earnings potential,  cash flow and book value) is equal to at least
80% of the net assets of NAAC at the time of such  acquisition.  The  purpose of
this  requirement  is to ensure that a Business  Combination  will  constitute a
significant acquisition. Stockholder Approval of Business Combination

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<PAGE>

Stockholder Approval of Business Combination

         NAAC,  after signing a definitive  agreement for the  acquisition  of a
Target Business,  but prior to the consummation of any Business Combination,  is
required to submit such  transaction  to the holders of the Class A Common Stock
and Class B Common Stock  (together  "Common  Stock") for approval,  even if the
acquisition would not ordinarily require  stockholder  approval under applicable
state  law.  NAAC  will  consummate  a  Business  Combination  only if at  least
two-thirds  in interest of the  outstanding  shares of Common Stock are voted in
favor of the Business Combination and will not consummate a Business Combination
if more than 20% of the  outstanding  shares of Class A Common Stock  (excluding
the Pre-IPO  Shares),  or more than 160,000  shares,  are  submitted to NAAC for
redemption. See below "Redemption Rights."

         The  stockholders  who hold  Pre-IPO  Shares  have agreed to vote their
shares  (approximately  11.7% of the  outstanding  shares  of  Common  Stock) in
accordance  with the vote of the  majority in  interest of all other  holders of
Common Stock on a proposal to approve a Business  Combination.  For this purpose
they have given their proxy to the current officers of NAAC.

Redemption Rights  in Connection with Business Combination

         Holders of Class A Common Stock, other than the stockholders of Pre-IPO
Shares,  have the right to have NAAC  redeem  for cash up to a maximum of 20% of
the Class A Common Stock (up to 160,000 shares),  other than the Pre-IPO shares,
in  connection  with  a  Business  Combination  upon  its  consummation.   If  a
specifically  proposed  Business  Combination is not  consummated,  the right of
redemption terminates as to that transaction.

         The per share  redemption  price will be  determined  by  dividing  the
amount in the Escrow Account (including earned interest) by the number of shares
of  Class  A  Common  Stock  outstanding,  excluding  the  Pre-IPO  Shares.  The
stockholders  of Pre-IPO  Shares do not have  redemption  rights with respect to
those shares of Class A Common Stock.

Escrow of the Pre-IPO Shares

         The Pre-IPO Shares  (approximately 11.7% of the outstanding shares) are
held in escrow with Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP, as escrow
agent,  until the earlier of the consummation of the first Business  Combination
or August 22,  1999.  During such escrow  period,  the  stockholders  of Pre-IPO
Shares  are  unable  to  sell  or  otherwise  transfer  them,  except  (i)  in a
transaction  subsequent to the consummation of a Business  Combination  which is
offered to all NAAC  stockholders  and (ii) to family members or pursuant to the
laws  of  descent.  Accordingly,  the  stockholders  of  Pre-IPO  Shares  cannot
separately negotiate the purchase of any portion of their Pre-IPO Shares as part
of a Business Combination.

Redemption Payment If No Business Combination

         If NAAC does not consummate a Business  Combination by August 22, 1999,
NAAC will  distribute  to the  holders of Class A Common  Stock with  respect to
their shares  (excluding the Pre-IPO Shares),  the amount in the Escrow Account,
including any interest earned thereon. The stockholders of Pre-IPO Shares do not
have the right to participate  in any  redemption  payment with respect to their
Pre-IPO  Shares and their shares of Class A Common Stock will be cancelled.  The
remaining assets of NAAC, if any, will be used to pay NAAC's  liabilities and to
redeem the outstanding  Series A Preferred Stock at its liquidation  value.  The

                                       3
<PAGE>

Class B Common  Stock will not receive any  redemption  payment.  Following  the
Class A Common Stock  redemption and  cancellation,  the  outstanding  shares of
Class B Common  Stock  automatically  will be  exchanged  for two shares of NAAC
Class A Common  Stock.  In this event,  the holders of the Class B Common  Stock
will be the sole shareholders of a public shell corporation with no assets.

Selection of a Target Business and Structuring of a Business Combination

         Management  of NAAC has  substantial  flexibility  in  identifying  and
selecting a prospective Target Business.  However, NAAC's flexibility is limited
to the  extent  that it must  satisfy  the fair  market  value  test and  obtain
stockholder  approval.  In evaluating a prospective Target Business,  management
will consider,  among other factors,  the following:  (i) costs  associated with
effecting the Business Combination;  (ii) equity interest in and opportunity for
control of the Target  Business;  (iii) growth potential of the Target Business;
(iv)  experience  and skill of  management  of and  availability  of  additional
personnel  for the  Target  Business;  (v)  capital  requirements  of the Target
Business;  (vi)  competitive  position  of the Target  Business;  (vii) stage of
development of the Target Business; (viii) degree of current or potential market
acceptance  of the Target  Business,  (ix)  proprietary  features  and degree of
intellectual  property  or other  protection  of the  Target  Business;  (x) the
financial condition of the Target Business;  and (xi) the regulatory environment
in  which  the  Target  Business  operates.  NAAC  will  retain  an  independent
investment banking firm which is a member in good standing of the NASD to assist
the Company in identifying,  evaluating,  structuring and negotiating  potential
Business Combinations. In connection with its evaluation of a prospective Target
Business,  management will conduct a due diligence  review which will encompass,
among  other  things,   meeting  with  incumbent   management,   inspecting  the
facilities,  and reviewing the financial, legal and other information which will
be made available to NAAC.

         The time and costs  required to select and  evaluate a Target  Business
(including  conducting a due diligence  review) and to structure and  consummate
the  Business  Combination   (including   negotiating  relevant  agreements  and
preparing requisite documents for filing pursuant to applicable  securities laws
and state "blue sky" and corporation  laws) will not be  ascertainable  with any
degree of certainty until  consummation of the Business  Combination.  Any costs
incurred in connection with the  identification  and evaluation of a prospective
Target Business with which a Business Combination is not ultimately  consummated
will  result in a loss to NAAC and reduce the  amount of  capital  available  to
otherwise  complete  a  Business  Combination  or for the  resulting  entity  to
utilize.

         NAAC  will use the net  proceeds  derived  from  the  IPO,  and may use
additional equity  securities,  debt securities or bank or other borrowings or a
combination  thereof as  consideration to effect a Business  Combination.  There
currently are no  limitations  on NAAC's  ability to borrow funds for a Business
Combination. However, NAAC's limited resources and lack of operating history may
make it difficult to borrow  funds.  The amount and nature of any  borrowings by
NAAC will depend on numerous  considerations,  including the  Company's  capital
requirements,  potential  lenders'  evaluation of the Company's  ability to meet
debt service on borrowings and the then  prevailing  conditions in the financial
markets, as well as general economic  conditions.  The Company does not have any
arrangements  with  any  bank or  financial  institution  to  secure  additional
financing and there can be no assurance that such  arrangements if required will
be obtainable or otherwise in the best  interests of the Company.  The inability
of the Company to obtain the funds  required to effect or  facilitate a Business
Combination,  or to provide funds for an  additional  infusion of capital into a
Target  Business,  may have material  adverse effects on the Company's  business
prospects, including the ability to effect a Business Combination.

                                       4

<PAGE>

Proposed Business Combination

         On August 18,  1998,  NAAC,  Moto Guzzi Corp.,  a Delaware  corporation
("Guzzi  Corp."),  and, for certain  provisions,  Trident  Rowan Group,  Inc., a
Maryland corporation  ("TRG"),  entered into an Agreement and Plan of Merger and
Reorganization  ("Merger Agreement"),  pursuant to which Guzzi Corp. would merge
with and into NAAC, with NAAC being the surviving corporation  ("Merger").  TRG,
through  its  84%  owned  subsidiary,   O.A.M.  S.p.A.  ("OAM"),  owns  all  the
outstanding  common  stock of  Guzzi  Corp.  Guzzi  Corp.  also has  outstanding
1,500,000 shares of preferred stock and warrants to purchase 1,500,000 shares of
its common stock. The Merger Agreement was amended on December 3, 1998 to change
certain of the terms  relating to the  consideration  to be paid for Guzzi Corp.
and to modify the indemnification provisions.

         The  consummation  of the Merger is subject to the terms and conditions
of the Merger  Agreement  and approval by the holders of the Common Stock of the
Merger  and  Merger  Agreement  at a  stockholders  meeting to be called for the
purpose  ("Stockholders  Meeting").  At the Stockholders Meeting, the holders of
the  Common  Stock  also  will  be  asked  to  approve  certain  changes  to the
certificate of incorporation  of NAAC,  approve stock option plans for employees
and directors, and approve a recapitalization of the Class B Common Stock and to
elect eight  persons to be members of the board of  directors  of NAAC after the
Merger.  Implementation  of  each  of  these  proposals  is  contingent  on  the
consummation of the Merger.

The Merger

         Subject to the terms and conditions of the Merger Agreement,  NAAC will
issue to the current  holders of the common stock and  preferred  stock of Guzzi
Corp.  an  aggregate  of  3,110,058  shares of Class A Common Stock and warrants
("Nominal Warrants") to purchase 592,400 shares of Class A Common Stock ("Merger
Consideration"). Simultaneously with the consummation of the Merger, TRG and OAM
have agreed to  contribute  to the capital of Guzzi Corp.  certain  intercompany
debt between each of those  companies and Guzzi Corp.  aggregating  at September
30, 1998 approximately Lit. 12,919,  plus the interest due thereon,  in exchange
for the issuance of an  aggregate of 871,953  shares of Class A Common Stock and
Nominal Warrants to purchase  166,080 shares of Class A Common Stock.  NAAC will
also offer to the  holders  of the  outstanding  warrants  of Guzzi  Corp.,  the
opportunity  to  exchange  them for an  aggregate  of 217,989  shares of Class A
Common Stock and Nominal  Warrants to purchase  41,520  shares of Class A Common
Stock.  The Merger  Consideration is subject to being increased if NAAC has less
than  $8,150,000  in cash assets at the time of the  Merger,  at the rate of one
share of Class A Common Stock for each $11.00 of shortfall, excluding any amount
used to pay for the redemption of Class A Common Stock.

