<PAGE>
                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549

                                       FORM 10-K

                    FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO 
             SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

 X  Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
--- of 1934  

                For the fiscal year ended    DECEMBER 31, 1997     or
                                         ------------------------

    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
--- Act of 1934. 

For the transition period from                        to                    .
                               ----------------------   --------------------

Commission File Number   0-2642  
                       ----------

                              TRIDENT ROWAN GROUP, INC.
                              -------------------------
                (Exact name of registrant as specified in its charter)

        MARYLAND                                          52-0466460      
---------------------------------------------     ----------------------------
(State of other jurisdiction of                   (I.R.S. Employer I.D. No.)
incorporation or organization)

TWO WORLDS FAIR DRIVE, SOMERSET, NEW JERSEY                  08873         
---------------------------------------------            ------------
(Address of principal executive offices)                  (Zip Code)



Registrant's telephone number, including area code:    (732) 868-9000 
                                                    -----------------------

          Securities registered pursuant to Section 12(b) of the Act: 

                                                  NAME OF EACH EXCHANGE
          TITLE OF EACH CLASS                      ON WHICH REGISTERED 
          -------------------                     ---------------------
                                         None

Securities registered pursuant to Section 12(g) of the Act:

                       Common Stock, par value $0.01 per share

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.     

               Yes:      X                             No:              
                    ------------                            ------------

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the average of bid and asked price of the
stock as of April 13, 1998, was $13,622,441.


The number of shares of common stock, $0.01 par value, outstanding as of April
13, 1998 was 4,987,780. 

                         DOCUMENTS INCORPORATED BY REFERENCE:

<PAGE>


                                        PART I


ITEM 1.                                BUSINESS

OVERVIEW

     The Company owns Moto Guzzi, S.p.A. ("Moto Guzzi"), an Italian manufacturer
of luxury and high-performance motorcycles, and L.I.T.A., S.p.A., an Italian
manufacturer of welded steel tubes used principally in the automobile and
furniture industries, and, through its Temporary Integrated Management S.p.A.
("T.I.M.") subsidiary, provides temporary management and merchant banking
services to troubled businesses located primarily in Italy.  The Company also
owns commercial real  estate which is being disposed as and when opportune.  The
Company was incorporated in Maryland in 1917.

     Until 1993, the Company was primarily in the business of manufacturing 
luxury automobiles and minicars through its former Maserati S.p.A. subsidiary
("Maserati"), and, secondarily, in motorcycle manufacturing and distribution
through Moto Guzzi.  After selling its 51% controlling interest in
Maserati in 1993, the Company's only remaining operating subsidiary was Moto
Guzzi, which the Company had acquired in 1972.  In 1993, Moto Guzzi was a
manufacturer of medium and high priced motorcycles. For years, Moto Guzzi had
been both unprofitable and undercapitalized. The Company's Board of Directors,
in 1993 and early 1994, considered a capital investment by or joint venture
with a third party, the sale of its interest in Moto Guzzi, or some other form 
of business combination to repair Moto Guzzi's capital deficiencies and
financial condition. When those efforts proved unsuccessful, the Company, in 
May 1994, engaged the predecessor of T.I.M. to provide Moto Guzzi with 
critically needed temporary management in order to staunch losses and to 
provide the time and means to design and implement a capital plan for future 
growth or, alternatively, a plan for the sale of the subsidiary. 

     In July 1995, the Company acquired  substantially all of the operating
subsidiaries of Finprogetti S.p.A. ("Finprogetti"), consisting of T.I.M., real
estate interests (and related debt) and a leasing and factoring company.  This
acquisition was consummated by issuing the Company's common stock ("Common 
Stock") to Finprogetti in exchange for those assets. In addition, 
Finprogetti-affiliated shareholders also purchased newly issued shares of 
Common Stock for Lit. 8,204 million in cash.  In total, 2,330,660 shares of 
Common Stock were issued for a value of Lit. 38,223 million.  

     In April 1995, the Company entered into an agreement, contingent on
consummation of the Finprogetti acquisition, to repurchase a controlling
interest in the Company, represented by 1,000,000 shares of convertible
preferred stock, par value $2.50 per share, and 480,304 shares of Common Stock,
previously owned by its  former Chairman, Mr. Alejandro de Tomaso, and which had
been transferred to two trusts.   Contemporaneously with the closing of the
Finprogetti transaction, the Company acquired 703,774 shares of preferred and
Common Stock from the trusts, 


                                          1
<PAGE>

the remaining 776,530 shares of preferred stock were exchanged for shares of
Common Stock and the Company committed to repurchase such 776,530 shares on June
30, 1998 at a price of $11.27 per share.  The Company obtained a bank letter of
credit secured  by the deposit of marketable securities to guarantee the
repurchase.

     Beginning in July 1995, the Company embarked on a program to sell the real
estate acquired from Finprogetti and to expand the scope of its acquired T.I.M
business to encompass international merchant banking  services and real estate
services for T.I.M. clients and others.  The Company's objective was to seek to
invest in troubled companies with the objective of enhancing, through its
temporary management capability,  the value of such investments and then
realizing such enhanced value through exits developed by its merchant banking
division.  The acquired leasing and factoring division has now been wound down
and its operations are not material.  See " Commercial Real Estate Development,"
below.
  
     L.I.T.A., a producer of welded steel tubes, was acquired in July 1995 and
represented the first merchant banking investment by the Company in a client
arising out of a T.I.M. engagement. T.I.M. had been engaged by L.I.T.A.'s prior
owners in 1994 to manage the company through an operational crisis and to
prepare it for sale. Since its acquisition by the Company, L.I.T.A. has expanded
its customer base and initiated an export program.  

     Beginning in July 1995, the Company made preparations to honor its pledge
to undertake a stock repurchase program to accommodate those shareholders who
held the view that the Company, following the sale of Maserati, was no longer
engaged in the business activity that had initially attracted them to become
shareholders. This program was completed in October 1996 with the repurchase of
761,995 shares for approximately $7,479,000 in cash and $1,863,000 in the form
of  non-negotiable two-year promissory notes bearing interest at 8% per annum.

     Under T.I.M.'s direction, Moto Guzzi increased production and sales,
reduced costs, and achieved a small operating profit in 1996.  The Company also
acquired Moto America Inc., the exclusive U.S. importer of Moto Guzzi
motorcycles and parts, in January 1996 for approximately $300,000, in an effort
to expand its U.S. market share.  

     The progress achieved at Moto Guzzi permitted the Company to seek capital
for the investments in plant, machinery, products, marketing and management
needed to provide a foundation for the significant growth of Moto Guzzi's
business.  In December 1996 and January 1997, the Company completed a private
placement of Moto Guzzi Corp. preferred stock and common stock purchase warrants
which raised gross proceeds of $6,000,000 for development of the Moto Guzzi
business.  Moto Guzzi Corp. is a U.S. holding company formed expressly for the
purpose of holding  and financing the Company's interests in the Moto Guzzi
business.   

     In June 1997, the Company completed a public offering of its Common Stock
and Common Stock purchase warrants, raising gross proceeds of $7,643,750, of
which the Board of Directors of the Company committed $4,000,000 to Moto Guzzi's
growth plan.  In the second fiscal quarter of 


                                          2
<PAGE>



1997, the Company hired Oscar Cecchinato as CEO of Moto Guzzi, directing him to
develop and implement an accelerated growth plan.  Moto Guzzi has subsequently
accelerated its research and product development expenditures and hired new
managers in several areas of its business.  It has also set-up a new 100%-owned
exclusive importer of Moto Guzzi motorcycles in France, replacing a previous
independent exclusive importer, and changed its exclusive importer in Germany,
one of its most important markets, with a new importer in which it holds a 25%
equity interest and has an option to acquire control.  Additionally, Moto Guzzi
obtained a Lit. 10,000 million credit facility in February 1998 to fund planned
1998 investments in plant, machinery and product development.

     In May, 1997, Finprogetti, the largest shareholder of the Company, sold to
Tamarix Investors, L.D.C., 900,000  shares of the Company's Common Stock. 
Tamarix and Finprogetti agreed that Finprogetti shall have a put right and
Tamarix shall have a call right with respect to an additional 735,000 shares of
Common Stock owned by Finprogetti.  The put option is exercisable for a one year
period, beginning on May 3, 1998 and the call option is exercisable during the
two years ending May 2, 1999.  During such two year period, Tamarix has a proxy
from Finprogetti to vote such 735,000 shares.  Subsequently, Tamarix purchased
an additional 100,000 shares from Finprogetti so that the put and call options
now refer to the remaining 635,000 shares.  The Company issued to Centaurus
Management L.D.C., the manager of Tamarix, 1,250,000 warrants to purchase shares
of the Company's Common Stock at an exercise price of $6.00 per share (the
Company's per share public offering price in June 1997) as an inducement to
consummate the transaction with Finprogetti.  See "Recent Transactions."

     Following the change of control effected by the purchase of Finprogetti's
Common Stock interest by Tamarix and changes to the composition of the Company's
Board of Directors pursuant to such transaction, the Company set about reviewing
its business strategies and its cost structure.  In early 1998, the Company's
Board of Directors decided that it would dedicate substantially all of its
resources and energies to enhance the value of its Moto Guzzi business and not
to pursue any new business opportunities. The Company's Board of Directors  also
decided to accelerate the disposition of its real estate and other non-core
assets in support of this decision.

MOTO GUZZI

     INDUSTRY GENERALLY.  Historically, the motorcycle had been an "entry level"
form of transport which has been supplanted by the automobile. Over recent
years, the industry has become established as a recognized leisure industry in
developed markets and Moto Guzzi's current range of motorcycles, being larger
and more expensive, are principally targeted at the leisure segment of the
vehicular industry. The Company's management believes that the recent
recognition of motorcycling as an acceptable leisure activity is one of the
major factors behind the steady growth in Moto Guzzi's market segment over the
last two years. The Company management believes that this trend will continue in
the short and medium term and that its markets will not be subject to
significant demand changes, although no assurance can be provided that this will
be the case. 

                                          3
<PAGE>

     MANUFACTURING.  Moto Guzzi today manufactures a high priced line of
motorcycles, and distributes parts and accessories, under the trademark "Moto
Guzzi-Registered Trademark-." Moto Guzzi motorcycles vary in engine displacement
from 350cc to 1,100cc.  Moto Guzzi has, in recent years, concentrated
development and sales efforts on its largest motorcycles, having engines of
750cc or larger but, as part of its growth plan, it is currently examining other
market segments. Moto Guzzi parts were distributed through Centro Ricambi, a
100% owned subsidiary of Moto Guzzi until it was merged into Moto Guzzi in 1997.

     All motorcycle manufacturing is conducted at a factory in Mandello del
Lario, Italy.  Moto Guzzi manufactures certain power train components, acquires
certain other components from outside suppliers, and performs finishing work and
assembly into motorcycle bodies. Until 1994, Moto Guzzi internally produced a
majority of the components of its motorcycles. As a result of its decision to
increase outsourcing to increase production capacity, Moto Guzzi now produces
less than 40% of all components used in the assembly of its motorcycles.

     Because much of the production machinery at Moto Guzzi's facility is aged
and in need of extensive modification, improvement or replacement, the Company
expects that, over the next four years, significant further capital, in addition
to the amounts raised through the private placement of Moto Guzzi Corp.
preferred stock, amounts committed by the Company from proceeds of its public
offering and Lit. 10,000 million debt facilities obtained in February 1998, will
be required to complete the planned overhaul.  While anticipated increases in
sales during the four-year period, if realized, would provide a significant
portion of the needed capital, anticipated internally generated cash and
currently available bank financing, in the aggregate, will not be sufficient to
enable Moto Guzzi to increase production and sales rapidly enough to generate
the remaining needed capital. Hence, management is exploring a variety of other
debt and equity financing options.  No assurances can be given that such
financing will be obtained on acceptable terms, or at all.

     SEASONAL NATURE OF BUSINESS.  Moto Guzzi's business is affected by seasonal
factors. Retail market demand is highest in the spring and early summer, whereas
most sales to the Italian government generally take place in the last quarter of
the year. Moto Guzzi, like most Italian companies, traditionally shuts down
production in August of each year and traditionally also has reduced production
over the Christmas holidays and in the period immediately following, while
inventory is being taken.  As part of its effort to increase overall production
levels, Moto Guzzi did not additionally suspend production during the
December-January period of physical inventory taking. 

     COMPLIANCE WITH GOVERNMENTAL REGULATIONS.  Moto Guzzi, along with other
motorcycle manufacturers, incurs substantial costs in designing and testing
products to comply with safety and emissions requirements. Such standards have
added, and will continue to add, substantially to the price of the vehicles
while competitive pressures have kept export prices lower than domestic Italian
sales prices. 

     Motorcycles sold in the United States, the European Economic Community and
all other countries are subject to environmental emissions regulations and
safety standards with which Moto Guzzi must comply in order to expand its
presence in such countries. All motorcycles produced for 

                                          4
<PAGE>

sale are manufactured with the intent to comply with all applicable safety
standards. All current  Moto Guzzi models comply with all emission standards
applicable in all countries in which they are sold. There can be no assurance,
however, that Moto Guzzi will be able cost effectively to comply with any
emissions or safety standards which the governments may hereafter adopt (though
the design of new products seeks to conform with such standards as are believed
likely to be introduced), in which event, Moto Guzzi may be unable to achieve
the market growth that it desires. 

     Moto Guzzi is subject to a number of governmental regulations relating to
the use, storage, discharge and disposal of minerals and alloys used in
manufacturing processes and to the safety standards of its facilities and
processes. Although neither the Company nor Moto Guzzi has been subject to
material environmental or safety claims in the past and the Company believes
that the activities of its operating subsidiaries conform in all material
respects to presently applicable environmental and safety regulations, claims or
the failure to comply with present or future regulations could result in the
assessment of damages or imposition of fines against the Company, suspension of
production or cessation of certain activities. New regulations could require the
Company to acquire costly equipment or incur other significant expenses that
could have an adverse effect on the results of operations. Any failure by the
Company to control the use of, or adequately restrict the discharge of hazardous
substances or comply with safety requirements and legislation could subject it
to future liabilities. 


     BACKLOGS.  On January 1, 1997, Moto Guzzi had open orders from its
importers for its entire 1997 production capacity.  Export orders for 1998
delivery also exceed production capacity.  Moto Guzzi does not have open orders
for the full 1998 year for the Italian market where it acts directly selling
motorcycles to concessionaires and where it estimates demand based on research
by its sales and marketing departments.  Open export orders are subject to
cancellation without penalty.