         The Nominal Warrants are exerciseable at $.01 per share,  between April
1, 2000 and June 30, 2001,  provided that the surviving  corporation  has either
Lit. 7,140 million or Lit. 8,211 million of operating  income in the fiscal year
ended December 31, 1999 or 2000, respectively.

         To  provide  a fund for the  indemnification  of NAAC in the event of a
breach of a representation or warranty in the Merger Agreement, determined after
the  Merger,   200,000   shares  of  Class  A  Common  Stock  issued  as  Merger
Consideration in the Merger will be deposited in escrow with TRG. Claims against
the shares in escrow must aggregate at least  $600,000  before they may be made.
The escrow is for a maximum period ending approximately April 2000, unless there
is an outstanding claim for indemnification.

                                       5
<PAGE>

         The fees and expenses of the  transaction  attributable to NAAC will be
paid  from the  amount  held in the  Escrow  Account.  TRG will pay the fees and
expenses of the transaction attributable to Guzzi Corp.

         The consummation of the Merger is conditioned upon various matters. The
obligations  of NAAC,  Guzzi Corp.  and TRG are  subject to various  conditions,
including (i) the  representations  and warranties of NAAC,  Guzzi Corp. and TRG
are  true and  correct  in all  material  respects  (as  defined  in the  Merger
Agreement) at the consummation of the Merger, (ii) performance of and compliance
with the  covenants,  agreements  and  conditions,  (iii) absence of any pending
claim, action, suit, investigation or governmental proceeding which would render
the Merger unlawful,  and (iv) receipt of all necessary  consents,  approvals or
waivers.  The  obligation  of NAAC to  consummate  the Merger is also subject to
approval  of various  matters by the  stockholders  of NAAC and  approval by the
security holders of Guzzi Corp.

         The Merger  Agreement may be  terminated by (i) mutual  consent of NAAC
and Guzzi Corp.  and TRG,  (ii) by Guzzi Corp. if the cash assets of NAAC at the
time of the Merger are less than  $8,000,000  (after  various  cash  expenses of
NAAC),  (iii) if the Merger is not  consummated  by February 18,  1999,  (iv) if
there is a breach of any of the covenants,  representations  or warranties as of
the consummation of the Merger that have not been waived,  or (v) the failure of
the  stockholders  of NAAC to approve the  transaction  or up to 20% of the NAAC
stockholders  who are  eligible to, and do,  exercise  their right to have their
Class A Common Stock redeemed at the time of the Merger.

Guzzi Corp.

         Guzzi Corp., through its Moto Guzzi S.p.A subsidiary ("Moto Guzzi"), is
a leading  Italian  manufacturer,  marketer and  distributor of performance  and
luxury  motorcycles  and motorcycle  parts,  marketed under the "Moto  Guzzi(R)"
brand name. Guzzi Corp. is a Delaware corporation formed in 1996 to acquire Moto
Guzzi,  its  principal  operating  subsidiary  and  Moto  America,  Inc.  ("Moto
America"),  the exclusive  U.S.  importer and  distributor of "Moto Guzzi" brand
motorcycles and parts.

         Products and Distribution

         Moto Guzzi, over a period of more than 75 years, earned a reputation as
one of the world's elite designers and  manufacturers  of performance and luxury
motorcycles. While Moto Guzzi's models vary in engine displacement from 350cc to
1,100cc, in recent years, Moto Guzzi has focused its product design, development
and sales  efforts on the  heavyweight  segment of the market.  This segment has
experienced rapid growth with global new heavyweight  registrations,  increasing
17% in  1997.  As  part of its  business  strategy,  Moto  Guzzi  will  evaluate
expansion  of  its  product  line  to  include   lower-cost  small  displacement
motorcycles and scooters.  At present,  Moto Guzzi's  primary product  offerings
include the following models:

    o   California EV       Guzzi's classic cruiser with a 1064cc engine and 
                            traditional lines.

    o   Nevada Club         A lower riding cruiser with a 744cc engine and 
                            chrome accents.

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    o   V10 Centauro        A performance touring bike with a powerful 992cc 
                            4-valve air-cooled engine.

    o   1100 Sport Corsa    A sleek  sports bike with modern lines and a 1064cc
                            engine.

    o   Quota               Guzzi's new entrant into the enduro segment.

    o   Police  Bikes       Variations of  Moto Guzzi's models targeted at
                            government agencies, national and local police 
                            forces and highway patrols.

         Moto Guzzi sells its products worldwide through a network of wholly and
partially  owned  importers  and  independent  dealers.  In  Italy,  Moto  Guzzi
maintains a network of over 140 independent distributors. In Germany, Moto Guzzi
owns 25%,  and has an option  to buy a total of 90%,  of MGI GmbH,  which is the
exclusive  importer-distributor  of Moto  Guzzi  motorcycles  and  parts in that
country.  In France,  Moto Guzzi owns 100% of its  importer-distributor.  In the
United States,  Guzzi Corp.'s wholly owned Moto America subsidiary serves as the
exclusive  importer-distributor and maintains a national network of 100 dealers.
Moto Guzzi's sales by region are:

                                         Year Ended December 31,
                                    -------------------------------- 
Geographic Area                     1997         1996          1995
---------------
Italy                                37%          37%           35%
Europe (Other than Italy)            46%          43%           49%
United States                        13%           7%            6%
Elsewhere                             4%          13%           10%

         History and Recent Developments

         Established in 1921, Moto Guzzi is one of the oldest  motorcycle brands
in the world.  Between  1921 and 1966,  Moto Guzzi  operated  as an  independent
privately owned entity. In 1972, Moto Guzzi was acquired by de Tomaso Industries
("de  Tomaso"),  the  predecessor  of  TRG.  Because  management  attention  was
principally focused on de Tomaso's other operating units,  especially the luxury
automobile  manufacturer,  Maserati,  and  limited  investment  was made in Moto
Guzzi's product design and development activities and manufacturing  operations,
sales declined from a high of 46,487 units in 1971 to 3,274 units in 1993.  Moto
Guzzi has experienced  continuous losses for the last eleven years,  including a
loss of Lit. 10,569 million for the fiscal year ended December 31, 1997 and Lit.
8,608 million for the nine months ended September 30, 1998 and has not generated
cash from operations for over three years.

         In  1994,  TRG  retained  Temporary  Integrated  Management  S.p.A.,  a
temporary  management service, to stabilize Moto Guzzi's operations and to begin
the process of  developing  a business  plan to restore  Moto Guzzi to financial
health.  In 1996, Mario  Tozzi-Condivi was hired as President of Moto Guzzi. Mr.
Tozzi-Condivi  had  previously  been an  independent  consultant  to  automotive
distributors  and  dealers in the United  Kingdom,  Italy,  Singapore  and South
Africa for more than ten years and was  Chairman of the Board of  Maserati  U.K.
Ltd.  Since  1994,  and more  recently  during  1997 and  1998,  Moto  Guzzi has
recruited new senior management that includes:  Dino Falciola,  General Manager,
who joined Moto Guzzi in November of 1997; Nick Speyer, Chief Financial Officer,
who  joined  Moto  Guzzi in  November  of 1998;  Gianluca  Lanaro,  Director  of
Marketing,  who joined Moto Guzzi in May 1995;  and Louisa  Brenna,  Director of
Purchasing, who joined Moto Guzzi in January, 1997.

                                       7

<PAGE>

         The new management team has focused its efforts on increasing sales and
the  efficiency  of  Moto  Guzzi's  production  process.   Capital  expenditures
increased  from Lit. 1,801 million in 1995 to Lit. 3,887 million in 1997. In the
nine month period ended September 30, 1998,  capital  expenditures  totaled Lit.
5.6 billion  versus Lit. 2.4 billion  during the  comparable  period in 1997. To
enhance sales  volumes by ensuring that new products meet Moto Guzzi's  quality,
design and technical standards, investment in new product design and development
has recently been increased.  Research and development expenditures rose to Lit.
3,125  million in 1997 from Lit.  602 million in 1995.  In the nine month period
ended September 30, 1998,  investment in research and development  totalled Lit.
3,078  million  versus Lit.  1,393  million for the  comparable  period in 1997.
Selling, general and administrative expense increased from Lit. 7,486 million in
1995 to Lit. 13,824 in 1997,  reflecting  higher staff costs associated with the
recruitment  and  employment  of the new  management  team  as  well  as  higher
marketing and sales expenditures. To fund its operations in 1997 and 1998, Guzzi
Corp.  sold shares of preferred  stock and common stock  purchase  warrants in a
private  placement  which  raised  approximately  $5.2  million and  borrowed or
obtained  capital from Italian  financial  institutions  and from Guzzi  Corp.'s
affiliated  entities,  TRG  and  OAM.  Partly  as  a  result  of  the  increased
investment, unit sales volumes increased from a low of 3,274 in 1993 to 6,052 in
the last four quarters  ended  September 30, 1998,  and Moto Guzzi added two new
models,  the  "Centauro"  and  "Quota,"  to its product  offerings.  During this
period, Moto Guzzi has also experienced improvement in its cost structure,  with
gross margins improving from 13.7% in 1993 to 17.6% during the nine months ended
September 30, 1998.

         Strategy

         Moto Guzzi's strategy is to increase sales volumes and gross profits by
(i) focusing on the breadth,  quality and design of its product offerings,  (ii)
increasing its marketing  activities,  (iii) enhancing its distribution network,
and (iv)  leveraging its brand name. Moto Guzzi believes that its reputation and
rich tradition as a technological  innovator and quality manufacturer provides a
solid  foundation.  Moto Guzzi has built a loyal  customer base over the past 77
years through the outstanding performance and reliability of its motorcycles, as
well as its strong distribution  network.  The current customer base ranges from
professional  motorcycle enthusiasts to government agencies,  police departments
and highway  patrols around the world.  While public  administration  sales have
traditionally  been a stable  source of revenue for Moto Guzzi,  its  management
believes  that there are  unexploited  growth  opportunities  in this market and
plans to refocus its sales and marketing efforts in this product category.

         Guzzi Corp.  intends to build on its existing  product family platforms
and to develop  new  platforms  which will be the basis for the  Company's  next
generation of motorcycles.  New power trains, which represent a significant part
of planned  development  activities,  typically  require at least  three  years'
development  time. In the interim,  new motorcycles based on the current product
platforms  will be  periodically  introduced.  The  focus of these  intermediate
offerings  will  be  significant   improvements  in  quality,   performance  and
refinement.

         The U.S. market represents the largest  expansion  opportunity for Moto
Guzzi. Between 1996 and 1997, U.S. registrations of new heavyweight  motorcycles
increased by 14.8% to 190,200 units. Moto Guzzi plans to implement an aggressive
marketing  campaign  targeted at U.S.  consumers that is designed to build brand
value and name  recognition and to emphasize the technical and design  strengths
of Moto Guzzi's motorcycles.

         In the United  States,  Moto Guzzi also plans to expand and enhance its
distribution  network.  In  addition to  increasing  the size and quality of its
dealer network, Moto Guzzi also plans to introduce new sales incentives programs
for dealers and a floor plan financing  program.  Other  innovations that either
have been or are expected to be introduced in the U.S. include customer purchase
financing and an extended, three year warranty program.

                                       8
<PAGE>

         Finally,  Moto  Guzzi  plans to  leverage  the  "Moto  Guzzi"  brand by
expanding  into  new  products,   markets  and  services  that  also  offer  the
opportunity to enhance its brand awareness and brand image. Moto Guzzi currently
sells a limited line of non-motorcycle  merchandise.  In the future,  Moto Guzzi
plans to introduce a range of branded accessories such as hats, jackets,  shirts
and luggage. Moto Guzzi also plans to exploit opportunities to license the "Moto
Guzzi" brand name to manufacturers and suppliers of other products and services.

         If Guzzi Corp.  were to proceed on all of the  projects it is currently
evaluating,  it estimates that  approximately Lit. 50 billion of development and
capital  expenditure  would be required over the next five years.  Additionally,
Moto Guzzi will have to make up to Lit. 20 billion of capital  investments  over
the next few years to refurbish  its plant to make it more  competitive  and for
investments in information technology and systems. As cash flows from operations
are not  anticipated  to be  sufficient to entirely  finance such  expenditures,
Guzzi Corp.'s actual product development  programs will be, in part,  determined
by its ability to obtain  further  financing.  It is  anticipated  that,  if the
Merger is consummated,  the immediate capital requirements would be satisfied by
the funds available in the Escrow Account and certain other funds. The immediate
capital  requirements  include  repayment of Lit 6 billion in interim  financing
incurred  by  Moto  Guzzi  in  October  1998,  repayment  of up to  $800,000  in
intercompany  debt to TRG and OAM and  payment of supplier  arrearages  which at
October 31, 1998 amounted to Lit 5.5 billion.

Item 2.  DESCRIPTION OF PROPERTIES

         The Company's  executive  office is located at 5 East 59th Street,  3rd
Floor, New York, New York 10022 and its telephone number is (212) 486-4444.

         Pursuant to an oral agreement, Mitchell & Co., a corporation controlled
by David J. Mitchell, a stockholder of the Company and, currently, the Company's
Chairman and Chief Executive Officer,  has agreed that it will make office space
and services available to the Company, as may be required until the consummation
of a Business Combination. NAAC pays $2,500 per month for these services.

         The Company  believes  that this facility is adequate to meet its needs
in the foreseeable future pending the consummation of a Business Combination.

ITEM 3.  LEGAL PROCEEDINGS

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of the Company's  security  holders
through the  solicitation  of proxies or otherwise  during the fiscal year ended
August 31, 1998.

                                       9

<PAGE>

                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

         The NAAC Class A Common Stock,  Class A Warrants,  Class B Common Stock
and  Units are  traded  in the  over-the-counter  market  and  quoted on the OTC
Bulletin Board under the symbols NACQA, NACQW, NACQB, NACQU, respectively.

         The  following  table  sets  forth  the  range of high and low  closing
trading  prices for the Class A Common Stock,  Class A Warrants,  Class B Common
Stock and Units for the period  since  August 22,  1997 the date of the IPO,  as
reported by the OTC Bulletin  Board.  The OTC Bulletin Board is an  inter-dealer
automated  quotation  system  sponsored  and  operated  by the NASD  for  equity
securities  not  included in the Nasdaq  System.  Such  over-the-counter  market
quotations reflect  inter-dealer  prices,  without retail mark-up,  mark-down or
commission and may not necessarily reflect actual transactions.

<TABLE>
<CAPTION>
                                                                     Class A           Class B          Class A
                                                    Units          Common Stock     Common Stock       Warrants
                                                    -----          ------------     ------------       --------
                                                High      Low     High      Low     High     Low     High     Low
                                                ----     -----    ----     -----    ----     ----    ----     -----
<S>                                              <C>       <C>                      <C>      <C>      <C>      <C>             
Year Ended August 31, 1997:                      10.00     9.25      N/A      N/A   10.00    10.00     N/A      N/A
Fourth Quarter (from August 22, 1997)
Year Ended August 31, 1998:                     10.125     9.00    8.375    8.375   10.50     9.25     .50      .50
         First Quarter
         Second Quarter                          10.00    8.875    8.500    8.375   10.00     9.25     .50      .50
         Third Quarter                            9.25     9.00     9.00     8.50    9.75     9.25     .50      .50
         Fourth Quarter                          9.313     9.13    9.375    8.625    9.75    9.375     .50      .50
Year Ending August 31, 1999:                      9.75    9.313    9.375    8.625    9.75    9.375     .75      .50
         First Quarter
</TABLE>

Holders

         As of December 8, 1998, there were twenty-one  holders of record of the
Class A Common  Stock and one  holder  of  record  of the Class B Common  Stock.
Because  Units are separable  into Class A Common Stock and Class A Warrants,  a
transfer  of Units is recorded  by NAAC's  transfer  agent only as a transfer of
Class A Common Stock and Class A Warrants.  Consequently,  the number of holders
of record of Units is not available. Since the majority of the shares of Class A
Common Stock and Class B Common Stock is held in street name, NAAC believes that
there is a substantial number of beneficial holders of the shares.

Dividends

         The Company has paid no  dividends  on its shares of Common Stock since
its  organization  on August 9,  1995.  The  Company  does not expect to pay any
dividends prior to the  consummation  of a Business  Combination and anticipates
that for the  foreseeable  future any  earnings  will be retained for use in its
business and, accordingly, does not anticipate the payment of cash dividends.

                                       10
<PAGE>

Sales of Unregistered Securities

        During the  fiscal  year ended  August 31,  1998,  NAAC has not sold any
unregistered securities.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

Forward Looking Statements

        When used in this Form  10-KSB  and in future  filings  by NAAC with the
Securities and Exchange  Commission,  the words or phrases "will likely result,"
"management   expects,"  or  "the  company   expects,"   "will   continue,"  "is
anticipated,"  "estimated"  or similar  expressions  are  intended  to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance
on any such forward-looking  statements, each of which speak only as of the date
made.  Such statements are subject to certain risks and  uncertainties,  some of
which are described below,  that could cause actual results to differ materially
from  historical  earnings and those  presently  anticipated  or projected.  The
Company has no obligation to publicly  release the result of any revisions which
may be made to any  forward-looking  statements to reflect anticipated events or
circumstances occurring after the date of such statements.

Fiscal Year 1998

        NAAC is a Specialized Merger and Acquisition  Allocated Risk Transaction
company,  the  objective of which is to acquire a Target  Business in a Business
Combination.  Since its  inception in 1995,  NAAC has engaged in  organizational
activities,  completing the IPO and identifying and evaluating Target Businesses
with which it might  effect a Business  Combination.  In March 1998,  NAAC began
evaluating  and  negotiating  a  Business  Combination  with Guzzi  Corp.  which
resulted in the signing of the Merger  Agreement on August 18, 1998,  as amended
December 3, 1998.  Since August 18, 1998, NAAC has been engaged in preparing the
required  documentation  for the  Stockholders  Meeting  at which the Merger and
Merger  Agreement and certain other  proposals will be submitted for stockholder
vote and  approval.  Except for its  efforts to identify a Target  Business  and
effect a Business  Combination,  NAAC has not engaged in any business activities
during the fiscal year ended August 31, 1998.