     RAW MATERIALS AND COMPONENTS.  There are multiple reliable sources for most
motorcycle raw materials, including aluminum for power train components.
However, certain significant components are available from only one or two
sources. In 1996 and 1997, situations arose where Moto Guzzi's suppliers were
unable to make timely deliveries of needed components due to production problems
incurred by such suppliers. All such delays adversely affect motorcycle
production.

     While the cost of imported raw materials is affected by variations in the
value of the Italian Lira relative to the currencies of Italy's primary trading
partners, currency exchange rates have not had a significant adverse effect on
costs and price competitiveness in 1995, 1996 or 1997.

     RESEARCH, DEVELOPMENT AND CONTINUING ENGINEERING.  Moto Guzzi, while
continuously engaged in product improvement and development, has significantly
increased its commitment to develop new products.  Aggregate 1997 research and
development expenditures by Moto Guzzi were approximately Lit. 3,125 million,
compared to Lit. 1,177 million in 1996, and Lit. 602 million in 1995. 
Expenditures in 1997 related primarily to development of models scheduled for
1998 production.  On-going programs relate to specific models under development
and, more generally, 

                                          5
<PAGE>

developing more powerful two-cylinder air-cooled and other engines with improved
performance and durability characteristics, superior braking systems,
suspensions, frames, transmissions and other components applicable to
two-wheeled vehicles. 

     SALES, MARKETING AND INVENTORY.  Moto Guzzi primarily markets its products
through advertising in trade publications, participation in promotional events
and fairs, attendance at trade shows and from editorial coverage in trade and
general circulation press. All sales are invoiced in Italian lire except sales
to the United States which are invoiced in U.S. dollars. Prices are customarily
reviewed and are increased to cover increases in production costs at periodic
intervals and in light of prevailing exchange rates. Italian prices for
motorcycles traditionally have been higher than export prices. In March 1996,
Moto Guzzi increased prices of its various models 5% on average for domestic
sales and for export sales invoiced both in lire and in dollars.  In 1997, Moto
Guzzi generally maintained its selling prices in order to maintain market share,
and increased prices by approximately 5% effective April, 1998.  Export sales
continued to reflect lower margins than domestic Italian sales.  See Note 18 of
Notes to Consolidated Financial Statements.

     Moto Guzzi is not affected by any unusual industry practices relating to
returns of merchandise or extended payment. It is obliged to maintain 10 years'
inventory of parts for all motorcycles sold to Italian government agencies and,
in common with many other motor vehicle manufacturers, maintains significant
spare parts inventories for commercial reasons.  Moto Guzzi's sales are pursuant
to open purchase orders rather than long-term contracts.  By scheduling
production in anticipation of fulfilling such orders, it may end a given year
with substantial inventory if orders are cancelled or delivery not taken.

     DISTRIBUTION.  Moto Guzzi maintains a distribution network throughout Italy
of over 120 independent dealers. No single Italian dealer accounted for more
than 5% of the sales of Moto Guzzi in 1997. The Italian dealers who distribute
Moto Guzzi motorcycles generally handle other brands as well. 

     In 1997, a single importer-distributor acted as exclusive
importer-distributor for Moto Guzzi in each of Argentina, Australia, Austria,
Belgium, the Czech Republic, Denmark, Finland, France, Germany, Greece, Holland,
Japan, Luxembourg, Malaysia, Malta, New Zealand, Norway, Portugal, Singapore,
Spain, Sweden, Switzerland, the United Kingdom, and the United States. 

     Moto America is Moto Guzzi's exclusive importer-distributor in the United
States. Until 1996, when it was acquired by the Company and later transferred to
Moto Guzzi Corp., Moto America was an independent business.

     In November 1996, Moto Guzzi replaced its independent French 
importer-distributor with a newly created wholly-owned subsidiary of Moto 
Guzzi, which commenced operations in February 1997.

                                          6
<PAGE>

     Moto Guzzi also owns a 25% equity interest in MGI GmbH, a new German
corporation which became the exclusive importer-distributor of Moto Guzzi
motorcycles and spare parts on January 1, 1997. Moto Guzzi has the right to
acquire up to a total of 90% of the equity interest of the new distributor
within four years. Until December 1996, Moto Guzzi also owned a 25% equity
interest in A+G Motorad GmbH ("A+G"), a German corporation, the majority of the
shares of which is owned by Aprilia S.p.A., another Italian manufacturer of
motorcycles with small displacement engines. A+G distributed the motorcycles of
both Moto Guzzi and Aprilia in the German market in 1996, but was replaced as
the Moto Guzzi distributor in 1997 by MGI GmbH. 

     Moto Guzzi provides support to its worldwide dealer network by, among other
things, operating a technical training and support facility at Mandello del
Lario. All dealers are required to attend training courses at the inception of
their relationship, and periodically thereafter. 

     Set forth below is a chart illustrating percentage of motorcycle sales
revenues attributable to various geographic areas in the three most recent
fiscal years. Sales outside Italy in 1997 were approximately Lit. 50,000
million, 63% of total sales. 

<TABLE>
<CAPTION>

                                   MOTO GUZZI SALES
                                                             YEAR ENDED DECEMBER 31
                                                             ----------------------
GEOGRAPHIC AREAS                                            1997      1996      1995
                                                            ----      ----      ----
<S>                                                         <C>       <C>       <C>

     Italy  . . . . . . . . . . . . . . . . . . . . . .      37%       37%       35%
     Europe (other than Italy)  . . . . . . . . . . . .      46%       43%       49%
     United States  . . . . . . . . . . . . . . . . . .      13%        7%        6%
     Elsewhere. . . . . . . . . . . . . . . . . . . . .       4%       13%       10%
</TABLE>


     COMPETITION.  The sale of motorcycles is a highly competitive business,
with competition typically coming from all powered passenger vehicles, as well
as motorcycles. The overall motorcycle market in Italy (excluding scooters) grew
in 1997, with new vehicle registrations increasing by approximately 38% compared
to the same period in 1996. The market in Italy for larger motorcycles, in which
Moto Guzzi is concentrating its sales and production efforts, increased by 29%
in 1997 compared to 1996, according to the Italian Ministry of Transportation.
Moto Guzzi maintains an extremely small share of the world-wide motorcycle
market, which is dominated by many of the same manufacturers that predominate in
Italy.  Many of such companies are far larger and better capitalized, with
greater name recognition. Moto Guzzi competes principally through such
intangible qualities as performance, reputation and quality of manufacture,
areas in which its competitors also excel.

     The Italian market today remains dominated by large, well-financed Japanese
manufacturers. A number of Italian and foreign manufacturers, principally
Cagiva, Honda, BMW, Yamaha, Kawasaki and Suzuki, sell their products in the
Italian market.  In 1997, according to data from the Italian Ministry of
Transportation, the Italian market shares of the principal competitors of Moto
Guzzi on a unit basis, excluding scooters, were as follows: 

                                          7
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<TABLE>
<CAPTION>


                                                       ALL           LARGE
                                                   MOTORCYCLES    MOTORCYCLES
                                                   -----------    -----------

<S>                                                    <C>            <C>
     Honda . . . . . . . . . . . . . . . . . . . . . . 26.5%          29.9%
     Yamaha. . . . . . . . . . . . . . . . . . . . . . 16.8%          18.4%
     Aprilia . . . . . . . . . . . . . . . . . . . . .  7.0%           3.7%
     Suzuki. . . . . . . . . . . . . . . . . . . . . . 13.8%          14.7%
     BMW . . . . . . . . . . . . . . . . . . . . . . .  8.4%          10.7%
     Kawasaki. . . . . . . . . . . . . . . . . . . . .  7.0%           5.3%
     Ducati. . . . . . . . . . . . . . . . . . . . . .  6.9%           8.7%
     Harley Davidson . . . . . . . . . . . . . . . . .  3.2%           4.1%
     Cagiva. . . . . . . . . . . . . . . . . . . . . .  1.6%           0.8%
     Moto Guzzi. . . . . . . . . . . . . . . . . . . .  2.7%           2.6%
     Others. . . . . . . . . . . . . . . . . . . . . .  6.1%           2.1%
</TABLE>

     PRODUCT LIABILITY.  Moto Guzzi's business exposes it to possible claims for
personal injury from the use of its products. Moto Guzzi maintains liability
insurance with a per-occurrence limit of Lit. 2,000 million. Although no claims
have been made against the subsidiary in excess of insurance coverage, there can
be no assurance that such claims will not arise in the future or that the
insurance coverage will be sufficient to pay such claims. A partially or
completely uninsured claim, if successful and of significant magnitude, could
have a material adverse effect on the Company. 

     PATENTS AND TRADEMARKS.  Except as described below, the business of Moto
Guzzi is not and has not been in any material respect dependent upon patents,
licenses, franchises or concessions. The component parts of motorcycles are
manufactured pursuant to well known techniques and include components which are
not unique to its products, although some of these components are specially
styled and designed. Management believes that the registered trade name "Moto
Guzzi-Registered Trademark-" and the 
related trademarks are well known and highly regarded throughout the world, and
appropriate steps have been taken to protect Moto Guzzi's rights in these trade
names and trademarks in 67 countries, including those countries representing
significant markets. 

     EMPLOYEES AND EMPLOYEE RELATIONS.  Relations with Moto Guzzi employees are
considered by management to be good.  At December 31, 1997, Moto Guzzi had 360
employees, compared to 358 at December 31, 1996, including employees of Centro
Ricambi, merged into Moto Guzzi in 1997, of whom approximately 71% were engaged
in factory production and the balance in various supervisory, sales, purchasing,
administrative, design, engineering and clerical activities.  Resolution of the
national metal workers union contract in 1997 resulted in a one-time payment to
workers of Lit. 900,000 ($588) in respect of periods prior to the date of the
new agreement.  An increase in Moto Guzzi's use of outsourced components reduced
overtime hours to 5.2% of total hours in 1997 compared to 7.7% in 1996.

     Moto Guzzi was not subjected to any significant local work stoppages or
strikes in 1997.  In December 1997, however, Moto Guzzi experienced a work
stoppage of one hour duration prompted by reports that management was
considering alternative locations as part of its long term expansion 

                                          8
<PAGE>

plans.  In 1996, it was subjected to strikes totaling 2-1/2 production days, all
concerning the negotiation of a national contract for all workers in metal
working industries.  The national strikes resulted in the loss of approximately
four production days because of additional time needed to restart production
after each strike. Moto Guzzi's "company" contract was renegotiated early in
1996.  Renegotiation of the "national" contract was completed in 1997.

     Under Italian law, persons in a company acquire the right to severance pay
based upon salary and years of service. At December 31, 1997, Moto Guzzi was
obligated to pay employees an aggregate of Lit. 8,003 million, and Lit. 7,154
million at December 31, 1996.  See Note 2 of Notes to Consolidated Financial
Statements of the Company.

L.I.T.A.

     BACKGROUND.  On July 25, 1995, the Company, through one of its Italian
subsidiaries, acquired L.I.T.A.  T.I.M. had been retained to manage L.I.T.A.
after a material decline in L.I.T.A.'s operations, and to oversee its sale to a
third party to be identified by T.I.M.  The physical and operational presence of
T.I.M. at L.I.T.A., its ability to examine and comprehensively analyze the
managed company's operational and capital needs and T.I.M.'s ability to help its
client to meet its strategic objective of selling L.I.T.A. represents an example
of an investment opportunity arising from T.I.M.'s management business. The
stock of L.I.T.A. was acquired at a cost of Lit. 615 million, representing a
discount of approximately Lit. 1,600 million from the book value of L.I.T.A.'s
assets of Lit. 2,264 million. 

     MANUFACTURING.  L.I.T.A. manufactures plain and perforated welded specialty
steel tubes used principally in the automotive and furniture industries. The
subsidiary's 10,000 square meter factory in Torino has a two-shift production
capacity of approximately 15,000 tons.  Beginning in 1996, following the
installation of T.I.M. management, L.I.T.A.'s production equaled 80% of
capacity; in prior years, however, production rarely reached 60% of capacity. 

     IMPACT OF CHANGING PRICES AND CURRENCY MOVEMENTS.  Steel prices have a
material effect on the business of L.I.T.A. Finished product prices are affected
by the cost of steel; market and competitive pressures are such that selling
prices react quickly to changes in the price of steel. From January to June
1996, the prices of various qualities of steel used by L.I.T.A. decreased, on
average, by approximately 22%. Finished product selling prices fell in response
and margins were burdened by losses on inventories of steel. The negative effect
on margins over the first six months of 1996 was estimated as approximately Lit.
600 million. Steel prices stabilized in the fourth quarter of 1996 and remained
broadly stable in 1997 with some small price recovery. To the extent permitted
by competition, L.I.T.A. seeks to pass increased costs from changing prices on
to its customers by increasing selling prices. 

     Exchange rates historically did not have a significant effect on the
business of L.I.T.A., as export sales were not significant to overall sales.
Export sales in 1997 amounted to 18% of sales and 

                                          9
<PAGE>

L.I.T.A. is seeking to increase such sales. As export sales continue to
increase, L.I.T.A. will become more sensitive to exchange rates between Italy
and the countries of export.

     PLANT AND MACHINERY.  L.I.T.A.'s plant and machinery were acquired many
years ago. When the Company acquired L.I.T.A. in July 1995, the fair value of
the assets acquired was in excess of the price paid. This excess, in accordance
with generally accepted accounting principles, was applied to reduce the
carrying values of long-term assets and fixed assets. Depreciation expenses are
therefore significantly lower than if they were based on current prices. Plant
and machinery will be replaced in future years at higher costs with higher
depreciation charges which, in many cases, may be offset by technological
improvements.

     RESEARCH AND DEVELOPMENT.  L.I.T.A.'s actual annual and forecast research
and development expenditure is only approximately Lit. 150 million, less than 1%
of actual and projected revenues.  The low level of expenditures was possible
because  L.I.T.A. manufactures according to a well-known and relatively
uncomplicated process.

     SALES AND MARKETING.  L.I.T.A. distributes its products directly in all
countries except in the U.K., where it distributes through exclusive agents,
(which represents approximately 5% of net sales) and in certain regions of Italy
(which represent approximately 20% of net sales).  See Note 18 to Consolidated
Financial Statements.

     CUSTOMERS.  L.I.T.A. has begun developing a market in the low-cost
furniture industry, which provides a steadier flow of production and demand than
the automotive industry. L.I.T.A. currently has a number of customers each
representing between 5% and 9% of net sales. As a consequence of the current and
planned expansion of the business, including expansion of export sales and
expansion in markets other than the automobile market, it is expected that in
the medium term the importance of any single customer will decrease. 

     BACKLOGS.  L.I.T.A. has no long-term contracts with customers and orders
typically reflect the requirements of customers for the following one to two
months.

     EXPORT SALES.  L.I.T.A. did not have significant export sales prior to
1996.  In 1997, 82% of net sales were made in Italy, and most of the remaining
18% were made elsewhere in Europe. In 1996, 90% of net sales were made in Italy,
7% elsewhere in Europe, and 3% elsewhere in the world. 

     SUPPLIERS.  There are multiple suppliers of the special clad and coated
steels used by L.I.T.A. L.I.T.A. does not have written long-term contracts with
such suppliers except in respect of a particular steel quality which is not
significant to net sales. L.I.T.A. is seeking to formalize its arrangements with
major suppliers to reduce the business risks associated with its planned
expansion and to reflect the fact that close collaboration with the steel
suppliers is required to ensure consistent quality and to shorten lead times for
significant change in supply levels, which currently can run from 12 to 18
months. 

                                          10
<PAGE>

     COMPETITION.  L.I.T.A.'s competitors are principally larger companies, many
of them subsidiaries of Italian steel manufacturers, including Profilmec,
S.p.A., Ispadue S.p.A., Lombarda Tubi (a division of the Marcegaglia Group) and
ITAS, S.p.A. The size of these competitors and the support of their parent
companies enable them to compete aggressively in the market. L.I.T.A. competes
principally on quality, flexibility of service and timeliness of delivery,
factors which its competitors also seek to offer to the market. L.I.T.A. is
currently the leading supplier in Italy of aluminized steel tubes for automotive
exhaust systems. While automotive original equipment manufacturers are
increasing their usage of higher grade stainless steel, which L.I.T.A. does not
currently supply in material quantities, the automotive aftermarket in Italy and
elsewhere in Europe is increasing its purchases of aluminized steel tubing as a
cost-effective compromise between lower-grade cold steel tubing and the higher
priced stainless steel. Tubifici DiTermi S.p.A. is the largest supplier of
stainless steel exhaust tubing in Europe. 

     SEASONAL NATURE OF BUSINESS.  L.I.T.A.'s operations historically have been
characterized by seasonal factors due to the company's dependence on the
automobile industry. Demand is lowest over the period from November to February
and is also significantly reduced in the traditional holiday month of August. 
Since 1995, L.I.T.A. has sought to reduce this seasonality by expanding its
markets in the furniture industry, which is less seasonal, but which is more
price sensitive and less profitable. 

     NUMBER OF EMPLOYEES.  Labor relations with L.I.T.A.'s employees are
considered by management to be excellent. L.I.T.A. was not subjected to any
strikes or work stoppages in 1996 or 1997. As of December 31, 1997,  L.I.T.A.
had 34 employees, of which 28 are engaged in production and 6 in management,
sales and administrative roles. At December 31, 1997, the amount of L.I.T.A.'s
severance pay obligation to employees was Lit. 888 million.

     COMPLIANCE WITH GOVERNMENTAL REGULATIONS.  L.I.T.A. is subject to a number
of governmental regulations relating to the use, storage, discharge and disposal
of minerals and alloys used in its manufacturing processes and to the safety
standards of its facilities and processes. L.I.T.A. has not been the subject of
material environmental or safety claims in the past and its management believes
that L.I.T.A.'s activities conform in all respects to presently applicable
regulations. The anticipated costs of compliance with regulations are not
expected to be significant to L.I.T.A.'s operations. 

T.I.M.

     T.I.M. is a wholly-owned subsidiary of the Company, having been acquired in
1995 as part of the purchase of substantially all of the operating subsidiaries
of Finprogetti. 

     T.I.M. provides temporary management for companies facing special problems
through a network of experienced and qualified managers which it makes available
to operate all or strategic portions of the businesses of its clients. Managers
are selected based on a client's specific needs and are supported by T.I.M.'s
management and administrative resources. T.I.M. analyzes the client's 

                                          11
<PAGE>

businesses and develops strategic business plans based on the client's
objectives which, upon agreement with the client, define the goals and standards
by which T.I.M.'s performance and incentive compensation will be measured at the
end of each engagement. A significant component of T.I.M.'s compensation is
performance-related.

     A typical T.I.M. engagement requires the appointment of a T.I.M. manager as
temporary Chief Executive Officer, or, less frequently, as Chief Financial
Officer, Chief Operating Officer or as an executive responsible for a specific
functional team or project. The engagement might require the adoption of a
fundamental corporate restructuring, a sale or other divestiture of assets, the
reorganization of marketing or distribution functions, a financial
restructuring, or the management of technological innovation. T.I.M.'s strategic
plans usually focus on reestablishing profitability and increasing net worth,
achieving productivity growth and managing staff reductions, accelerating the
decision-making process, and bridging cultural gaps which may have inhibited
growth. 

     T.I.M. is compensated for its services by receiving a monthly fee. It also
negotiates a success fee based on achievement of agreed-upon results. T.I.M.
engagements normally begin with an analysis phase and continue with a business
plan implementation and review phase. 

     SALES AND MARKETING.  T.I.M. seeks new management engagements through
marketing efforts directed at financial and legal professionals, and
entrepreneurs, in Italy and elsewhere in Europe. T.I.M. conducts seminars and
symposia. 

     The ability of T.I.M. to generate management services income for the
Company is in part dependent on the availability of and ability to attract
suitably qualified managers to collaborate with T.I.M. The availability of
suitably qualified managers will depend on, among other factors, the general
economy in Italy and demand for managers, the actions of companies that seek to
compete with T.I.M. or offer alternative employment options to such managers,
and the ability of T.I.M. to negotiate attractive engagements and attractive
engagement terms for potential manager candidates. 

COMMERCIAL REAL ESTATE DEVELOPMENT

     The Company acquired, as part of the Finprogetti transaction, a real estate
portfolio which it has been disposing of and will continue to seek to liquidate
at opportune times. 

     In June 1996, the Company sold its 66.7% equity interest in Immobiliare
Broseta S.r.l. which owns industrial and commercial holdings and additional
surrounding land aggregating approximately 66,000 square meters in Bergamo,
Italy to its then 25% owned affiliate Domer S.r.l. The remaining 33.3% equity
interest in Immobiliare Broseta S.r.l. was owned by Interim S.p.A., a subsidiary
of Domer and was transferred to Domer. The Company had sought offers from third
parties through an independent broker and the sale price of Lit. 5,200 million
offered by Domer was the highest of the offers received. Domer issued a
promissory note for Lit. 1,800 million of the sale price, due December 31, 1996,
which note was subsequently extended for another year, bearing an interest rate 

                                          12
<PAGE>

equal to the official Lira discount rate plus 3%.   The balance due of Lit.
3,400 million was to be received from the sales of apartments to be developed
from the Immobiliare Broseta property when such sales occurred or on June 30,
1999, whichever occurred earlier. This amount of Lit. 3,400 million carried an
interest rate of 6%, payable bi-annually, and has been accounted for at its
estimated net present value of Lit. 2,908 million, applying a discount rate of
12%, considered to be a fair market rate for similar notes receivable. The book
value of the 66.7% interest in Immobiliare Broseta S.r.l. was Lit. 4,708 million
and no gain or loss was recorded on the transaction. 

     In December 1997, the Company entered into an agreement to dispose of its
25% interest in  Domer and the promissory notes due from Domer deriving from the
Company's 1996 disposal of Immobiliare Broseta described above.   The
consideration for such sale is composed of Lit. 2,900 million in cash, of which
Lit. 1,400 million was paid on December 31, 1997 and Lit. 1,500 million on March
31, 1998, plus the proceeds of sale by persons affiliated with Finprogetti of
45,977 shares of the Company's Common Stock, plus the proceeds from the sale of
certain apartments located in Bergamo, the sales of which are expected to be
substantially completed during 1998.

     The Company estimates that the aggregate of the consideration received and
to be received will at least equal the aggregate carrying value of Lit. 6,238
million of the 25% interest in Domer and the promissory notes due by Domer to
the Company from the Immobiliare Broseta sale.  No gain has been recorded in
respect of this transaction in the financial statements at December 31, 1997 and
the amounts due are shown in "Other receivables" at the aggregate book value of
the assets disposed of, less the Lit. 1,400 million received in 1997.

     In March 1997, the Company agreed to sell its interest in Finprogetti
Investimenti Immobiliare S.p.A., ("FII"), the Italian entity which had owned
commercial property at Cologne, Italy.  The Cologne property is subject to a
lease expiring in 1998 and is encumbered by two mortgages requiring substantial
amortization payments.  In addition to assuming all of the mortgage
indebtedness, the purchaser agreed to pay to the Company approximately Lit.
6,178 million, of which Lit. 2,428 million was paid in March and April 1997 and
Lit. 2,040 million paid on July 1, 1997.  The balance was paid on December 31,
1997, at the option of the purchaser, by delivery of 120,000 shares of Common
Stock of the Company, valued at Lit. 1,610 million at the date this option was
given to the purchaser.  Alternatively, the purchaser had had the option of
paying Lit. 2,040 million in cash.  In connection with the sale of FII, the
purchaser undertook to pay to the Company the proceeds of a tax receivable owned
by FII, at such time as the proceeds are received.

     The Company owns an 80% interest in unimproved land aggregating 2,539,020
square meters near Cagliari (Sardinia), Italy which had a book value at December
31, 1997 of Lit. 3,500 million, net of reserves for risks connected with the
permitted use of the land and its development. An option held by an unaffiliated
third party to purchase the Company's interest in this land, for an amount above
book value, expired unexercised on June 30, 1996. The land has development
potential for tourism or residential purposes and the Company is exploring its
disposition. 

                                          13
<PAGE>

     The Company owns 99.9% of Pastorino Strade S.r.l., which owns concession
rights for 196 spaces in a municipal parking garage in Genoa, Italy. The book
value of the concession rights is Lit.  4,406 million at December 31, 1997. The
rights expire in the year 2041 and are being depreciated over the period from
acquisition to this date. The Company has sub-contracted management of the
parking spaces under a three-year contract and will consider disposition of the
concession rights upon the termination of this contract or sooner, depending on
market conditions.

     Unrelated to the real estate acquired from Finprogetti, the Company owned
and subsequently sold surplus property remaining after the Maserati sale and the
winding down of the automobile spare parts operation. A parcel in Rome, Italy
was sold in December 1996 for approximately Lit. 1,533 million, and a parcel in
Baltimore, Maryland in July 1996 for approximately $1,100,000. 

RECENT TRANSACTIONS

     TRANSFER OF CONTROLLING INTEREST TO TAMARIX.  On May 2, 1997, Finprogetti,
then the largest shareholder of the Company,  agreed to sell to Tamarix, a
Cayman Islands limited duration company, 900,000 shares of Common Stock. 
Tamarix and Finprogetti agreed that Finprogetti will have a put right and
Tamarix a call right with respect to an additional 735,000 shares of Common
Stock owned by Finprogetti.  The put option is exercisable for a one year
period, beginning on the first anniversary of the closing of the 900,000 share
purchase and sale and the call option is exercisable during the two years
beginning on such closing date.  During such two-year period, Tamarix will have
a proxy from Finprogetti to vote such 735,000 shares.  Subsequently, Finprogetti
sold to Tamarix 100,000 of such shares so that the put and call options
described above now relate to 635,000 shares.  In addition, Finprogetti 
delivered the resignations from the Company's Board of Directors of certain
persons.  In connection with the foregoing the Company (a) engaged Tamarix
Capital Corporation for three years to provide certain financial advisory
services to the Company at a cost of $200,000 per year, payable quarterly, plus
reasonable expenses, (b) issued to Centaurus Management LDC, a Cayman Islands
limited duration company and the manager of Tamarix, a warrant to purchase
1,250,000 shares of Common Stock with an exercise price equal to the offering
price per share of Common Stock exercisable for a three-year
period, (c) registered the shares of the Company purchased from Finprogetti as
well as the shares underlying such warrants, and (d) caused the By-Laws or the
Certificate of Incorporation of the Company to be amended to provide for (i) a
staggered Board of Directors which shall include at least one person nominated
by Tamarix in each of the three classes, (ii) provide for a representative of
Tamarix to be Chairman of the Board of the Company, (iii) provide that Tamarix's
consent will be required to further amend the Company's Certificate of
Incorporation, and (iv) require that the Board of Directors be expanded and
limited to not more than 11 members, such Board to include three Tamarix
nominees and an additional three independent directors who are experienced in
business matters and otherwise reasonably acceptable to Tamarix.  As financial
advisor, Tamarix will, among other things, identify potential investment or
acquisition opportunities for the Company, and sources of capital for the
Company and its subsidiaries.  See also Notes to Consolidated Financial
Statements.

                                          14
<PAGE>

     1997 PUBLIC OFFERING.  In June 1997, the Company completed an underwritten
"firm commitment" public offering of 1,250,000 shares of Common Stock and
1,437,500 Redeemable Common Stock Purchase Warrants (the "Warrants").  Each
Warrant is exercisable for one share of Common Stock of the Company at an
exercise price of $7.20 share, for a period of five years commencing on June 5,
1997 - the effective date of the offering, and is redeemable by the Company
under certain circumstances.  GKN Securities Corp., of which Deborah S. Novick,
a director of the Company, is also an officer, acted as underwriter for the 1997
public offering.

     MOTO GUZZI FINANCING.  The Company's newly-formed subsidiary, Moto Guzzi
Corp., acquired all of the equity interest of the Company in Moto Guzzi and in
Moto America, in exchange for 6,000,000 shares of common stock of Moto Guzzi
Corp. In December 1996 and January 1997, Moto Guzzi Corp. consummated a private
offering of convertible preferred stock and common stock purchase warrants which
raised an aggregate of approximately $5,300,000 for Moto Guzzi Corp. net of
expenses.  GKN Securities Corp. acted as placement agent.

STRUCTURE OF THE COMPANY

     The following chart depicts the current structure of the Company. 

     The following is a textual summary of the current organizational chart of
the Company. The chart in graphical form is included in the paper version of
this filing: 

     The Company owns 100% of the equity interest in Temporary Integrated
Management, S.p.A., an Italian corporation, a 99.9% equity interest in Trident
Rowan Servizi S.p.A. ("TRS"), an Italian corporation, a 20% equity interest in
Moto Guzzi Corp., a Delaware corporation, and a 95.54% equity interest in
Finproservice S.p.A., an Italian corporation. 