        On August 27, 1997, NAAC  consummated the IPO and raised net proceeds of
approximately   $8,100,000,   after  payment  of  underwriting  discounts,   the
underwriter's  non-accountable expense allowance, and other offering costs. NAAC
deposited  approximately  $8,000,000  of the  offering  proceeds  in the  Escrow
Account.  At November  30,  1998,  the Escrow  Account  amounted to  $8,520,995.
Cumulative  interest  earned  on the  Escrow  Account  and  other  funds  was an
aggregate of  approximately  $411,000 as of August 31, 1998.  All income through
August 31, 1998 has been from interest.

                                       11
<PAGE>

        During  fiscal  year  1998,  substantially  all of the  working  capital
requirements   and  the  expenses  of  NAAC  have  been   attributable   to  the
identification,  evaluation and selection of a suitable  Target  Business and to
structure and  consummate the  acquisition of Guzzi Corp.  NAAC has incurred and
accrued  costs  of  approximately  $268,000  in  connection  with  its  business
activities through August 31, 1998. Of this amount,  $203,000 is attributable to
general and  administrative  expenses and debt costs and $65,000 is attributable
to income  taxes due on the interest  earned on the funds in the Escrow  Account
and working capital funds. NAAC is incurring additional costs in connection with
the proposed  Merger.  NAAC will satisfy its working capital needs from existing
cash balances,  and if a Business Combination is consummated,  from the funds in
the Escrow  Account and payment of the exercise price of $300,000 of the Class B
Options held by Messrs. Mitchell and McMillen, officers of NAAC, which they have
agreed to exercise upon  consummation of the Merger. If the Merger, or any other
Business Combination is not consummated,  and NAAC effects the redemption of the
Class A Common  Stock  (other  than the Pre-IPO  Shares)  using the funds in the
Escrow  Account,  the  assets of NAAC will not be  sufficient  to pay all of its
accounts payable,  taxes due and accrued expenses. The report of the independent
certified public accountants of NAAC states that there are several factors which
raise substantial doubt about NAAC's ability to continue as a going concern.

        NAAC anticipates that upon  consummation of the Merger with Guzzi Corp.,
it will have  available  for working  capital from the Escrow  Account and other
resources of about  $8,000,000.  The immediate  capital needs of the post-Merger
company include the repayment of approximately Lit 6 billion (approximately $3.6
million) in interim financing incurred by Moto Guzzi in October 1998,  repayment
of up to  $800,000  in  intercompany  debt  to  TRG  and  OAM,  and  payment  of
substantial supplier  arrearages.  In addition to the immediate capital needs of
Guzzi  Corp.,  the  longer-term  capital  requirements  of  Moto  Guzzi  include
approximately Lit 70 billion (approximately $42 million) of capital improvements
to existing  plant and  machinery,  purchasing  of new  machinery  and  business
systems,  design and research  expenses and working capital to support  expanded
operations.  It is expected that this capital will come from bank  financing and
the additional sale of securities. There is no assurance that any financing will
be available.

        If NAAC does not  consummate a Business  Combination by August 22, 1999,
the Class A Common  Stock  (other than the Pre-IPO  Shares)  will be redeemed by
distribution of the Escrow Account proceeds,  inclusive of any interest thereon,
to the holders of those shares of Class A Common Stock. The per-share redemption
price is equal to the amount in the Escrow  Account,  including  interest earned
thereon,  divided  by the  number  of  shares  of Class A Common  Stock  held by
stockholders  entitled to share in the Escrow Account. The Pre-IPO Shares do not
participate  in the funds held in the Escrow Account and those shares of Class A
Common Stock will be cancelled at the time of redemption. The assets of NAAC, if
any, other than the escrowed assets,  will be used to pay NAAC's liabilities and
to redeem the  outstanding  Series A Preferred  Stock of NAAC at its liquidation
value.  Upon redemption and cancellation of the Class A Common Stock, each share
of Class B Common Stock will  automatically be exchanged for two shares of Class
A Common  Stock,  and the  holders of this stock will be the  stockholders  of a
public shell corporation.

        Holders of Class A Common Stock  (excluding the Pre-IPO Shares) have the
right to redeem their shares in connection with a Business Combination, provided
that if more than 20% of the shares are to be redeemed, the Business Combination
will not be consummated  and the right of redemption  will terminate  until such
time as another acquisition is submitted for approval of the NAAC stockholders.

                                       12

<PAGE>

Year 2000

        NAAC has  evaluated  the  potential  impact  of the  situation  commonly
referred to as the "Year 2000 Issue"  ("Y2K").  Y2K  concerns  the  inability of
information systems, primarily computer software programs, to properly recognize
and process  date  sensitive  information  relating to the year 2000 and beyond.
Many of the  world's  computer  systems  currently  record  years in a two-digit
format.  Such computer systems will be unable to property interpret dates beyond
the year  1999,  which  could  lead to  business  disruptions  in the  U.S.  and
internationally.  The potential costs and uncertainties associated with Y2K will
depend on a number of factors,  including  software,  hardware and the nature of
the industry in which a company operates.

        To ensure that the Company's  computer  systems are Y2K compliant,  NAAC
has reviewed each of its systems and programs over the past year.  NAAC does not
have any  internal  systems or  operations  that may be  affected  by Y2K.  NAAC
believes  its only  exposure to the Y2K issue is in  connection  with the Escrow
Account.  NAAC believes that the Chase Manhattan Bank N.A.  systems  relating to
the Escrow Account are Y2K compliant or will be Y2K compliant  prior to the year
2000.  NAAC does not believe it will incur any expenses  associated with the Y2K
compliance.

ITEM 7. FINANCIAL STATEMENTS

        The  financial statements listed in Item 13 are included in this report
beginning on page F-1. 

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
        FINANCIAL DISCLOSURE

        None.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT.

        The current directors and officers of the Company are as follows:

Name                              Age           Position
----------------                  -----         ---------

David J. Mitchell                  37           Chairman of the Board,
                                                Chief Executive Officer, 
                                                Director

C. Thomas McMillen                 45           Secretary, Treasurer, Director

A.J. Nassar                        41           Director


David J. Mitchell has been Chairman of the Board,  Chief Executive Officer and a
director  of the Company  since  October  1996.  He also has been  President  of
Mitchell & Company,  Ltd., a New York-based merchant banking firm, since January
1991 when he founded it. Mr.  Mitchell is a director  of  Kellstrom  Industries,
Inc. and Bogen Communications  International,  Inc., both of which are traded on
The Nasdaq National Market, as well as several private companies.

        C. Thomas  McMillen  has been  Chairman and Chief  Executive  Officer of
Complete Wellness Centers, Inc., a physician practice management company founded
by him, since November 1994. He has been a director,  Treasurer and Secretary of
the Company since October 1996.  Mr.  McMillen has been  president of McMillen &
Company,  Inc., a health care consulting  firm, since January 1993. He served as
Chief  Administrative  Officer of  CliniCorp,  Inc.  from November 1993 to March
1994. Until December 1994, Mr. McMillen was a director of CliniCorp, which filed
for  bankruptcy in June 1996. Mr.  McMillen  serves on the Board of Directors of
Commodore  Applied  Technologies,  Inc.,  Kellstrom,  Inc.,  CHG,  Inc.  and  UC
Television Network Corp.

                                       13
<PAGE>

        A.J. Nassar has served as President,  Chief Executive Officer, Treasurer
and a Director of The Maxim Group,  Inc.  since  December 1990. The Maxim Group,
Inc.,  a New York Stock  Exchange  listed  company,  is a  franchisor  for floor
covering  outlets.  From 1986 to 1990,  Mr. Nassar served as Vice  President and
Chief Operating Officer of Kenny Carpet and Linoleum,  Inc., a multistore retail
carpet  chain in western New York.  He was  previously  employed by Trend Carpet
Mills and Queen Carpet Mills, both of which are carpet  manufacturers,  where he
was responsible for cultivating new markets in the  northeastern  United States.
In addition, Mr. Nassar has served as a managing partner of K.K.N. Investment, a
privately held real estate development and holding company.

Compliance with Section 16(a) of the Exchange Act 

        Section  16(a) of the  Exchange  Act requires  officers,  directors  and
persons  who  beneficially  own more  than 10% of a  registered  class of equity
securities of NAAC ("10% stockholders") to file reports of ownership and changes
in ownership with the Securities and Exchange  Commission.  Officers,  directors
and 10%  stockholders  also are  required  to  furnish  NAAC with  copies of all
Section 16(a) forms they file.  Based solely on its review of the copies of such
forms  furnished to it, and written  representations  that no other reports were
required,  NAAC believes that during the fiscal year ended August 31, 1998, each
of its officers,  directors and 10% stockholders complied with the Section 16(a)
reporting requirements.

ITEM 10.          EXECUTIVE COMPENSATION

Compensation

        No executive  officer of NAAC has received from NAAC since its inception
any cash  compensation  for services  rendered.  David J. Mitchell and C. Thomas
McMillen,  in consideration for their services as directors and officers of NAAC
were each granted  options to purchase an aggregate of 50,000  units,  each unit
consisting  of one share of Class A Common Stock and one Class A Warrant,  at an
exercise  price of $12.50 per unit,  until the third  anniversary  of a Business
Combination  and options to purchase an  aggregate  of 15,000  shares of Class B
Common Stock at $10.00 per share until the  consummation  of the first  Business
Combination of NAAC,  which each has agreed to exercise at the  consummation  of
the Merger.  Directors  receive  reimbursement  for any  out-of-pocket  expenses
incurred in connection with NAAC's business. The Company does not pay directors'
fees.