     TRS owns an 83.92% equity interest in O.A.M. S.p.A. ("OAM"), an Italian
corporation. 

     OAM owns a 60% equity interest in Moto Guzzi Corp., a 100% equity interest
in Finprogetti International Holdings, S.A., a Luxembourg corporation ("FIH"), a
99.9% equity interest in Pastorino Strade, S.r.l. and an 80% equity interest in
Grand Hotel Bitia S.r.l. FIH owns the remaining .1% equity interest in Pastorino
Strade.

     FIH owns a 99.6% equity interest in L.I.T.A. S.p.A. OAM owns the remaining
0.4% interest in L.I.T.A. 

     Moto Guzzi Corp. owns a 100% equity interest in Moto Guzzi S.p.A. ("Moto
Guzzi"), an Italian corporation and 100% of the equity interest in Moto America,
Inc., a North Carolina corporation. 

     Moto Guzzi owns a 100% equity interest in Centro Ricambi S.r.l., an Italian
corporation, a 25% equity interest in MGI GmbH, a German corporation, and a 100%
equity interest in Moto Guzzi France, S.A., a French corporation. 

                                          15
<PAGE>

ITEM 2.   PROPERTIES

     The following facilities were in 1997, and are presently, leased or owned
by the Company in the active conduct of its business: 

      (a) 1,700 square feet of office space at Two Worlds Fair Drive, Franklin
Township, Somerset, NJ 08873, in which are located the United States
administrative office of the Company, and which is occupied under a five-year
lease expiring in 2001, at a monthly rental of approximately $2,200.

      (b) Factory and office facilities owned in fee and located in Mandello del
Lario, Italy in a group of one, two and three story buildings aggregating 54,550
square meters, and which is used by Moto Guzzi. This facility is currently
operating at approximately 55% of production capacity calculated as a percentage
of available space.

      (c) Moto Guzzi's parts distribution facility is located at a 3,683 square
meter facility in Modena, Italy, under a six-year lease expiring in 2002. The
current year lease obligation is Lit. 239 million, and is subject to incremental
annual increases.

      (d) Offices aggregating 480 square meters in Milan, Italy, used by Trident
Rowan Servizi, OAM and T.I.M. are leased from an entity affiliated with
Francesco Pugno Vanoni, the former Chairman of the Board of the Company, and his
brother, at a cost of Lit. 161 million in 1997 under a lease expiring on August
31, 2000. The rental is believed to be comparable to rents paid for similar
facilities elsewhere in Milan.

      (e) Unimproved land aggregating 2,539,020 square meters in Cagliari,
Italy. The Company, through OAM, owns an 80% interest therein, and is exploring
its disposition. An unaffiliated third party had an option to purchase the
Company's interest, which expired unexercised on June 30, 1996 for Lit. 10,600
million, less outstanding debt.

      (f) Offices aggregating 150 square meters in Brescia, Italy used by
Finproservice S.p.A. at an annual rental of Lit. 16 million under a six-year
lease expiring in 2001.

     (g)  Factory and related commercial facility aggregating approximately
10,000 square meters in Torino, Italy leased by L.I.T.A., at an annual rental of
Lit. 510 million in 1997 and used at approximately 80% of present production
capacity, based on present equipment in place. 

ITEM 3.   LEGAL PROCEEDINGS

     The Company and its subsidiaries are involved in litigation in the normal
course of business. Management does not believe, based on the advice of its
legal advisors, that the final disposition of such litigation will have a
material adverse effect on the Company.

                                          16
<PAGE>

ITEM 4.   SUBMISSION OF MATTERS OF VOTE OF SECURITY HOLDERS

     On December 9, 1997, the Company held an Annual Meeting of Shareholders to
elect a Board of Directors and to act upon the proposals required by the
Finprogetti-Tamarix agreement.

     The proposals put before the shareholders, and the vote taken thereon, were
as follows:


     1.   To amend the Articles of Incorporation to establish the maximum number
of members of the Board of Directors at 11 for so long as Finprogetti shall not
have completed the sale of 1,635,000 shares of common stock to Tamarix and at a
maximum of 10 thereafter.  

               A total of 4,033,647 shares were voted in favor thereof.

     2.   To amend the Articles of Incorporation to require that at least three
members of the Board of Directors shall not be employees of or affiliated with
the Company or any of its subsidiaries, or of any shareholder or affiliate
thereof, all of whom shall otherwise be persons of good character, experienced
in business matters, and reasonably acceptable to Tamarix (each an "independent
director").  

               A total of 4,037,574 shares were voted in favor thereof.

     3.   To amend the Articles of Incorporation to require that actions of the
Board of Directors shall require the affirmative vote of the majority of  the
entire Board, including vacancies then unfilled.  

               A total of 3,474,968 shares were voted in favor thereof.

     4.   To amend the Articles of Incorporation to classify the Board of
Directors into three classes, as nearly equal in number as possible, each of
which, after an interim arrangement, will serve for three years, one class being
elected each year.  

               A total of 3,445,102 shares were voted in favor thereof.

     5.   To amend the Articles of Incorporation to permit Tamarix, so long as
it is the record owner of (i) not less than 1,000,000 shares of Company common
stock to nominate one member to each class of the Board of Directors, one of
whom shall serve as the Chairman of the Board, (ii) at least 500,000 but fewer
than 1,000,000 shares of Company common stock to nominate one member to the
class which shall initially serve for a two year term and who shall serve as the
Chairman of the Board, and (iii) at least 300,000 but fewer than 500,000 shares
of Company common stock to nominate one member to the class which shall
initially serve for a one year term. 

                                          17
<PAGE>

               A total of 3,473,550 shares were voted in favor thereof.

     6.   To elect each of the nominees named below as a Director.

CLASS I DIRECTORS:                              VOTE

     Albino Collini                          4,062,175
     Mario Tozzi-Condivi                     4,062,175
     Giovanni Caronia                        4,062,175
     Nicola Caiola                           4,062,175

CLASS II DIRECTORS:

     Arno Morenz                             4,062,175 
     Deborah S. Novick                       4,062,175
     William Spier                           4,062,175 
     Ronald Koenig                           4,062,175 

CLASS III DIRECTORS:

     Howard E. Chase                         4,062,175 
     Emanuel Arbib                           4,062,175 
     Mark Hauser                             4,062,175 


ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     From September 24, 1994 through June 5, 1997, the Company's common stock
traded on the Nasdaq SmallCap Market under the symbol DTOM, and, since August
22, 1996, under the symbol TRGI. The reported prices represent inter-dealer
prices, which do not include retail mark-ups, mark-downs, or any commission to
the broker-dealer, and may not necessarily represent actual transactions.  Since
June 5, 1997, the common stock and warrants have traded on the Nasdaq National
Market.

                                    COMMON STOCK 

<TABLE>
<CAPTION>
                                                                    BID PRICES
                                                                    ----------
                                                               HIGH BID     LOW BID
                                                               --------     -------

     1995
<S>                                                            <C>         <C>
     1st Quarter . . . . . . . . . . . . . . . . . . . . . .     9 1/2       7 3/4
     2nd Quarter . . . . . . . . . . . . . . . . . . . . . .     8 5/8       8 1/2
     3rd Quarter . . . . . . . . . . . . . . . . . . . . . .     9 3/4       9 3/8
     4th Quarter . . . . . . . . . . . . . . . . . . . . . .     10 1/2      9 1/2
</TABLE>

                                          18
<PAGE>

<TABLE>
<CAPTION>

     1996

<S>                                                             <C>         <C>
     1st Quarter . . . . . . . . . . . . . . . . . . . . . .     11          10 3/8
     2nd Quarter . . . . . . . . . . . . . . . . . . . . . .     10 3/4       9 3/4
     3rd Quarter . . . . . . . . . . . . . . . . . . . . . .     10 3/4       9
     4th Quarter . . . . . . . . . . . . . . . . . . . . . .     10 3/4       8

     1997

     1st Quarter . . . . . . . . . . . . . . . . . . . . . .     9 1/2        7 3/8
     2nd Quarter . . . . . . . . . . . . . . . . . . . . . .     8 1/2        4 7/8
     3rd Quarter . . . . . . . . . . . . . . . . . . . . . .     7 1/4        4 1/8
     4th Quarter . . . . . . . . . . . . . . . . . . . . . .     7 1/8        4 15/16

                                       WARRANTS
     1997


     2nd Quarter from June 5 . . . . . . . . . . . . . . . .     1 1/8        3/8
     3rd Quarter . . . . . . . . . . . . . . . . . . . . . .     1 7/16      11/32
     4th Quarter . . . . . . . . . . . . . . . . . . . . . .     1 3/8        3/4
</TABLE>

     As of April 13, 1998, there were 1,235 holders of record of the Company's
common stock. 


                                   DIVIDEND POLICY

     The Company has not paid any dividends since its inception and does not
anticipate paying any dividends on its Common Stock for the foreseeable future.
Management intends to retain earnings, if any, for use in its business and to
support development and expansion of the Company's business.  Under an agreement
with Tamarix, the approval of the Tamarix-designated directors is required as a
condition of paying dividends.


ITEM 6.   SELECTED FINANCIAL DATA

     The selected consolidated financial data set forth below for the fiscal
years ended December 31, 1997, 1996, 1995, 1994 and 1993 have been derived from
the Company's audited financial statements.  The information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and such financial statements, including the notes
thereto, included elsewhere in this Form 10-K.

                                          19
<PAGE>

<TABLE>
<CAPTION>

                                   Year ended
                                   December 31,                              YEARS ENDED DECEMBER 31                    
                                                       -----------------------------------------------------------------
                                      1997             1997            1996           1995           1994           1993
                                   -------------------------------------------------------------------------------------
                                   US$000(1)                     (Millions of Italian Lire - except for per share amounts)
                                   (except per
                                   share data)

<S>                                <C>            <C>                 <C>            <C>            <C>            <C>
Net Sales..........................$   58,586     Lit. 103,369        96,806         72,253         51,994         41,919
Loss from continuing operations 
     before extraordinary items....   (12,707)         (22,477)      (15,001)        (6,980)        (3,277)        (6,736)
Net (loss)/income..................   (12,707)         (22,477)      (15,001)        (6,980)        (3,277)       153,497(2)
Basic loss per share from continuing 
     operations before extraordinary
     items.........................     (2.76)          (4,886)       (3,268)        (2,065)        (1,593)        (2,203)
Net (loss)/income per share........     (2.76)          (4,886)       (3,268)        (2.065)        (1,593)        50,204(2)
Total Assets.......................    82,395          145,755       156,512        182,830        118,661        127,556
Long-term debt.....................     4,038            7,144        16,468         18,098          5,004          5,738
Cash dividends paid per  
     common share..................                    Dividends have not been paid in the past.
</TABLE>

1    The above information for the year ended December 31, 1997, expressed in
     Italian Lire, has been translated into U.S. Dollar equivalents in thousands
     of dollars (except for per share amounts), at the rate of exchange
     prevailing at December 31, 1997. 

2    Includes a gain of Lit. 160,233 million (Lit. 52,407 per share)
     resulting from the sale of the Company's 51% interest in Maserati
     S.p.A. to Fiat. 

EXCHANGE RATES

     Since all of the production, and much of the sales of the Company, occur in
Italy, the Company's primary financial statements are reported in Italian Lire,
the functional currency of the Company as defined by generally accepted
accounting principles. U.S. Dollar translations are provided solely for the
reader's convenience and have been made at the approximate rate of 1,769 lire to
the dollar as of December 31, 1997.

     Prior to September 1992, the Bank of Italy maintained the value of the Lira
within the narrow band contemplated by the Exchange Rate Mechanism (the "ERM")
of the European Monetary System (the "EMS"). On September 17, 1992, in response
to strong downward pressure on the exchange rate of the Lira against other EMS
currencies that continued despite intervention by the Bank of Italy and the
central banks of the other nations participating in the EMS, the Italian
Government, in consultation with the Bank of Italy, suspended the Lira from the
ERM. Following this suspension, the value of the Lira immediately declined by
approximately 20% against the main EMS currencies with similar consequent
depreciation against the U.S. Dollar. The Lira was readmitted into the ERM on
November 25, 1996. 

                                           20
<PAGE>

     The following table sets forth, for the period indicated, the high, low,
average and end of period exchange rates expressed in lire per dollar (rounded
to the nearest lira): 

<TABLE>
<CAPTION>

CALENDAR YEAR                         HIGH      LOW      AVERAGE   END OF PERIOD
-------------                         ----      ---      -------   -------------

<S>                                  <C>       <C>       <C>          <C>
  1997 . . . . . . . . . . . . . . . 1,837     1,520     1,703        1,768
  1996 . . . . . . . . . . . . . . . 1,606     1,499     1,542        1,522
  1995 . . . . . . . . . . . . . . . 1,767     1,565     1,626        1,588
  1994 . . . . . . . . . . . . . . . 1,689     1,539     1,612        1,622
  1993 . . . . . . . . . . . . . . . 1,713     1,478     1,574        1,713

</TABLE>

  Fluctuations in the exchange rates between the lira and the dollar will
affect the dollar equivalents of the Company's reported revenues and earnings. 
The Company does not currently engage in hedging activities to reduce its
exposure to exchange rate fluctuations.

  In addition, fluctuations in the exchange rates of other foreign countries
relative to the lira may affect the Company's results of operations as a
consequence of the competitiveness of the Company relative to its competitors
and due to effects on the cost of imported raw materials.  See also
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."


                                           21

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
         RESULTS OF OPERATIONS

PORTIONS OF THE DISCUSSION AND ANALYSIS BELOW CONTAIN CERTAIN "FORWARD LOOKING"
STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS
MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FORWARD LOOKING
STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT
LIMITED TO, MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS AND SERVICES, CHANGES IN
CURRENCY EXCHANGE RATES, LACK OF ADEQUATE CAPITAL TO ACHIEVE SUCH RESULTS, OTHER
FACTORS DISCUSSED IN THE REPORT AS WELL AS FACTORS DISCUSSED IN OTHER FILINGS
MADE WITH THE SECURITIES AND EXCHANGE COMMISSION. ALTHOUGH THE COMPANY BELIEVES
THAT THE ASSUMPTIONS UNDERLYING THE FORWARD LOOKING STATEMENTS CONTAINED HEREIN
ARE REASONABLE, ANY OF THE ASSUMPTIONS COULD PROVE INACCURATE, AND THEREFORE,
THERE CAN BE NO ASSURANCE THAT THE FORWARD LOOKING STATEMENTS INCLUDED HEREIN
WILL PROVE TO BE ACCURATE.

GENERAL

   The Company's revenues are dominated by the results of Moto Guzzi, its
principal operating subsidiary, which represent 78% of 1997 consolidated net
sales compared to 80% in 1996. With Lit. 8,034 million of financing provided by
a private placement of Moto Guzzi Corp. preferred stock at the beginning of 1997
and approximately Lit. 6,800 million committed by the Board of Directors of the
Company from the proceeds of a public offering of shares of its Common Stock in
June 1997, Moto Guzzi has begun to make necessary investments in plant,
equipment and personnel. Increased expense for product development, establishing
and expanding importer-distributors in the U.S. and France, and in strengthening
its sales, marketing and general management functions, have all adversely
affected 1997 operating results. Management expects to realize the benefits
therefrom in 1998 and in future years.

   The results of L.I.T.A., the Company's steel tubing subsidiary, showed a
significant improvement in 1997 from 1996 due to improved and stabilized steel
prices and increased volumes. This subsidiary recorded a Lit. 795 million
operating profit in 1997 compared to an operating loss of Lit. 385 million in
1996.

   The Company made a significant step forward in the disposition of the real
estate portfolio acquired in 1995 from Finprogetti with the sale of the largest
property in April 1997. Additionally, it entered into agreement in December to
dispose of its minority interest in, as well as receivables due from a real
estate development company.

   POTENTIAL EFFECTS OF THE YEAR 2000 ON THE COMPANY'S BUSINESS

   Many older computer systems and electronic devices are based on software
systems which, because of how dates are stored and manipulated, assume that all
years occur only in the 20th century. Consequently, after December 31, 1999,
such devices may not function correctly. The Company, like many other businesses
and individuals, is potentially subject to adverse consequences arising both
from the incorrect functioning of any systems used in its own business such as
accounting, production control, inventory and automated equipment and also from
the incorrect functioning of systems of suppliers, customers, utilities, banks
and financial institutions and others with whom it interacts in the normal
course of its business.

                                           22
<PAGE>

   The Company has over the last two years refurbished production and inventory
computer systems at Moto Guzzi, which is its most complex business and relies to
the greatest extent on computerized systems for its business. Company management
has sought assurance from suppliers that the new systems would be compliant with
requirements related to the year 2000. The Company's businesses do not have
unique or custom-tailored requirements for their accounting systems and could
rapidly and inexpensively change to "off-the-shelf" systems which are 2000
compliant, if their current systems are found not to be year 2000 compliant
despite any assurances to the contrary. Over the next 12 months, Management will
institute procedures to address potential problems which could arise in relation
to suppliers and customers, with particular regard to suppliers' ability to 
provide components on a timely basis. Management believes that it is reasonable 
to assume that utility suppliers and the banks and financial institutions with 
which it has relationships, generally national or large regional institutes, are
themselves addressing potential problems on a timely basis so as to be able 
to provide necessary services to the Company. The Company has a number of 
banking relationships and alternatives for banking services.

   POTENTIAL EFFECTS OF THE PROPOSED EUROPEAN COMMON CURRENCY ON THE COMPANY'S
   BUSINESS

   The Company's businesses are substantially located and operate in Italy. In
the early part of 1998, Italy's government expressed its willingness to
participate in a proposed European common currency, the Euro, and has presented
financial forecasts and statements of its financial position which support its
qualifications to so participate. Formal decisions on participation in the 
Euro, by Italy and other European Union countries are expected in May 1998.

   The proposed European Common Currency is expected to have significant effects
on the Company's business. Among many potential economic factors, the proposed
common currency is expected to increase competition within the common currency
zone. Decreases in current Italian interest rates toward a currently expected
lower convergence rate of the participant countries is also expected and the
likelihood of Italy's participation is widely believed to have been a
significant factor in decreases in Italian interest rates in 1997.

   Moto Guzzi makes significant export sales outside the proposed common
currency zone and the prices of certain commodities used in its manufacturing
processes may be affected by the value of the Euro. The implementation of the
Euro within the common currency zone could have unanticipated consequences on
the economies of participant countries which could affect demand for the
company's products. The common currency zone is expected to encompass countries
representing over three-quarters of Moto Guzzi's 1997 net sales and
economic consequences could have material affects on the Company's business.

   Adoption of the Euro is expected to take place over a two year transition
phase in which initially both the Lire and the Euro would be valid currencies
for business transactions in Italy.

   The proposed European Common Currency could have a significant effect on the
Company's accounting systems which could require significant modification or
replacement. Management believes that the Company's businesses do not have
unique or custom-tailored requirements for accounting systems and that it could
rapidly and inexpensively change to "off-the-shelf" systems at an appropriate
time if existing systems prove not to be adequate. The Company is not able to
evaluate these matters or the effects on international financial and payment
systems with which it interacts at the present time. The company will address
these issues during the current year and in 1999 as further guidelines and
information become 

                                           23
<PAGE>
available. Adoption of the Euro would also lead to the Company reporting its
results in that currency instead of the Italian Lire from some point in the
future, yet to be defined.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                                                    YEAR ENDED                YEAR ENDED
                                                                DECEMBER 31, 1997          DECEMBER 31, 1996
                                                                     LIRE M.                    LIRE M.
<S>                                                              <C>         <C>            <C>       <C>
NET SALES....................................................      103,369    100.0%          96,806    100.0%

COST OF SALES................................................      (91,259)   (88.1%)        (84,165)   (86.9%)
                                                              -------------              ------------

                                                                    12,380     11.9%          12,641     13.1%

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.................      (22,990)   (22.2%)        (21,430)   (22.1%)
RESEARCH AND DEVELOPMENT.....................................       (3,125)    (3.0%)         (1,177)    (1.2%)
IMPAIRMENT LOSSES............................................       (4,001)    (3.9%)         (4,180)    (4.3%)
RENTAL INCOME................................................          477      0.5%           1,483      1.5%
                                                              -------------              ------------

OPERATING LOSS...............................................      (17,259)   (16.7%)        (12,663)    (8.8%)

INTEREST EXPENSE.............................................       (4,493)    (4.3%)         (6,563)    (6.8%)
INTEREST INCOME..............................................        2,403      2.3%           3,747      3.9%
OTHER INCOME, NET............................................        2,007      1.9%           1,452      1.5%
                                                              -------------              ------------

LOSS BEFORE INCOME TAXES AND MINORITY INTERESTS..............      (17,342)   (16.7%)        (14,027)   (14.5%)

INCOME TAXES.................................................         (457)    (0.4%)           (595)    (0.6%)

MINORITY INTERESTS...........................................        1,041      1.0%            (379)    (0.4%)

AMORTIZATION OF PREMIUM FOR REDEMPTION OF

  PREFERRED STOCK OF SUBSIDIARY..............................       (3,595)    (3.5%)              -        -
CHARGE FOR ISSUANCE OF WARRANTS..............................       (2,124)    (2.0%)              -        -
                                                              -------------              ------------

NET LOSS.....................................................      (22,477)   (21.7%)        (15,001)   (15.5%)
                                                              =============              ============
</TABLE>
<TABLE>
<CAPTION>
                                                         NET SALES                    OPERATING PROFIT/(LOSS)
                                           --------------------------------------  ------------------------------
                                                1997       CHANGE%       1996          1997               1996
<S>                                       <C>             <C>        <C>           <C>              <C>
   MOTORCYCLES                                 80,988        4.3%       77,620       (7,435)                478
   STEEL TUBING                                20,480       18.3%       17,313          795                (385)
   REAL ESTATE                                      -                        -          201                 826
   CORPORATE AND OTHER                          2,535      (10.9.%)      2,846       (6,910)             (9,402)
   IMPAIRMENT LOSSES                                -                        -       (4,001)             (4,180)
   INTERSEGMENT ELIMINATIONS                     (364)     (62.6%)        (973)          91                   -
                                         -------------            -------------  ------------      -------------
                                              103,639        7.1%       96,806      (17,259)            (12,663)
                                         =============            =============  ============      =============

   REAL ESTATE - RENTALS                          477      (67.8%)       1,483
                                         =============            =============
</TABLE>

Further analysis of net sales and components of operating loss by industry
segment is included in Note 18 to the Company's Consolidated Financial
Statements at December 31, 1997.
                                           24
<PAGE>

   OVERVIEW

   The increase of 7.1% in consolidated net sales in 1997 compared to 1996
comprises increases at both Moto Guzzi and L.I.TA., discussed below. The
decrease in corporate and other sales reflects lower than anticipated levels of
new engagements in 1997 for the Company's T.I.M. subsidiary, although T.I.M. has
obtained several new engagements since January 1, 1998. Intersegment
eliminations have decreased because of the appointment of Oscar Cecchinato as
CEO of Moto Guzzi; previously T.I.M. had provided senior management to Moto
Guzzi.

   Costs of sales increased in 1997 compared to 1996 and consequently margins
fell from 13.1% to 11.9%. Increased margins at L.I.T.A. were more than offset by
decreased margins at Moto Guzzi, both discussed below.

   While selling, general and administrative expenses increased in Lire terms in
1997 compared to 1996, they were unchanged as a percentage of sales. The
additional expense reflects an increase of 35% at Moto Guzzi connected with
efforts to strengthen sales, marketing and management and to new and expanded
overseas distributors, offset by a decrease of 27% in corporate overhead
resulting from cost cutting. Selling, general and administrative expenses at
L.I.T.A. showed a slight reduction in 1997 compared to 1996.

   Moto Guzzi, in accordance with its expansion and product improvement plans,
also significantly increased research and product development expenditures from
Lit. 1,177 million in 1996 to Lit. 3,125 million in 1997. Expenditures were
accelerated in the last quarter of 1997 following the commitment by the Board of
Directors of the Company of $4 million for Moto Guzzi's expansion plans from the
proceeds of the Company's public offering of Common Stock in June 1997.

   Rental income decreased by 67.8% in 1997 compared to 1996 following sale of
the Company's most significant property in March 1997.

   The Company's Board of Directors has made a strategic decision to focus the
Company's energies and resources on its Moto Guzzi business and, consequently,
not to develop, at the present time, its merchant banking and other financial
services activities. In this context, the potential of its temporary management
subsidiary will be curtailed and, accordingly, the Company has recorded
impairment adjustments which substantially write down trademarks and related
goodwill of that subsidiary. In 1996 the Company recorded impairment reserves of
Lit. 4,180 million in connection with its real estate disposal program.

   The increase in operating loss in 1997 compared to 1996 was due principally
to reductions in margins, increased selling, general and administrative expenses
and increased research and development expenditures at Moto Guzzi, as outlined
below. This adverse change more than offset the operating profit at L.I.T.A. and
the reductions in the Company's overhead.

   The Company has recorded decreased interest income of Lit. 2,403 million in
1997 compared to Lit. 3,747 million in 1996 due to a decrease in liquidity and
interest rates. Interest expense decreased from Lit. 

                                           25
<PAGE>

6,563 million to Lit. 4,493 million due to the elimination of real estate loans
with disposal of the Cologne property and to reductions in interest rates.

   Other income increased in 1997 compared to 1996 and is principally composed
of favorable exchange gains which, in 1997 aggregated Lit. 1,984 million,
principally relating to bridge financing, until completion of the Company's June
1997 public Common Stock offering, by the Company's Italian subsidiaries to the
U.S. parent. Other income in 1996 included gains on sale of assets of Lit. 1,211
million, a government grant of Lit. 450 million for research carried out in
prior years and miscellaneous gains, offset by exchange losses of Lit. 848
million.

   The Company recorded in 1997 two non-cash items not present in 1996. Lit.
3,595 million has been recorded as amortization of preferred stock redemption
premiums relating to the Moto Guzzi Corp. preferred stock issued at the end of
1996 and in early 1997. A significant element of this charge results from
exchange differences as the contingent redemption obligation is denominated in
U.S. dollars. The Company also recorded, in the second quarter of 1997, a charge
of Lit. 2,124 million for the issuance of warrants in connection with the
acquisition by Tamarix of a controlling interest in the Company's Common Stock
from Finprogetti.

   Because Italian companies are taxed in Italy on their individual results and
are not able to file consolidated returns, one of the Company's Italian
subsidiaries had income tax expense in 1997 and 1996 on interest income and
gains on disposals of assets, despite consolidated operating losses from
operations in both years.

   As a result of the operating factors, impairment reserves and the non-cash
charges described above, the Company has reported an increased net loss for 1997
compared to 1996.

   MOTO GUZZI

   Despite a 7.4% decline in unit sales in 1997 over 1996, net sales at Moto
Guzzi increased by 4.3%, due principally to a more favorable sales mix. Total
unit sales in 1997 were 5,593 compared to 6,050 in 1996. Net sales in 1997 also
reflected approximately Lit. 3,800 million at sales value of motorcycles
manufactured for public administration customers whose sale was planned for
December, but for which the necessary technical checks and clearance were not
completed until the first quarter of 1998. Consolidated net sales of parts
increased 13% in 1997 over 1996.

   Net sales of the Company's exclusive U.S. importer increased by 113% to Lit.
13,000 million, reflecting a 93% increase in local currency terms and the
effects of conversion of dollars into lire.

   Gross margin as a percentage of sales decreased in 1997 compared to 1996 as a
result of the Company's policy substantially not to pass on increased component
costs to customers. Moto Guzzi also incurred higher charges for inventory
obsolescence in 1997 reflecting continuing moves to higher quality outsourced
components and modifications to model specifications. Production increased in
1997 compared to 1996 by 3.4% from 6,027 units to 6,234 units.

   Moto Guzzi has also made increased investments in development of new products
in 1997 with research and development expenditure increasing from Lit. 1,177
million to Lit. 3,125 million.

                                           26
<PAGE>


   Sales general and administrative expenses increased in 1997 compared to
1996 by approximately 35%, reflecting increased activities in its U.S. importer
and its newly formed French importer as well as increased sales and marketing
and general management expense at Moto Guzzi S.p.A. as the Company seeks to
redefine and improve its operations in all areas.


   Moto Guzzi's operating loss of Lit. 7,435 million in 1997, compared to an
operating profit of Lit. 478 million in 1996, arose principally from the
following: 1) the decision to maintain 1996 sales prices to support sales
objectives; 2) higher levels of inventory obsolescence resulting from product
changes and a switch to higher quality components; 3) increased research and
development expenditure; and 4) increased marketing, sales and general 
management in connection with expansion of operations in the U.S. and France 
and plans to improve all areas of its business. Management believes these 
investments made in 1997 in quality and new model development and in building a 
strong management team will produce benefits in 1998 and future years.