NAAC Board Meetings and Committees

        During  the  fiscal  year  ended  August  31,  1998,  the NAAC  board of
directors  met on one  occasion.  All the members of the NAAC board of directors
attended the meeting. The NAAC board of directors has established no committees.
The  NAAC  board  of  directors  has no  compensation  policies  required  to be
disclosed as none of its executive officers receives any compensation. Directors
serve for a term of one year after  election or until their earlier  resignation
or their successor is elected or appointed and qualified.

                                       14
<PAGE>

Stock Option Plans

        On July 23, 1998,  the NAAC board of  directors  approved the 1998 Stock
Option  Plan  ("1998  Plan")  and  the  Outside  Directors'  Stock  Option  Plan
("Directors Plan"). The 1998 Plan provides for stock options for up to 1,250,000
shares of Class A Common  Stock  which may be  granted to  employees,  officers,
directors and  consultants  of NAAC and its  subsidiaries.  The  Directors  Plan
provides  for stock  options for up to 400,000  shares of Class A Common  Stock.
Stock  options under the  Directors  Plan will be granted on an automatic  basis
each January 2, beginning January 2, 2000, to each  non-employee  director as of
that date, at the rate of 12,500 shares of Class A Common Stock,  exercisable at
the then market price of a share of Class A Common Stock.

        Both  plans must be  approved  by the  holders  of the Common  Stock and
implementation  of both plans is contingent on  consummation  of the Merger.  No
stock  options have been granted  under either plan.  However,  if the Merger is
consummated,  an  aggregate  of 625,000  shares of Class A Common  Stock will be
subject to options  under the 1998 Plan to be granted to  executive  officers of
the post-Merger company and its subsidiaries.

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth  information as of December 1, 1998 based
on  information  obtained  from the persons  named  below.  With  respect to the
beneficial  ownership of shares of the Company's Common Stock by (i) each person
known to be the owner of more than 5% of the outstanding shares of Common Stock,
(ii) each  director and (iii) all  executive  officers and directors as a group.
Name Class A Class B Common Percent

                                                                 Percent
                                                                Of Class A
                                                                 Common
                                                                 Stock
                               Class A          Class B       Beneficially
Name                         Common Stock     Common Stock       Owned 
-----------                 -------------     ------------    -------------
David J. Mitchell(1)          172,500(2)        15,000(3)        16.2%  
C. Thomas McMillen(1)         172,500(2)        15,000(3)        16.2%  
A.J. Nassar(1)                115,000(4)           -0-            9.5%  
Barry Rubenstein              218,000(5)        32,000           21.1%  
The Maxim Group, Inc.         100,000              -0-            8.3%
All NAAC officers and         460,000(6)        30,000(6)        30.1%  
  directors as a group     
  (3 persons)

_______________________________
*       Beneficial  ownership is determined in accordance  with the rules of the
        Securities and Exchange Commission ("Commission") and generally includes
        voting or investment power with respect to securities.  Shares of common
        stock  issuable  upon the  exercise  of  options or  warrants  currently
        exercisable,  or exercisable  or convertible  within 60 days, are deemed
        outstanding for computing the percentage ownership of the person holding
        such options or warrants but are not deemed  outstanding  for  computing
        the percentage ownership of any other person.

                                       15
<PAGE>

(1)  The address of each of Messrs.  Mitchell  and  McMillen  is c/o  Mitchell &
     Company, 3rd Floor 5 East 59th Street, New York New York 10022. The address
     of Mr. Nassar is c/o The Maxim Group,  Inc., 210 Townpark Drive,  Kennesaw,
     Georgia 30144.

(2)  Includes  50,000  shares of Class A Common  Stock and the 50,000  shares of
     Class A Common Stock underlying a like number of Class A Warrants  issuable
     upon exercise of the Class A Options.  Also includes 60,000 shares of Class
     A Common Stock issuable upon (i) conversion of the Class B Common Stock and
     (ii) exercise of the Class A Warrants,  both of which  underlie the Class B
     Common Stock subject to the Class B Options.

(3)  Represents  the Class B Common Stock  issuable upon exercise of the Class B
     Option.

(4)  Includes  100,000  shares of Class A Common Stock owned by The Maxim Group,
     Inc. of which Mr. Nassar is the President and Chief Executive Officer and a
     Director.

(5)  Includes  128,000  shares  of  Class  A  Common  Stock  issuable  upon  (i)
     conversion  of the Class B Common  Stock and (ii)  exercise  of the Class A
     Warrants, both of which underlie the Class B Common Stock.

(6)  Includes  the Class A Common  Stock  and Class B Common  Stock set forth in
     Notes (2) and (3) above.

ITEM 12.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        NAAC pays $2,500 per month to Mitchell & Company,  Ltd. for office space
and office services.  David J. Mitchell, a director,  and currently the Chairman
of the Board, and Chief Executive Officer of NAAC,  controls Mitchell & Company,
Ltd.  NAAC  management  believes that this  arrangement  is on terms at least as
favorable as would be available from an unaffiliated third party. This agreement
will terminate upon consummation of the Merger.

        Mr. David  Mitchell and Mr. Thomas  McMillen,  directors of the Company,
have each received  options to purchase up to 15,000 shares,  or up to 30,000 in
the  aggregate,  of the  Company's  Class B Stock at an exercise  price of up to
$300,000.  The options will expire, if not sooner exercised upon consummation of
the first Business  Combination of NAAC.  Each of Messrs.  Mitchell and McMillen
has agreed to exercise these options in connection with the proposed Merger.

        Mr. Mitchell and the other directors of the Company may be deemed to be
"promoters" of the Company.

ITEM 13.  EXHIBITS, LIST AND REPORTS ON FORM 8-K

(a)  Exhibits

2.1  Agreement and Plan of  Reorganization,  dated August 18, 1995 (Exhibit 2.1)
     (1)

2.2  First Amendment to Agreement and Plan of Reorganization,  dated December 3,
     1998 (Exhibit 2.2)(1)

3.1  Amended  and  Restated  Certificate  of  Incorporation  of  the  Registrant
     (Exhibit 3.1)(2) 

3.2 By-laws of the Registrant (Exhibit 3.2)(2)

4.1  Warrant Agency Agreement dated May 28, 1996 between American Stock Transfer
     & Company and the Registrant (Exhibit 4.2)(2)

  

<PAGE>

16   4.2 Form of  Representative's  Warrant  Agreement  of  Registrant  (Exhibit
     4.5)(2)

4.3  Form of Class A Common Stock Certificate of Registrant (Exhibit 4.1)(2)

4.4  Form of Class B Stock Certificate of the Registrant (Exhibit 4.4)(2)

4.5  Form of Class A Common Stock Purchase Warrant Certificate of the Registrant
     (Exhibit 4.3)(2)

4.6  Form of Warrant  (Nominal  Warrant)  to  Purchase  Shares of Class A Common
     Stock (Exhibit 4.6)(1)

10.1 Underwriting Agreement (Exhibit 1.1)(2)

10.2 Form of Escrow Agreement for proceeds from sale of Units (Exhibit 10.1)(2)

10.3 Amended and Restated License  Agreement,  dated May 9, 1997, between Bright
     Capital, Ltd. and the Company (Exhibit 10.3)(2)

10.4 Management Unit Purchase Option Plan (Exhibit 10.4)(1) 10.5-- Form of Class
     B Stock Option Agreement (Exhibit 10.5)(2)

10.6 Form of Registration Rights Agreement, undated (Exhibit 10.6)(1)

10.7 Form of Escrow Agreement for outstanding Common Stock (Exhibit 10.2)(2)

10.8 Form of Subscription  Agreement,  dated August 29, 1995 between the Company
     and Investors (Exhibit 10.8)(1)

10.9 Form of Escrow  Agreement  for Class A Common  Stock to be dated the Merger
     Effective Time (Exhibit 10.9)(1)

27.1* Financial Data Schedule



___________________________________ 
*    Filed herewith.

(1)  Filed as an Exhibit to the Registrant's  Registration Statement on Form S-4
     (No. 333-65267).

                                       17
<PAGE>

(2)  Filed as an Exhibit to the Registrant's Registration Statement on Form SB-2
     (No. 33-80647) declared effective August 22, 1997.

(b)  Reports on Form 8-K

     On August 18, 1998, the  Registrant  signed an Agreement and Plan of Merger
     and  Reorganization  which was  reported  under Item 5 on Form 8-K filed on
     August 25, 1998.

                                       18

<PAGE>



                        NORTH ATLANTIC ACQUISITION CORP.
                      (FORMERLY ORION ACQUISITION CORP. I)
                    (A CORPORATION IN THE DEVELOPMENT STAGE)
                              FINANCIAL STATEMENTS
                      YEARS ENDED AUGUST 31, 1998 AND 1997







<PAGE>



                        NORTH ATLANTIC ACQUISITION CORP.
                      (FORMERLY ORION ACQUISITION CORP. I)
                    (A CORPORATION IN THE DEVELOPMENT STAGE)
                                    CONTENTS


                                                                        PAGE

Report of independent certified public accountants.......................F-3

Financial statements:

   Balance sheet.........................................................F-4

   Statements of operations..............................................F-5

   Statements of stockholders' equity....................................F-6

   Statements of cash flows..............................................F-7

   Notes to financial statements...................................F-9 - F-17




<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders of North Atlantic Acquisition Corp.
New York, New York

We have audited the  accompanying  balance sheet of North  Atlantic  Acquisition
Corp.  (formerly  Orion  Acquisition  Corp. I) (a corporation in the development
stage)  as of  August  31,  1998,  and the  related  statements  of  operations,
stockholders'  equity,  and cash flows for the years  ended  August 31, 1998 and
1997,  and the period  September 1, 1995 (date of inception) to August 31, 1998.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of North  Atlantic  Acquisition
Corp.  as of August 31,  1998,  and the results of its  operations  and its cash
flows for the years ended August 31, 1998 and 1997, and the period  September 1,
1995 (date of  inception)  to August 31,  1998,  in  conformity  with  generally
accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going  concern.  As discussed in Notes 1 and 2 to the
financial  statements,  the Company is unable to use escrow funds to pay general
and  administrative  expenses  and merger  costs.  Currently,  the  Company  has
insufficient   funds  to  pay  its   liabilities  and  its  future  general  and
administrative  expenses and merger  costs,  nor has the Company  completed  its
pending  merger (see Note 3). These  factors raise  substantial  doubt about the
Company's  ability to continue as a going concern.  The financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

                                BDO SEIDMAN, LLP

New York, New York
October 12, 1998



                                      F-3


<PAGE>



                        NORTH ATLANTIC ACQUISITION CORP.
                      (FORMERLY ORION ACQUISITION CORP. I)
                    (A CORPORATION IN THE DEVELOPMENT STAGE)
                                  BALANCE SHEET


                                     ASSETS

                                                                  August 31,
                                                                      1998 
                                                                  ---------
Current:
     Cash                                                        $    1,079
     Cash held in escrow                                                324
     Investment in United States Government 
      Treasury securities held in escrow (Notes 2 and 5)          8,408,801
     Deferred merger costs                                          105,000
                                                                 ----------
                                                                 $8,515,204
                                                                 ==========

                                   LIABILITIES

Liabilities:
     Accrued expenses                                            $  174,496
                                                                 ----------
         Total liabilities                                          174,496
                                                                 ----------
Commitments (Note 6)
Common Stock subject to possible redemption, 160,000 
  shares at redemption value (Note 2)                             1,681,825
Stockholders' equity (Notes 1, 2, 4 and 8):
     Convertible preferred stock, $.01 par value--shares 
         authorized 1,000,000, outstanding 94;
         liquidation value--$9,400                                        1
     Subscription receivable                                          (100)
     Class A common Stock, $.01 par value--shares 
         authorized 10,000,000; outstanding 906,000                  9,060
     Class B common stock, $.01 par value--shares 
         authorized 250,000; issued and outstanding 150,000          1,500
     Additional paid-in capital                                  6,586,948
     Retained earnings during the development stage                 61,474
                                                                ---------- 
         Total stockholders' equity                             $8,515,204
                                                                ========== 









                 See accompanying notes to financial statements.


                                      F-4
<PAGE>


                        NORTH ATLANTIC ACQUISITION CORP.
                      (FORMERLY ORION ACQUISITION CORP. I)
                    (A CORPORATION IN THE DEVELOPMENT STAGE)
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                    Year Ended August 31,          Period from
                                                                    ---------------------       September 1, 1995
                                                                                                 (inception) to
                                                                      1998          1997         August 31, 1998
                                                                      ----          ----         ----------------
<S>                                                                  <C>            <C>              <C>     
Interest income                                                      $ 411,393      $   --           $411,393

General and administrative expenses and debt costs                     133,089       38,920           203,094

Income taxes                                                            65,000          --             65,000
                                                                     ---------      -------          --------
Net income (loss)                                                   $  213,304     $(38,920)         $143,299
                                                                    ==========     =========         ========
Net income (loss) per common share--basic and diluted               $      .20     $   (.33)
                                                                    ==========     =========
Weighted average common shares outstanding                           1,056,000      119,014
                                                                    ==========     =========



















             See accompanying  notes to financial statements.

                                      F-5

<PAGE>


                        NORTH ATLANTIC ACQUISITION CORP.
                      (FORMERLY ORION ACQUISITION CORP. I)
                    (A CORPORATION IN THE DEVELOPMENT STAGE)
                       STATEMENTS OF STOCKHOLDERS' EQUITY


                                                                                                         Retained
                                                    Class A           Class B                            Earnings
                  Preferred Stock                 Common Stock       Common Stock         Additional     During the     Stock-   
                                   Subscription                                             Paid-In      Development    holders'
                  Shares   Amount   Receivable   Shares   Amount    Shares     Amount       Capital         Stage       Equity
                  ------   ------  ------------  ------   ------    ------    -------     ----------     -----------   --------
<S>                <C>    <C>          <C>       <C>        <C>      <C>       <C>         <C>            <C>          <C>     
Issuance of 
 founders' shares   --       $--           $--    86,000     $860         --       $--      $7,740           $--       $ 8,600

Sale of common      --        --            --    20,000      200         --        --      44,800            --        45,000
 stock

Subscription         94         1       (9,400)        --       --        --        --       9,399            --            --
 receivables

Net loss             --        --            --                           --        --          --       (31,085)      (31,085)
                  ------   ------  ------------  --------  -------   --------  --------  ----------       --------   --------
                                                                          
Balance, August      94         1       (9,400)   106,000    1,060         --        --      61,939      (31,085)       22,515
31, 1996

Net loss             --        --            --        --       --         --        --          --      (38,920)      (38,920)
         
Sale of common       --        --            --   800,000    8,000    150,000     1,500   8,125,009            --    8,134,509
 stock, net
                   
Reclassification     --        --            --        --       --         --        --  (1,600,000)           --   (1,600,000)
 to redeemable
 common stock
                  ------   ------  ------------  --------  -------   --------  --------  ----------       --------   ---------

Balance, August      94         1       (9,400)   906,000    9,060    150,000     1,500   6,586,948      (70,005)    6,518,104
 31, 1997

Subscription         --        --         9,300        --       --         --        --          --            --        9,300
 paid

Net income           --        --            --        --       --         --        --          --       213,304      213,304

Accretion to         --        --            --        --       --         --        --          --      (81,825)      (81,825)
 redemption
 value of common
 stock
                  ------   ------  ------------  --------  -------   --------  --------  ----------       --------   ---------

Balance, August      94       $ 1       $ (100)   906,000  $ 9,060    150,000   $ 1,500  $6,586,948       $61,474   $6,658,883
 31, 1998         ======   ======  ============   =======  =======   ========  ========  ==========       ========   ==========  

</TABLE>






              See accompanying  notes to financial statements.

                                      F-6
<PAGE>




                        NORTH ATLANTIC ACQUISITION CORP.
                      (FORMERLY ORION ACQUISITION CORP. I)
                    (A CORPORATION IN THE DEVELOPMENT STAGE)
                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                          Year Ended August 31,                     Period from
                                                                                                                 September 1, 1995
                                                                                                                   (inception) to
                                                                       1998                    1997                August 31, 1998
                                                                    ----------               ----------           -----------------
<S>                                                               <C>                       <C>                     <C>   
Cash flow from operating activities:
   Net income (loss)                                                $ 213,304                $ (38,920)              $ 143,299
   Adjustments to reconcile net income (loss) to
   net cash provided by (used in) operating
   activities:
   Amortization of deferred debt costs                                    --                        --                   9,800
   Amortization of discount on notes payable                              --                    17,088                  35,000
   Changes in assets and liabilities:
     Accrued expenses                                                 (7,935)                   84,332                 (63,303)
     Interest on receivable on investments                          (271,654)                       --                (123,555)
                                                                    ----------               ----------           -----------------
           Net cash provided by (used in)
            operating activities                                    ( 66,285)                   62,500                    941
                                                                    ----------               ----------           -----------------
Cash flows from investing activities:
   Purchase of treasury securities in escrow                     (10,634,874)               (7,998,324)            (18,634,198)
   Sale of treasury securities in escrow                          10,497,051                        --              10,495,375
   Decrease (increase) in cash held in escrow                          1,352                    (1,676)                  1,352
          Net cash used in investing activities                     (137,471)               (8,000,000)             (8,137,471)
                                                                    ----------               ----------           -----------------
Cash flows from financing activities:
   Proceeds from sale of common stock                                     --                 8,134,509               8,188,109
   Subscription paid                                                   9,300                        --                   9,300
   Deferred costs:
     Registration                                                         --                   177,792                  90,000
     Merger costs                                                   (105,000)                       --                (105,000)
     Debt                                                                 --                        --                  (9,800)
     Repayment of notes payable                                     (100,000)                       --                (100,000)
   Proceeds from issuance of notes payable                                --                        --                  65,000
          Net cash provided by (used in)financing activities        (195,700)                8,312,301               8,137,609
                                                                    ----------               ----------           -----------------
Net increase (decrease) in cash                                     (399,456)                  374,801                   1,079

Cash, beginning of period                                            400,535                    25,734                      --
                                                                    ----------               ----------           -----------------
Cash, end of period                                                $   1,079                 $ 400,535                $  1,079
                                                                   ===========               ==========           =================
Supplemental disclosures for cash flow
   information:

   Cash paid for:
     Interest                                                      $      --                 $      --                 $    --
     Taxes                                                                --                        --                      --
</TABLE>


     In fiscal 1996, the Company received a note for subscribed  preferred stock
amounting to $9,400, which is a noncash financing activity.

     In fiscal 1996,  the Company has recorded a $90,000  liability  relating to
the purchase of a license agreement, which is a noncash financing activity.

                 See accompanying notes to financial statements.