   L.I.T.A.

   L.I.T.A. recorded an 18.3% increase in net sales in 1997 compared to 1996 due
to increased volumes and a partial recovery of prices. Part of the sales volume
increase derived from increased export sales which grew to 18% of net sales in
1997 compared to 10% of net sales in 1996.

   Gross margins as a percentage of sales more than doubled in 1997 to 14.4%
compared to 6.6% in 1996. 1996 had been adversely affected by falling steel
prices and consequent loss on finished inventories and the 1997 margins reflect
greater price stability and a small recovery in prices. Selling, general and
administration expenses decreased by 7.7% in 1997 compared to 1996 reflecting
strict cost controls.

   These positive changes have generated an operating profit of Lit. 795 million
in 1997 compared to an operating loss of Lit. 385 million in 1996.

                                           27
<PAGE>


RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>

                                                                    Year Ended                Year Ended
                                                                December 31, 1996          December 31, 1995
                                                                     Lire m.                    Lire m.

<S>                                                              <C>       <C>            <C>         <C>
Net sales....................................................       96,806    100.0%          72,253    100.0%

Cost of sales................................................      (84,165)   (86.9%)        (62,808)   (86.9%)
                                                              -------------              ------------

                                                                    12,641     13.1%           9,445     13.1%

Selling, general and administrative expenses.................      (21,430)   (22.1%)        (16,230)   (22.5%)
Research and development.....................................       (1,177)    (1.2%)           (602)    (0.8%)
Impairment losses for real estate properties.................       (4,180)    (4.3%)              -        -
Rental income................................................        1,483      1.5%             770      1.1%
                                                              -------------              ------------

Operating loss...............................................      (12,663)   (13.1%)         (6,617)    (9.2%)

Interest expense.............................................       (6,563)    (6.8%)         (4,448)    (6.2)
Interest income..............................................        3,747      3.9%           4,442      6.1%
Impairment losses for real estate properties.................       (4,180)    (4.3%)              -        -
Other income, net............................................        1,452      1.5%             513      0.7%
                                                              -------------              ------------

Loss before income taxes and minority interests..............      (14,027)   (14.5%)         (6,110)    (8.5%)

Income taxes.................................................         (595)    (0.6%)           (420)    (0.6%)

Minority interests...........................................         (379)    (0.4%)           (450)    (0.6%)
                                                              -------------              ------------

Net loss.....................................................      (15,001)   (15.5%)         (6,980)    (9.7%)
                                                              =============              ============
</TABLE>


<TABLE>
<CAPTION>

                                                       NET SALES                    OPERATING PROFIT/(LOSS)
                                        --------------------------------------  -------------------------------
                                                1996       CHANGE%       1995          1996               1995

<S>                                       <C>            <C>          <C>        <C>                 <C>
   MOTORCYCLES                                 77,620       20.0%       74,671           478                (45)
   STEEL TUBING                                17,313      196.7%        5,836          (385)               235
   REAL ESTATE                                      -                        -           826                (92)
   CORPORATE AND OTHER                          2,846       15.8%        2,458        (9,402)            (6,809)
   IMPAIRMENT LOSS                                  -                        -        (4,180)                 -
   INTERSEGMENT ELIMINATIONS                     (973)      36.7%         (712)            -                 94
                                         -------------            -------------  ------------      -------------
                                               96,806       34.0%       72,253       (12,683)            (6,617)
                                         =============            =============  ============      =============
</TABLE>

                                           28
<PAGE>


   OVERALL

   Net sales increased 34% in 1996 compared to 1995, principally as a result of
a 20% increase in sales of Moto Guzzi motorcycles and spare parts and a 197%
increase in sales of steel tubing because of the inclusion of L.I.T.A. for a
full year, compared to 5 months in 1995.

   Overall, margins remained constant at 13.1%. Margins at Moto Guzzi increased
from 13.1% to 15.3% largely due to the absence of exceptional costs from
writedowns of tooling and inventories following the strategic decision to
abandon production of smaller "Moto Guzzi" and "Benelli" models which had
negatively impacted 1995 margins. Margins at L.I.T.A. fell from 22% in the 5
months ended December 31, 1995 to 7% for 1996, principally as a result of losses
on inventory holdings caused by a sharp drop in steel prices in the first half
of 1996.

   The increase in selling, general and administrative expenses resulted
principally from the inclusion of the costs of the Company's enlarged structure
following the Finprogetti acquisition for a full year against 6 months in 1995,
increases at Moto Guzzi for higher business levels and expenses to improve
logistics and management informations systems and the acquisition of Moto
America, Inc. In 1996, the Company also sustained substantial non-recurring
legal, accounting and tax advisory fees in connection with its share repurchase
program, internal restructuring and reorganization and in connection with the
agreement, subsequently terminated by mutual agreement, to acquire Carey
Winston.

   Research and product development expense relating to Moto Guzzi increased in
respect of planned new models and continuing development of existing models.

   Operating loss increased by Lit. 1,866 million, or 28.2%, in 1996 compared to
1995, principally as a result of higher corporate overhead arising from the
Company's enlarged structure and losses at L.I.T.A. due to falling steel prices
in the first half of 1996. These changes more than offset the improved operating
results from Moto Guzzi and from real estate operations.

   The increase in rental income in 1996 compared to 1995 reflected the
inclusion of the operations acquired from Finprogetti for a full year against
inclusion for 6 months in 1995, plus a small increase in rentals for
inflationary adjustments.

   Higher interest expense in 1996 primarily resulted from the inclusion of real
estate loans acquired as part of the Finprogetti transaction for a full 12
months compared to 6 months in 1995 and in respect of increased interest expense
on advances from banks which have financed the growth of Moto Guzzi and L.I.T.A.
Interest rates were slightly lower in 1996 compared to 1995. Interest income
decreased in 1996 compared to 1995, principally as a result of reduced cash
balances reflecting cash used in operations and cash used at the beginning of
November to consummate the Company's share repurchase program.

   The Company recorded a reserve of Lit. 2,500 million in the third quarter of
1996 following the expiration of an option held by third parties to acquire the
Company's interest in undeveloped land in Sardinia, Italy. The market value of
this property in Sardinia had decreased in 1996 and changes in rules and
practices by local and regional government relating to construction permits and
environmental authorizations increased uncertainties in respect of development
potential. Also in the third quarter, the Company recorded reserves of Lit. 450
million for extraordinary maintenance in respect of its Cologne, Italy 

                                           29
<PAGE>

property and further reserves of Lit. 1,230 million were recorded in the fourth
quarter to reflect the terms of a March 1997 agreement to sell the property.

   Other income in 1996 primarily consists of gains of sales of assets for Lit.
1,211 million (1995 - Lit. 321 million), a government grant of Lit. 450 million
received by Moto Guzzi in respect of research and development in prior years and
Lit. 527 million (1995 - Lit. 547 million) of miscellaneous items offset by
currency losses of Lit. 848 million (1995 Lit. 443 million). Gains on disposals
of assets primarily related to disposals of two surplus properties, one in Rome,
Italy and one in Baltimore, Maryland. Other income, net, also includes, in both
1996 and 1995, finance income and expense relating to factoring operations
acquired as part of the Finprogetti acquisition which are being wound down, with
no significant net income in either year from such operations.

   MOTO GUZZI

   Net sales of motorcycles and spare parts to unaffiliated third parties
increased in 1996 over 1995 by 23.2 % and 1.4% respectively. Growth in
motorcycle sales principally was attributable to increased volumes. Units sold
by Moto Guzzi increased from 5,198 in 1995 to 6,050 in 1996 (excluding sales of
Benelli inventory in 1995). Sales of the largest units, those with engine
displacement greater than 750cc, increased only by 6% in 1996 over 1995 as they
were held back in 1996 by delays in introducing the new Centauro model. The
sales growth in part is attributable to the contribution of Moto America Inc.
Sales of spare parts by the Company's Italian parts distribution subsidiary were
limited by a relocation of its warehouse during the year.

   Margins in 1996 benefitted from higher volumes, which had the effect of
lowering per-unit fixed costs, but were negatively impacted by higher costs from
the outsourcing of components. Sales price increases implemented in March 1996
averaged 5%. The Company had hoped that the gains from volume increases in 1996
would exceed the extra cost of outsourcing, but this was not realized in 1996
due to production shortages of approximately 400 units in the autumn due to late
delivery of parts by suppliers. In September, Moto Guzzi commenced production of
its new Centauro model which temporarily slowed production rate.

   Cost of sales at Moto Guzzi was adversely impacted by inflationary increases
in raw material prices and wages and increased costs for purchases of components
which had previously been manufactured in-house. Aluminum prices, which had been
a significant factor in raw material cost increases in 1995, were stable in
1996, with a decrease in the second half of the year, which helped to offset
price rises of other components. Total production labor costs increased by 8.0%
in 1996 compared to 1995, as a consequence of an increase in the number of
employees and effects of pay increases, offset by reduced overtime hours of 7.7%
compared to 9.6% in 1995.

   L.I.T.A.

   Net sales of L.I.T.A. for fiscal 1996 increased 19.0% over fiscal 1995. This
growth reflects volume increases of 23.3% to 12,056 tons and decreases in
selling prices due to falling steel prices, principally in 

                                           30
<PAGE>


the first and second quarter. Volume growth was achieved by increasing export
sales, which amounted to 8.7% in 1996, compared to 1.2% in 1995, and growth in
domestic (Italian) markets.

   Costs of sales and margins were significantly affected by a fall in steel
prices averaging 22% in the first half of 1996. L.I.T.A. purchased steel at
market prices at the time but when finished goods were sold, their selling price
reflected the falling steel price and a loss on inventories resulted. Raw
material prices stabilized in the second half of 1996 and margins recovered in
the fourth quarter.

LIQUIDITY AND CAPITAL RESOURCES

OPERATIONS AND WORKING CAPITAL

   Non-cash items contributed substantially to the Lit. 22,477 million net loss
recorded by the Company in 1997. The Company's negative net cash flow from
operations was Lit. 7,694 million in 1997, compared to Lit. 6,145 million in
1996, when the Company sustained a net loss of Lit. 15,001 million.

   The single largest non-cash item contributing to the loss, a one-time Lit.
4,001 million charge for substantially writing off the trademarks, other
intangibles and related goodwill of the T.I.M. subsidiary, derived from the
decision of the Board of Directors to curtail all activities of the Company
other than Moto Guzzi. Other significant non-cash items contributing to the 1997
loss were the charge for issuance of warrants of Lit. 2,124, and amortization of
the Moto Guzzi Corp. preferred stock redemption premium of Lit. 3,595 million.

   Negative operating cash flow principally reflects operating losses at Moto
Guzzi and general corporate expenses. To reduce such cash outflows, Management
is continuing on its rigorous overhead expense cost reduction program, which
began in 1997. Management also expects that actions taken in 1997 and in prior
years to bolster sales and performance at Moto Guzzi, including the installation
in 1997 of a new management team and investments made in the U.S. and French
distributors, will improve Moto Guzzi's results of operations in 1998 and in
future years, including a positive impact on cash flow.

   Though the net effect of changes in components of working capital was not
significant in 1997, individual components evidenced significant variations.

   The Lit. 11,531 million decrease in trade and other receivables principally
reflects that in 1997 Moto Guzzi's German sales were to a new 25% owned
affiliate, resulting in a corresponding increase in related party receivables of
Lit. 5,363 million. The decline in trade and other receivables also reflects the
reduction in the level of motorcycle sales in the last quarter of 1997, compared
to the last quarter of 1996, principally from sales to the public sector, and
the completion in the first quarter of 1998 of other public sector sales planned
to occur in 1997. Additionally, the Company continued to realize cash from
finance receivables in connection with the winding up of its factoring and
leasing subsidiary; remaining balances are not significant at December 31, 1997.

   Inventories increased by Lit. 12,558 million from December 31, 1996 to
December 31, 1997, after adjusting for non-cash reserves made in 1997 of Lit.
2,400 million. Approximately Lit. 2,000 million of this increase was due to
increased activity levels at L.I.T.A. and the timing of deliveries and
shipments. 

                                           31
<PAGE>


Approximately Lit. 10,500 million related to Moto Guzzi, the principal causes
for which were: 1) the delayed delivery of certain public sector motorcycles
planned for 1997 sale but were in finished goods inventories at year end; 2) an
increase of 324 units in finished goods destined for various markets reflecting
orders awaiting credit clearance and a small build-up of buffer stocks; and 3)
inventories at the newly formed French distributor and an increase due to higher
activity levels at the Moto Guzzi's U.S. distributor.

   Trade payables and other payables and accruals increased by Lit. 5,036
million at December 31, 1997, compared to December 31, 1996, reflecting longer
payment terms accepted by Guzzi's suppliers and an increase at L.I.T.A. in line
with increased operations and the timing of deliveries of raw materials which
led to increased inventories there.

   INVESTING ACTIVITIES

   The decrease in investments (certificates of deposit and similar fixed income
investments at Italian banks) reflects cash used in operations and repayments of
corporate debt and corporate expenses.

   The amount of Lit. 5,567 million from sale of subsidiaries, net of cash
disposed, principally reflects amounts from the sale of the Company's Cologne
property of Lit. 4,468 million, less Lit. 411 million cash disposed of, and an
advance payment of Lit. 1,400 million for the sale of the Company's 25%
investment in Domer and of the promissory notes due from this former affiliate.

   Investments in plant, property and equipment principally relate to Moto
Guzzi, where the Company also incurred research and product development expenses
in 1997 of Lit. 3,125 million which are reported in the statement of operations.
Additionally, Moto Guzzi acquired fixed assets for Lit. 760 million by way of
leasing, assuming Lit. 570 million of lease obligations at the inception of such
leases.

   FINANCING ACTIVITIES

   The net increase in advances from banks represents increases at L.I.T.A. and
Moto Guzzi to finance working capital. Moto Guzzi and L.I.T.A. have lines of
credit largely secured by trade receivables amounting to approximately Lit.
46,000 million and Lit. 5,600 million respectively.

   Proceeds from the issuance of shares includes Lit. 10,256 million, net,
received from the sale of the Company's Common Stock and Common Stock purchase
warrants in June 1997 and Lit. 2,933 million from the sale of Moto Guzzi Corp.
preferred stock and warrants in January 1997 (in addition to Lit. 5,101 million
that was received in December 1996 from such private placement).

   Share repurchases reflect 120,000 shares of Common Stock valued at Lit. 1,610
million in connection with settlement of the final installment due for sale of
the Company's Cologne property and 44,760 shares acquired for Lit. 900 million
from Finprogetti pursuant to arrangements entered into in 1996.