                                      F-7
<PAGE>




                        NORTH ATLANTIC ACQUISITION CORP.
                      (FORMERLY ORION ACQUISITION CORP. I)
                    (A CORPORATION IN THE DEVELOPMENT STAGE)

                          NOTES TO FINANCIAL STATEMENTS

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

         The accompanying  financial  statements have been prepared assuming the
Company will continue as a going concern which  contemplates the consummation of
the pending merger (see Note 3). If the pending merger is not  consummated,  the
Company  will be  unable  to pay its  liabilities  and its  future  general  and
administrative expenses and merger costs.

         Management  cannot be assured that the Company will be able to continue
as a going concern due to the uncertainty in completing the pending merger.  The
Company's  continued  existence  is  dependent  upon its ability to complete the
pending merger.

         The  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.

Income Taxes

         North  Atlantic  Acquisition  Corp. (the "Company"  or  "NAAC") follows
Financial  Accounting  Standards Board ("FASB") Statement No. 109 Accounting for
Income Taxes.  This  statement  requires that deferred  income taxes be recorded
following the liability method of accounting and be adjusted  periodically  when
income tax rates change.

Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period.  Actual results could differ from those estimates.

Earnings Per Share

         During 1997, the Financial  Accounting Standards Board issued Statement
of Financial  Accounting Standards No. 128, "Earnings per Share," which provides
for the calculation of "basic" and "diluted" earnings per share. This Statement,
effective for financial  statements issued for periods ending after December 15,
1997,  requires  restatement  of all  prior-period  EPS  data  presented.  Basic
earnings  per share  includes  no dilution  and is  computed by dividing  income
available to common shareholders by the weighted average number of common shares

                                      F-8
<PAGE>

outstanding for the period.  Diluted  earnings per share reflect,  in periods in
which they have a dilutive  effect,  the effect of common  shares  issuable upon
exercise of stock  options.  All periods  presented have been restated to comply
with the provisions of SFAS No. 128.

         Basic and  diluted  net  earnings/loss  per  share  are based  upon the
weighted average number of common shares outstanding.  Diluted earnings/loss per
share did not include the assumed  exercise of common stock options and warrants
because the effect was anti-dilutive.

Accounting for Stock-based Compensation

         In  October  1995,  the FASB  issued  SFAS  No.  123,  "Accounting  for
Stock-based  Compensation".  Beginning in 1996,  SFAS No. 123 requires  expanded
disclosures  of  stock-based   compensation   arrangements  with  employees  and
encourages,  but does not  require,  the  recognition  of employee  compensation
expense  related  to stock  compensation  based on the fair  value of the equity
instrument  granted.  Companies  that do not  adopt the fair  value  recognition
provisions  of SFAS No. 123 and  continue to follow the existing APB Opinion No.
25 rules to recognize and measure  compensation will be required to disclose the
pro forma  amounts  of net income  and  earnings  per share that would have been
reported had the Company elected to follow the fair value  recognition  rules of
SFAS  No.  123.  The  Company  has  elected  to  continue  to use the  intrinsic
value-based  method of APB  Opinion  No.  25,  and has  adopted  the  disclosure
requirements of SFAS No. 123.

2.       ORGANIZATION AND BUSINESS OPERATIONS

         The Company was  incorporated  in Delaware on August 9, 1995 to acquire
an operating  business.  Operations did not occur until September;  accordingly,
financial statements have been presented commencing on September 1, 1995.

         The  Registration  Statement for the Company's  Initial Public Offering
(the "Offering")  became effective August 22, 1997. The Company  consummated the
Offering on August 27, 1997 and raised net proceeds of approximately  $8,100,000
(see Note 4). The Company's  management has broad discretion with respect to the
specific   application   of  the  net  proceeds  of  this   Offering,   although
substantially  all of the net  proceeds  of this  Offering  are  intended  to be
generally applied toward  consummating a business  combination (see Note 3) with
an operating business ("Business  Combination").  There is no assurance that the
Company will be able to successfully effect a Business Combination. An aggregate
of $8,000,000 of the net proceeds was placed in an escrow account which has been
invested in short-term United States Government  Securities,  including treasury
bills and cash and cash  equivalents  ("Proceeds  Escrow  Account"),  subject to
release at the earlier of (i) consummation of its first Business  Combination or
(ii)  redemption of the Class A stock (see below).  The remaining  proceeds from
the  Offering  will be  used to pay for  business,  legal  and  accounting,  due
diligence on prospective acquisitions, costs relating to the public offering and
continuing general and administrative expenses in addition to other expenses.

   

<PAGE>

                                   F-9
         The Company,  prior to the  consummation  of any Business  Combination,
will submit such  transaction to the Company's  stockholders for their approval,
even if the nature of the  acquisition is such as would not  ordinarily  require
stockholder  approval  under  applicable  state law. All of the Company's  prior
stockholders, including all directors and the Company's executive officers, have
agreed to vote their  respective  shares of Class A stock in accordance with the
vote of the  majority  of the  shares  voted by all  other  stockholders  of the
Company  ("nonaffiliated public stockholders") with respect to any such Business
Combination. A Business Combination will not be consummated unless approved by a
vote of two-thirds of the shares of common stock owned by  nonaffiliated  public
stockholders.

         At the time the Company  seeks  stockholder  approval of any  potential
Business  Combination,  the Company will offer ("Redemption  Offer") each of the
nonaffiliated  public Class A stockholders  the right, for a specified period of
time not less than 20 calendar days, to redeem his shares of Class A stock.  The
per share  redemption  price will be  determined  by dividing  the amount in the
escrow account  (including all interest  earned thereon) by the number of shares
of Class A stock held by such nonaffiliated public  stockholders.  In connection
with the Redemption  Offer, if nonaffiliated  public  stockholders  holding less
than 20% or 160,000  shares of the Class A stock elect to redeem  their  shares,
the Company may proceed with such Business Combination.  If nonaffiliated public
stockholders  holding  20% or more of the Class A stock  elect to  redeem  their
shares,  the Company will not proceed with such potential  Business  Combination
and will not redeem such shares. Accordingly, a portion of the net proceeds from
the Offering (20% of the cash and treasury  securities  held in escrow) has been
classified  as common stock subject to possible  redemption in the  accompanying
balance sheet at the estimated value.

         Class A stock subject to possible  redemption are carried at redemption
value and are presented outside of stockholders' equity. Changes in the carrying
value of these shares are charged or credited directly to stockholders' equity.

         All shares of the escrowed stock  outstanding  immediately prior to the
date of the  Offering  have been  placed in escrow  until the earlier of (i) the
occurrence of the first Business Combination,  (ii) 18 months from the effective
date of the Offering or (iii) 24 months from the effective  date of the Offering
(August 22, 1999) if prior to the expiration of such 18 month period the Company
has become a party to a letter of intent or a  definitive  agreement to effect a
Business  Combination,  in which case such period  shall be extended six months.
During the escrow period,  the holders of escrowed  shares of Class A stock will
not be able to sell or otherwise  transfer  their  respective  shares of Class A
stock  (with  certain   exceptions),   but  will  retain  all  other  rights  as
stockholders of the Company,  including,  without limitation,  the right to vote
escrowed  shares of Class A stock,  subject  to their  agreement  to vote  their
shares  in  accordance  with  a  vote  of a  majority  of the  shares  voted  by
nonaffiliated  public  stockholders  with respect to a Business  Combination  or
liquidation proposal.

                                      F-10
<PAGE>

         If the Company does not effect a Business  Combination within 18 months
from the effective  date or 24 months from the  effective  date if the extension
criteria have been satisfied, the Company will distribute the amount held in the
Escrow Account to all  non-affiliated  public  stockholders  in respect of their
Class A  stock.  The  Class  A  stock  of the  affiliated  stockholders  will be
cancelled.  After the  redemption  and  cancellation  of the Class A stock,  the
assets of NAAC,  if any,  will be used to pay its  liabilities  and  redeem  the
outstanding Series A preferred stock at its liquidation  value.  Thereafter each
outstanding  share of Class B stock will be exchanged  for two shares of Class A
stock and the holders will be the sole stockholders of a public shell.

3.        PENDING MERGER

         On  August  18,  1998,  the  Company,  Moto  Guzzi  Corp.,  a  Delaware
corporation ("Guzzi Corp."),  and for certain  provisions,  Trident Rowan Group,
Inc., a Maryland  corporation  ("TRG"),  entered into a definitive Agreement and
Plan of Merger and Reorganization,  as amended ("Merger Agreement"), pursuant to
which Guzzi Corp.  would merge with and into NAAC, with NAAC being the surviving
corporation ("Merger").  TRG and its partially-owned  subsidiary,  O.A.M. S.p.A.
together own all the outstanding  common stock of Guzzi Corp.  Guzzi Corp., is a
leading Italian manufacturer, marketer and distributor of performance and luxury
motorcycles and motorcycles parts,  marketed under the "Moto  Guzzi(Registered)"
brand name.

         The Merger will be treated as a reverse  acquisition  of the Company by
Guzzi Corp. In a reverse  acquisition,  the shareholders of NAAC will own, after
the Merger,  less than 50% of the post-Merger  shares. The shareholders of Guzzi
Corp. will receive approximately 76.4% of the post-Merger shares of the Company,
excluding  any  shares  of the  Company's  Class A common  stock  issuable  upon
exercise of any options or warrants,  and Guzzi Corp. ,  therefore,  will be the
accounting acquirer. The cost of the acquisition of the Company will be based on
the fair value of the  Company's  assets and  liabilities  as of the date of the
Merger  (which  amounts   approximate  book  value).  The  Company   anticipates
completing  the merger by February 1, 1999. The Merger is subject to shareholder
approval and certain other conditions.

4.        PUBLIC OFFERING

         On August 27,  1997,  the Company  consummated  the  Offering  and sold
800,000 units ("Units") and 150,000 shares of Class B exchangeable common stock.
Each Unit  consists of one share of the  Company's  Class A common stock and one
Class A redeemable common stock purchase warrant ("Class A Warrant"). Each Class
A Warrant  entitles the holder to purchase from the Company one share of Class A
stock at an exercise  price of $9.00;  each Class B Stock entitles the holder to
receive two Units in exchange 90 days after the date of a Business  Combination.
The Class A Warrants are redeemable,  as a class, in whole and not in part, at a
price of $.05 per warrant  upon 30 days'  notice at any time  provided  that the
Company's  stockholders  have approved a Business  Combination and the last sale
price of the Class A stock has been $11.00 or higher for 10 of the trading  days
prior to the day on which the Company gives notice of redemption.

    
                                  F-11
<PAGE>

         Concurrent  with the  Offering,  the Company  amended and  restated its
certificate  of  incorporation  to  increase  its  authorized  common  stock  to
10,250,000 shares, of which 10,000,000 shares are designated Class A stock Class
A stock and  250,000  shares are  designated  Class B stock.  The  Company  also
increased its authorized preferred stock to 1,000,000 shares.

5.        UNITED STATES TREASURY SECURITIES HELD IN ESCROW

         Treasury  securities  held in escrow at August 31, 1998  consist of the
following:
                                  MATURITY     INTEREST        MATURITY
                       COST         AMOUT        RATE            DATE
                    ----------    ----------   --------     -----------------
Treasury bill       $6,423,585    $6,478,000     5.23%       October 27, 1998
Treasury note       $1,985,216     2,018,000     5.00        February 15, 1998
                    ----------    -----------    ----
Total Treasury      $8,408,801    $8,496,000
securities held     ==========    ========== 
in escrow             
                                            

         At  August  31,  1998,  the cost of each of the  above-listed  treasury
securities approximated its market value.

6.       COMMITMENTS

         The Company has entered into an oral  agreement with David J. Mitchell,
Chairman and Chief Executive Officer,  to lease office space, as well as certain
office  and  secretarial  services.  The  Company  pays  $2,500 per month to Mr.
Mitchell  for such  services.  The  expense was $30,000 and $20,000 for 1998 and
1997, respectively.

7.       INCOME TAXES

         The fiscal 1998 income tax  provision of $65,000 is net of a benefit of
$27,000  due to the  utilization  of the prior  years net  operating  loss carry
forwards. The tax expense consists of federal, current income taxes.

8.       STOCKHOLDERS' EQUITY

         (a)      Private Placement

         In November 1995, the Company completed a private offering to a limited
group of investors which consisted,  in the aggregate,  of $100,000 in unsecured
promissory  notes bearing  interest at 8% per annum. The notes were payable upon
the earlier of May 1998 or the completion of an initial public  offering.  As of
August 31, 1998,  the notes,  together with accrued  interest,  were repaid.  In
addition,  the Company  also issued to the private  placement  investors  20,000

                                      F-12
<PAGE>

shares of common  stock for  $10,000.  The notes were  recorded at a discount of
$35,000 for financial  reporting  purposes as a result of additional  fair value
attributed to the common stock issued to the private placement shareholders. The
effective interest rate on the notes was approximately 45%.

         (b)      Preferred Stock

         The Company is  authorized to issue  1,000,000  shares of "blank check"
preferred stock with such designations,  voting and other rights and preferences
as may be determined from time to time by the Board of Directors.

         The Company  has  outstanding  94 shares of Series A  preferred  stock,
owned by CDIJ Capital Partners,  L.P., an indirect affiliate of Bright Licensing
Corp.  The purchase  price for such  shares,  $100.00 per share or $9,400 in the
aggregate,  is payable to the  Company,  without  interest,  upon the earlier of
November 15, 1996 or the closing of the Offering.  As of August 31, 1998, $9,300
has been  received by the Company.  The Series A preferred  stock is  nonvoting,
does not bear a dividend and has a liquidation  value of $100.00 per share. Each
share of Series A  preferred  stock will be  convertible  into  1,000  shares of
common  stock for a period one year  following  the  consummation  of a Business
Combination.  In the event that a Business  Combination does not occur within 18
months  from the  effective  date or 24 months  from the  effective  date if the
extension criteria are satisfied,  the Series A preferred stock will be redeemed
by the Company for its liquidation value.

         (c)      Options

         The Company granted options to purchase  100,000 Units to the founders,
in  consideration  for their service as directors,  and officers of the Company.
The  options  are  exercisable  for a period of three  years  from the date of a
Business  Combination  at an exercise  price of $12.50 per Unit. The options are
fully vested.  The shares  issuable upon exercise of the options and  underlying
warrants may not be sold or otherwise transferred until 120 days after the first
Business Combination.

         In October 1996, the Company  cancelled the 100,000 options and granted
additional  options  to  purchase  133,333.3  Units  to the  Company's  two  new
directors and to a founder.  The options are  exercisable  for a period of three
(3) years from the date of a Business Combination at an exercise price of $12.50
per Unit.

         The  Company  has  granted  options to  purchase  30,000  shares of the
Company's  Class B stock to two  directors  at an  exercise  price of $10.00 per
share. The options will expire, if not sooner exercised,  upon consummation of a
Business Combination.

                                      F-13
<PAGE>

         On July 23, 1998,  the Company  adopted the 1998 Stock Option Plan (the
"1998 Plan"),  subject to stockholder  approval and  consummation of the Merger.
The 1998 Plan  provides  for the grant of options to purchase up to an aggregate
of  1,250,000  shares  of the  Company's  Class  A  common  stock  to be made to
employees,   officers,   directors  and  consultants  of  the  Company  and  its
subsidiaries  after the Merger.  An aggregate of 900,000 of such options will be
granted at the  effective  time of the Merger.  The 1998 Plan  provides both for
incentive stock options ("Incentive Options"), and for options not qualifying as
Incentive Options ("Nonqualified Options"). The Company's Board or the Committee
will determine the exercise price for each share of the Company's Class A common
stock  purchasable  under an  Incentive  or  Nonqualified  Option  (collectively
"Options"). The exercise price of a Nonqualified Option may be less than 100% of
the fair market value on the last trading day before the date of the grant.  The
exercise  price of an  Incentive  Option  may not be less  than 100% of the fair
market  value on the last  trading day before the date of grant (or, in the case
of an Incentive Option granted to a person  possessing at the time of grant more
than 10% of the  total  combined  voting  power of all  classes  of stock of the
Company,  not less than 110% of such fair  market  value).  Options  may only be
granted  within a ten-year  period  commencing  on July 23,  1998 and  Incentive
Options  may only be  exercised  within  ten  years of the date of the grant (or
within five years in the case of an Incentive Option granted to a person who, at
the time of the grant, owns stock possessing more than 10% of the total combined
voting  power of all  classes  of stock of the  Company  or of its parent or any
subsidiary).

         The  1998  Plan  for  Outside  Directors  provides  for  the  grant  of
non-incentive  options to purchase up to an aggregate  of 400,000  shares of the
Company's  Class A common stock, to the  non-employee  directors of the Company,
each grant to be on the  effective  date of the  Merger  and on each  January 2,
beginning  January 2, 2000,  of options to purchase  12,500  shares of Company's
Class A common  stock.  The  options  will  expire upon the earlier of ten years
following date of grant or three months  following the date on which the grantee
ceases to serve as a director.

         (d)      Warrants

         Class A Warrants  entitle the holder to  purchase  one share of Class A
common stock at a price of $9.00 per share. These warrants will become separable
and  transferable  and can be  redeemed  by the  Company  at a price of $.05 per
warrant any time after the consummation of a Business Combination.

         The  underwriters  engaged by the  Company in the  Offering  received a
warrant to purchase  80,000  shares of Class A common  stock with 80,000 Class A
Warrants,  at an exercise  price of $11.00 per share and warrant and to purchase
15,000 shares of Class B common stock for $11.00 per share.

         Upon closing of the pending  merger the Company will issue a warrant to
Allen & Company (Fairness  Opinion) to purchase 350,000 shares of Class A common
stock at an exercise  price of $10.00 per share.  The Warrant may be exercisable
at any time prior to July 1, 2003.

                                      F14
<PAGE>


                                   SIGNATURES

         Pursuant  to the  requirements  of the Section 13 or 15 or 15(d) of the
Securities  Exchange Act of 1934,  the  registrant  has duly caused this amended
report to be signed on its behalf by the undersigned,  thereunto duly authorized
on the ___th day of December, 1998.

Date: December 31, 1998

                                       NORTH ATLANTIC ACQUISITION CORP. II

                                          /s/ David J. Mitchell    
                                        -----------------------------------
                                         David J. Mitchell
                                         Chairman of the Board
                                         Chief Executive Officer


      In accordance  with the Securities  Exchange Act of 1934,  this report has
been signed below by the following  persons on behalf of the  registrant  and in
the capacities and on the dates indicated.

<TABLE>
<S>                                     <C>                                     <C>   

  /s/ David J. Mitchell                  Chairman of the Board                  December 31, 1998
-------------------------                and Chief Executive Officer
David J. Mitchell                        (Principal Executive Officer)
                         
  /s/ Thomas McMillen                    Secretary, Treasurer                   December 31, 1998
-------------------------                and Director
Thomas McMillen                          (Principal Accounting Officer and
                                         Principal Financial Officer)

_________________________                Director                               December     , 1998
A.J. Nassar
</TABLE>


<PAGE>