   Principal repayments of debt principally comprise Lit. 333 million in respect
of mortgage loans on the Cologne property prior to its disposal in March 31,
1997, Lit. 1,049 million in respect of Moto Guzzi and Lit. 898 million for loans
included among corporate liabilities and relating originally (prior to 1993) to
financing of investments when the Company owned Maserati.

                                           32
<PAGE>


FUTURE LIQUIDITY NEEDS

   Much of the production machinery at Moto Guzzi's facility is aged and in need
of extensive modification, improvement or replacement. Moto Guzzi obtained a
Lit. 10,000 million ten-year credit facility in February 1998, with principal to
be repaid in the final eight years. Management intends that the proceeds will be
principally applied to investments in plant and machinery and to continuing
research and product development, though they may be temporarily be applied to
reducing advances from banks.

   Management expects that, over the next four years, significant further
capital, in addition to the amounts raised through the private placement of Moto
Guzzi, Corp. preferred stock, amounts committed by the Company from proceeds of
its public offering and the proceeds of the Lit. 10,000 million debt facilities,
will be required to complete the planned overhaul. While anticipated increases
in sales during the four-year period, if realized, would provide a significant
portion of the needed capital, anticipated internally generated cash and
currently available bank financing, in the aggregate, will not be sufficient to
enable Moto Guzzi to increase production and sales rapidly enough to generate
the remaining needed capital. Hence, management is exploring a variety of other
debt and equity financing options. No assurances can be given that such
financing will be obtained on acceptable terms, or at all.

   To meet liquidity requirements other than those of Moto Guzzi, the Company
anticipates realizing capital from the disposition of certain assets, including
its Sardinia property and certain parking rights in Genoa and from the receipt
of Italian tax receivables. Lit. 1,500 million was received on March 31, 1998
from the December, 1997 sale of the Company's 25% interest in Domer and of
promissory notes due from Domer and further amounts, due from proceeds of
certain apartments in Bergamo, Italy are expected in 1998. The timing of any of
the aforementioned realizations is uncertain.

   In order to meet debt commitments of approximately $2,000,000 (Lit. 3,538
million) on October 23, 1998 and to finance corporate expenditures through such
date, the Company estimates that it needs additionally to raise approximately
$1,000,000 (Lit. 1,769 million) from either asset sales, bank borrowings or
other forms of debt or equity finance.

   The report of the independent public accountants on the financial statements
of the Company at December 31, 1997 includes a "going concern" qualification
referring to the historic operating losses of the Company and the requirement to
finance a forecast cash deficit at October 23, 1998. As noted above, Management
expects Moto Guzzi operations to improve and believes that the Company will be
able to realize such liquidity. The Company does not as yet have any agreements
for the sale of assets and has not arranged any other financing facilities to
cover such amounts.

CAPITAL COMMITMENTS

   In connection with the resolution of certain matters deriving from the
acquisition of the majority of Finprogetti's operating subsidiaries in July
1995, Finprogetti assumed responsibility for a claim which was successfully
brought against one of such subsidiaries. The Company agreed to repurchase
105,440 shares issued to Finprogetti at a present value of Lit. 1,940 million
($1,268,000) in installments ending June 30, 1998. The Company remains obligated
to repurchase the final 28,570 shares issued to Finprogetti for Lit. 

                                           33
<PAGE>


570 million. This commitment is recorded in the balance sheet at December 31,
1997 at its net present value of Lit. 544 million.

   The Company has an obligation to repurchase on June 30, 1998 the remaining
776,530 shares of Common Stock formerly owned by the Company's former Chairman,
Mr. DeTomaso, for an aggregate amount of $8,571,000. The Company has deposited
lire denominated investments valued at December 31, 1997 at Lit. 14,479 million
and with an expected maturity value at June 30, 1998 of Lit. 15,000 million, to
collateralize a letter of credit issued in respect of its repurchase obligation.
The Company has entered into a forward purchase contract for $4,000,000 to hedge
partially the exchange risks deriving from its repurchase obligation. Adverse
exchange movements could result in the obligation exceeding the maturity value
of investments deposited, adding to the Company's liquidity needs.


                                           34

<PAGE>


                            TRIDENT ROWAN GROUP, INC.


                           ANNUAL REPORT ON FORM 10-K
                        ITEM 8 AND ITEM 14(A)(1) AND (2)



                     CONSOLIDATED FINANCIAL STATEMENTS AS OF
                           DECEMBER 31, 1997 AND 1996

                                  TOGETHER WITH

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


<PAGE>


                            TRIDENT ROWAN GROUP, INC.
                          INDEX TO FINANCIAL STATEMENTS

                                                                        PAGE

Report of Independent Public Accountants................................F-2
Consolidated Balance Sheets - Assets....................................F-3
Consolidated Balance Sheets - Liabilities and Shareholders' Equity......F-4
Consolidated Statements of Operations...................................F-5
Consolidated Statements of Changes in Shareholders' Equity..............F-6
Consolidated Statements of Cash Flows...................................F-7
Notes to Consolidated Financial Statements..............................F-8



                                                                             F-1
<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors
         Trident Rowan Group, Inc.:

         We have audited the accompanying consolidated balance sheets of Trident
Rowan Group, Inc. (a Maryland corporation) and subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of operations,
shareholders' equity and cash flows for the years then ended, expressed in
Italian Lire. These financial statements and the schedule referred to below are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits. The
financial statements of the Company as of December 31, 1995 were audited by
other auditors whose report dated April 3, 1996, expressed an unqualified
opinion on those statements.

         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 Trident Rowan Group,
Inc. and subsidiaries as of December 31, 1997 and 1996 and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.

         The accompanying consolidated financial statements have been prepared
assuming that the Company continues as a going concern. As discussed in Note 1
to the consolidated financial statements, the Company has suffered recurring
losses from operations and negative cash flows. In addition, the Company has to
meet certain debt repayment obligations for which financing has yet to be
arranged. All of these matters raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The consolidated financial statements do not include
any adjustment that might result from the outcome of this uncertainty.

         Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule appearing on page F-34 of
the Form 10-K is presented for the purpose of complying with the Securities and
Exchange Commission's rules and is not a required part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

                                                  ARTHUR ANDERSEN LLP

April 14, 1998
Roseland, New Jersey



                                                                             F-2
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Consolidated Balance Sheets
December 31, 1997 and 1996

<TABLE>
<CAPTION>


ASSETS                                                                         1997             1997              1996
                                                                            US$'000           LIRE M.           LIRE M.

<S>                                                                       <C>                <C>                 <C>
CASH AND CASH EQUIVALENTS.........................................     $       5,883  LIT.     10,407   LIT.      8,281
MARKETABLE SECURITIES, AT COST                                                 2,133            3,774                 -
RECEIVABLES.......................................................            21,601           38,212            40,734
  TRADE, LESS ALLOWANCE OF LIT. 2,100 (1996, LIT. 1,300)..........            12,625           22,333            32,261
  RECEIVABLES FROM RELATED PARTIES................................             3,043            5,383                63
  OTHER RECEIVABLES...............................................             5,933           10,496             8,410

INVENTORIES.......................................................            24,562           43,450            32,838
  RAW MATERIAL, SPARE PARTS AND WORK-IN-PROGRESS..................            14,233           25,179            19,906
  FINISHED PRODUCTS...............................................            10,329           18,271            12,932

PREPAID EXPENSES..................................................               288              509             1,231

                                                                        -------------     ------------      ------------
CURRENT ASSETS                                                                54,467           96,352            83,084
                                                                        -------------     ------------      ------------

PROPERTY, PLANT AND EQUIPMENT.....................................             9,051           16,011            13,922
  LAND............................................................               424              750               750
  BUILDINGS.......................................................             1,495            2,644             2,554
  MACHINERY AND EQUIPMENT.........................................            20,260           35,841            33,334
                                                                        -------------     ------------      ------------
                                                                              22,179           39,235            36,638
  LESS ALLOWANCES FOR DEPRECIATION................................           (13,128)         (23,224)          (22,716)
                                                                        -------------     ------------      ------------

TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET OF
  AMORTIZATION LIT. 1,250 (1996, LIT. 750)........................               424              750             4,250
GOODWILL, NET OF AMORTIZATION LIT. 489 (1996, LIT. 283)...........               174              308             1,515
REAL ESTATE HELD FOR SALE.........................................                 -                -            15,100
LAND FOR DEVELOPMENT, NET OF RESERVE OF LIT. 2,500................             1,979            3,500             3,500
INVESTMENTS IN UNCONSOLIDATED COMPANIES...........................                14               25             1,574
SECURITIES COLLATERALIZING SHARE REPURCHASE COMMITMENTS...........             8,185           14,479            14,511
RECEIVABLES FROM RELATED PARTIES..................................                 -                -             4,708
OTHER ASSETS......................................................             8,101           14,330            14,348

                                                                        =============     ============      ============
ASSETS                                                                 $      82,395 LIT.     145,755   LIT.    156,512
                                                                        =============     ============      ============
</TABLE>





                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                             F-3
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Consolidated Balance Sheets
December 31, 1997 and 1996

<TABLE>
<CAPTION>

LIABILITIES AND SHAREHOLDERS' EQUITY                                          1997              1997              1996
                                                                             US$'000           LIRE M.           LIRE M.

<S>                                                                     <C>                   <C>               <C>
ADVANCES FROM BANKS...............................................     $      18,893  LIT.     33,423   LIT.     29,783
CURRENT PORTION OF LONG-TERM REAL ESTATE DEBT.....................                 -                -             4,998
CURRENT PORTION OF OTHER LONG-TERM DEBT...........................             3,397            6,009             2,270
ACCOUNTS PAYABLE..................................................            17,715           31,338            25,571
ACCRUED EXPENSES AND OTHER PAYABLES...............................             5,667           10,025            11,434

                                                                        -------------     ------------      ------------
CURRENT LIABILITIES                                                           45,672           80,795            74,056
                                                                        -------------     ------------      ------------

LONG-TERM REAL ESTATE DEBT, LESS CURRENT PORTION..................                 -                -             4,714
OTHER LONG-TERM DEBT, LESS CURRENT PORTION........................             4,038            7,144            11,754
TERMINATION INDEMNITIES ..........................................             5,040            8,917             8,031
PROVISION FOR CLAIMS .............................................             1,888            3,340             3,270

MINORITY INTERESTS................................................             7,772           13,747            14,788

COMMON STOCK SUBJECT TO REPURCHASE................................             8,871           15,691            13,968

PREFERRED STOCK OF SUBSIDIARY.....................................             6,575           11,629             5,101

SHAREHOLDERS' EQUITY..............................................             2,539            4,492            20,830

COMMON STOCK, PAR VALUE $0.01 PER SHARE;

AUTHORIZED 50,000,000 SHARES,
   4,987,780  (1996, 3,902,540) SHARES ISSUED AND
   OUTSTANDING, LESS 804,880 (1996, 849,640) SHARES
   SUBJECT TO REPURCHASE..........................................                50               88                69
ADDITIONAL PAID IN CAPITAL........................................            51,078           90,357            77,145
TREASURY STOCK, AT COST, 1,708,859 (1996, 1,544,099) SHARES.......           (16,914)         (29,921)          (27,411)
CUMULATIVE TRANSLATION ADJUSTMENT.................................               (87)            (154)            1,854
ACCRETION EXPENSE AND RELATED EXCHANGE GAINS......................            (1,399)          (2,474)              100
ACCUMULATED DEFICIT...............................................           (30,189)         (53,404)          (30,927)

                                                                        -------------     ------------      ------------
LIABILITIES AND SHAREHOLDERS' EQUITY                                   $      82,395 LIT.     145,755 LIT.      156,512
                                                                        =============     ============      ============
</TABLE>



                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                             F-4
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Consolidated Statements of Operations
Years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>

                                                                1997             1997              1996            1995
                                                               US$'000          LIRE M.           LIRE M.          LIRE M.

<S>                                                         <C>                <C>               <C>             <C>
NET SALES............................................    $      58,586 LIT.     103,639  LIT.      96,806 LIT.     72,253
COST OF SALES........................................          (51,588)         (91,259)          (84,165)        (62,808)
                                                          -------------    -------------     -------------    ------------
                                                                 6,998           12,380            12,641           9,445

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.........          (12,996)         (22,990)          (21,430)        (16,230)
RESEARCH AND DEVELOPMENT.............................           (1,767)          (3,125)           (1,177)           (602)
IMPAIRMENT LOSSES....................................           (2,262)          (4,001)           (4,180)               -
RENTAL INCOME........................................              270              477             1,483             770
                                                          -------------    -------------     -------------    ------------
                                                                (9,757)         (17,259)          (13,663)         (6,617)

INTEREST EXPENSE.....................................           (2,540)          (4,493)           (6,563)         (4,448)
INTEREST INCOME......................................            1,358            2,403             3,747           4,442
OTHER INCOME, NET....................................            1,135            2,007             1,452             513
                                                          -------------    -------------     -------------    ------------
LOSS BEFORE INCOME TAXES AND
  MINORITY INTERESTS.................................           (9,804)         (17,342)          (14,027)         (6,110)
INCOME TAXES.........................................             (258)            (457)             (595)           (420)
MINORITY INTERESTS...................................              588            1,041              (379)           (450)
AMORTIZATION OF PREMIUM FOR REDEMPTION
  OF PREFERRED STOCK OF SUBSIDIARY...................           (2,032)          (3,595)                 -               -
CHARGE FOR ISSUANCE OF WARRANTS......................           (1,201)          (2,124)                 -               -

                                                          =============    =============     =============    ============
NET LOSS.............................................    $     (12,707)LIT.     (22,477) LIT.     (15,001)LIT.     (6,980)
                                                          =============    =============     =============    ============


LOSS PER SHARE:                                                    US$             LIRE              LIRE            LIRE

BASIC AND DILUTED ...................................    $       (2.76)LIT.      (4,886) LIT.      (3,268)LIT.     (2,065)
                                                          =============    =============     =============    ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES 
OUTSTANDING DURING THE YEAR..........................

                                                          =============    =============     =============    ============
BASIC................................................        4,600,285        4,600,285         4,590,539       3,380,441
                                                          =============    =============     =============    ============
DILUTED..............................................        4,704,003        4,704,003         4,590,539       3,380,441
                                                          =============    =============     =============    ============
</TABLE>






                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                             F-5
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Consolidated Statements of Operations
Years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>


                                                      VOTING                ADDITIONAL                          
                                                    PREFERRED     COMMON      PAID-IN   ACCUMULATED   TREASURY  
                                                      STOCK        STOCK      CAPITAL       DEFICIT    STOCK    

<S>                                                    <C>         <C>          <C>          <C>        <C>     
AT JANUARY 1, 1995............................LIT.M      1,453       2,988       47,543      (8,946)          - 

Net loss......................................               -           -            -      (6,980)          - 
Translation adjustment........................               -           -            -           -           - 
Conversion of shares..........................          (1,453)      1,453            -           -           - 
Repurchase of shares..........................               -           -            -           -     (11,826)
Reclassify shares subject to repurchase.......               -      (1,128)     (11,607)          -           - 
Accretion expense, net of foreign exchange....               -                                    -           - 
Issuance of shares............................               -       3,431       35,396           -           - 
                                                    -----------  ----------  ----------- ----------- -----------

AT DECEMBER 31, 1995..........................LIT.M          -       6,744       71,332     (15,926)    (11,826)

Net loss......................................               -           -            -     (15,001)          - 
Translation adjustment........................               -           -            -           -           - 
Issuance of shares............................               -          44          427           -           - 
Change of par value to $0.01 per share........               -      (6,717)       6,717           -           - 
Repurchase of shares..........................               -           -          607           -     (15,585)
Reclassify shares subject to repurchase.......               -          (2)      (1,938)          -           - 
Accretion expense, net of foreign exchange....               -           -            -           -           - 
                                                    -----------  ----------  ----------- ----------- -----------

AT DECEMBER 31, 1996..........................LIT.M          -          69       77,145     (30,927)    (27,411)

Net loss......................................               -           -            -     (22,477)          - 
Translation adjustment........................               -           -            -           -           - 
Reclassify shares subject to repurchase.......               -          (2)      (1,608)          -           - 
Repurchase of shares..........................               -           2        2,459           -      (2,510)
Issuance of shares............................               -          19       10,237           -           - 
Issuance of warrants..........................               -           -        2,124           -           - 
Accretion expense, net of foreign exchange....               -           -            -           -           - 
                                                    -----------  ----------  ----------- ----------- -----------

AT DECEMBER 31, 1997..........................LIT.M          -          88       90,357     (53,404)    (29,921)
                                                    ===========  ==========  =========== =========== ===========

AT DECEMBER 31, 1997..........................$'000          -          50       51,078     (30,189)    (16,914)
                                                    ===========  ==========  =========== =========== ===========


<CAPTION>


                                                     CUMULATIVE      ACCRETION    SHARE-        SHARES   
                                                     TRANSLATION      EXPENSE,   HOLDERS'     SUBJECT TO 
                                                     ADJUSTMENT          NET      EQUITY      REPURCHASE 
                                                                                                         
<S>                                                    <C>             <C>       <C>            <C>      
AT JANUARY 1, 1995............................LIT.M         119            -      43,157            -    
                                                                                                         
Net loss......................................                -            -      (6,980)           -    
Translation adjustment........................              592            -         592            -    
Conversion of shares..........................                -            -           -            -    
Repurchase of shares..........................                -            -     (11,826)           -    
Reclassify shares subject to repurchase.......                -            -     (12,735)      12,735    
Accretion expense, net of foreign exchange....                -          186         186         (186)   
Issuance of shares............................                -            -      38,827            -    
                                                      ----------  ----------- -----------   ----------   
                                                                                                         
AT DECEMBER 31, 1995..........................LIT.M         711          186      51,221       12,549    
                                                                                                         
Net loss......................................                -            -     (15,001)           -    
Translation adjustment........................            1,143            -       1,143            -    
Issuance of shares............................                -            -         471            -    
Change of par value to $0.01 per share........                -            -           -            -    
Repurchase of shares..........................                -           43     (14,935)        (650)   
Reclassify shares subject to repurchase.......                -            -      (1,940)       1,940    
Accretion expense, net of foreign exchange....                -         (129)       (129)         129    
                                                      ----------  ----------- -----------   ----------   
                                                                                                         
AT DECEMBER 31, 1996..........................LIT.M       1,854          100      20,830       13,968    
                                                                                                         
Net loss......................................                -            -     (22,477)           -    
Translation adjustment........................           (2,008)           -      (2,008)           -    
Reclassify shares subject to repurchase.......                -            -      (1,610)       1,610    
Repurchase of shares..........................                -           49           -       (2,510)   
Issuance of shares............................                -            -      10,256            -    
Issuance of warrants..........................                -            -       2,124            -    
Accretion expense, net of foreign exchange....                -       (2,623)     (2,623)       2,623    
                                                      ----------  ----------- -----------   ----------   
                                                                                                         
AT DECEMBER 31, 1997..........................LIT.M        (154)      (2,474)      4,492       15,691    
                                                      ==========  =========== ===========   ==========   
                                                                                                         
AT DECEMBER 31, 1997..........................$'000         (87)      (1,399)      2,539        8,871    
                                                      ==========  =========== ===========   ==========   

</TABLE>



                                                                             F-6
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Consolidated Statements of Cash Flows
Years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>


                                                                   1997            1997           1996           1995
                                                                  US$'000         LIRE M.        LIRE M.        LIRE M.

<S>                                                            <C>              <C>            <C>
NET LOSS..................................................    $   (12,707) LIT.  (22,477) LIT.  (15,001)LIT.    (6,980)

ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
  USED IN OPERATING ACTIVITIES:
  DEPRECIATION AND AMORTIZATION...........................          1,954          3,457          2,811          2,990
  GAIN ON SALES OF OPERATING ASSETS.......................           (267)          (472)        (1,122)          (244)
  MINORITY INTERESTS IN NET INCOME........................           (588)        (1,041)           379            450
  RESERVES FOR TERMINATION INDEMNITIES....................            750          1,326          1,264          1,196
  PAYMENTS OF TERMINATION INDEMNITIES.....................           (248)          (438)        (1,435)        (1,013)
  RESERVES FOR IMPAIRMENT LOSSES..........................          2,262          4,001          4,180              -
  RESERVES FOR INVENTORY AND RECEIVABLES..................          1,833          3,243            222          1,572
  ISSUANCE OF WARRANTS....................................          1,201          2,124              -              -
  AMORTIZATION OF PREFERRED STOCK REDEMPTION PREMIUM                2,032          3,595              -              -
  OTHER OPERATING ACTIVITIES..............................           (618)        (1,094)        (1,187)         2,089
CHANGES IN OPERATING ASSETS AND LIABILITIES:
 RECEIPT OF TAX RECEIVABLES...............................            540            956          6,245              -
 TRADE AND OTHER RECEIVABLES..............................          6,518         11,531         (4,835)         1,217
 RELATED PARTY RECEIVABLES................................         (3,032)        (5,363)         2,714         (1,361)
 INVENTORIES..............................................         (7,099)       (12,558)        (1,862)        (9,055)
 PREPAID EXPENSES.........................................            271            480           (129)           427
 ACCOUNTS PAYABLE AND ACCRUED EXPENSES....................          2,847          5,036          2,103          3,308
 RELATED PARTY PAYABLES...................................              -              -           (492)          (786)
                                                               -----------    -----------    -----------    -----------
NET CASH USED IN OPERATING ACTIVITIES.....................         (4,351)        (7,694)        (6,145)        (6,190)
                                                               -----------    -----------    -----------    -----------

INVESTING ACTIVITIES:
 NET (INCREASE)/DECREASE IN INVESTMENTS...................         (2,275)        (4,025)         2,007          3,236
 PURCHASE OF SUBSIDIARIES, NET OF CASH ACQUIRED...........              -              -            555         (1,193)
 SALE OF SUBSIDIARIES, NET OF CASH DISPOSED...............          3,090          5,467              -              -
 PROCEEDS ON DISPOSAL OF OPERATING ASSETS.................            341            604          4,183          1,079
 DEFERRED RECEIPTS FROM SALE OF MASERATI..................              -              -              -         27,000
 PURCHASES OF PROPERTY, PLANT AND EQUIPMENT...............         (2,491)        (4,406)        (6,895)        (2,775)
                                                               -----------    -----------    -----------    -----------
NET CASH (USED)/PROVIDED BY INVESTING ACTIVITIES..........         (1,335)        (2,360)          (150)        27,347

FINANCING ACTIVITIES:
 NET INCREASE/(DECREASE) IN ADVANCES FROM BANKS...........          2,058          3,640          2,624         (3,770)
 PROCEEDS FROM SHARE ISSUES...............................          7,456         13,189          5,101          8,204
 REPURCHASE OF SHARES.....................................         (1,419)        (2,510)       (11,995)        (5,000)
 PROCEEDS FROM LONG-TERM DEBT.............................            167            296          1,581            392
 PRINCIPAL PAYMENTS OF LONG-TERM DEBT.....................         (1,457)        (2,578)        (6,718)        (2,091)
                                                               -----------    -----------    -----------    -----------
NET CASH PROVIDED BY/(USED) IN FINANCING ACTIVITIES.......          6,805         12,037         (9,407)        (2,265)
                                                               -----------    -----------    -----------    -----------

INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS..........          1,119          1,983        (15,702)        18,892
EFFECT OF EXCHANGE RATE CHANGES ON CASH
  AND CASH EQUIVALENTS....................................             81            143           (154)           (41)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR .............          4,683          8,281         24,137          5,286
                                                               ===========    ===========    ===========    ===========
CASH AND CASH EQUIVALENTS, END OF YEAR....................    $     5,883 LIT.    10,407 LIT.     8,281 LIT.    24,137
                                                               ===========    ===========    ===========    ===========
</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                             F-7
<PAGE>
TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Consolidated Statements of Cash Flows
December 31, 1997, 1996 and 1995

SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES

     1997

In March 1997, the Company disposed of its Finprogetti Investimenti Immobiliari
S.p.A. subsidiary which owned its Cologne, Italy property. Part of the sale
price was settled by way of delivery of 120,000 shares of the Company's common
stock, valued at Lit. 1,610 million at the date of the transaction. Pursuant to
the disposal, the Company eliminated real estate of Lit. 15,100 million and real
estate loans of Lit. 9,379 million from its balance sheet. Cash disposed of was
Lit. 411 million.  See Note 5.

As an inducement for Tamarix to acquire the Company's shares from the largest
shareholder, the Company issued to the Manager of Tamarix 1,250,000 warrants
valued at Lit. 2,124 million. See Note 1.

Fixed assets for Lit. 760 million were acquired in 1997 by way of finance
leases, assuming lease obligations of Lit. 570 million, net of initial payments
at the inception of the leases.

     1996

In October, 1996, the Company issued promissory notes of $1,863,000 (Lit. 2,851
million at such date) in connection with its share repurchase program -- see
Note 4. The Company also assigned a receivable of Lit. 763 million as a part of
the consideration for repurchase of shares from Finprogetti, also discussed in
Note 4.

The Company sold its 66.7% interest in Immobiliare Broseta S.r.l., receiving
promissory notes amounting to Lit. 4,708 million, net of present value
adjustments. As a result of this disposal, real estate loans of Lit. 5,049
million, real estate of Lit. 12,200 million and minority interests of Lit. 2,354
million were eliminated from the balance sheet. Cash disposed of amounted to
Lit. 22 million. See Note 5.

The Company issued 30,000 shares of its common stock with a value of Lit. 471
million to effect the acquisition of 100% of the outstanding stock of Moto
America Inc. Cash acquired amounted to Lit. 577 million. See Note 5.

Fixed assets for Lit. 1,830 million were acquired in 1996 by way of finance
leases, assuming lease obligations of Lit. 1,573 million, net of initial
payments at the inception of the leases.

     1995

In connection with the Finprogetti acquisition, the Company issued shares for
Lit. 38,223 million in exchange for cash of Lit. 8,204 million and assets with a
fair value of Lit. 29,707 million, net of advances from banks of Lit. 12,572
million and long-term debt of Lit. 19,431 million. Cash acquired amounted to
Lit. 631 million. The Company paid costs, included in the total purchase price,
of Lit. 1,224 million in this transaction which is described in Note 5.

In connection with the repurchase of stock formerly owned by the ex Chairman,
described in Note 4, the Company gave assets with a book value of Lit. 6,629
million as part of the consideration for the stock repurchased.

The Company issued shares with a value of Lit. 603 million to purchase the
minority shareholder interest in its motorcycle subsidiary, Moto Guzzi S.p.A.

The Company assumed advances from banks of Lit. 3,425 million in connection with
the acquisition of L.I.T.A. S.p.A. and acquired cash of Lit. 15 million.

OTHER SUPPLEMENTAL INFORMATION

Interest paid amounted to Lit. 4,650 Million, Lit. 6,721 million and Lit. 4,416
million in 1997, 1996 and 1995, respectively.

                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                             F-8
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


1.   BACKGROUND AND ORGANIZATION

     ACTIVITIES

Trident Rowan Group, Inc. (De Tomaso Industries, Inc. through August 22, 1996)
is a holding company incorporated in the United States which owns subsidiaries
that operate primarily in Italy. Trident Rowan Group, Inc. and subsidiaries are
referred to herein as the Company. The Company primarily operates in two
industry segments: the manufacture and distribution of "Moto Guzzi" brand
motorcycles in Italy, Europe and elsewhere in the world and the manufacture and
distribution of steel tubes for the automotive and furniture markets.
Additionally, the Company provides temporary management services to third
parties and to its steel tube entity and holds, for development and sale,
residual commercial real estate property. Information on the Company's
operations by segment and geographic area are included in Notes 17 and 18 to the
Financial Statements.

     CHANGE OF CONTROL

Finprogetti S.p.A., the largest shareholder of the Company, sold to Tamarix
Investors, LDC on May 2, 1997, 900,000 shares of the Company's common stock and
subsequently sold a further 100,000 shares. Tamarix and Finprogetti agreed that
Finprogetti shall have a put right and Tamarix shall have a call right with
respect to an additional 635,000 shares of common stock owned by Finprogetti.
The put option is exercisable for a one year period, beginning on May 3, 1998
and the call option is exercisable during the two years through May 2, 1999.
During such two year period, Tamarix has a proxy from Finprogetti to vote such
635,000 shares.

In addition, Finprogetti delivered the resignations from the Company's Board of
Directors of five persons who had been nominated at the request of Finprogetti.
In connection with the foregoing the Company entered into an agreement on April
8, 1997 to (a) engage Tamarix Capital Corporation to provide financial advisory
services to the Company at a cost of $200,000 per year, (b) issue to Centaurus
Management LDC, the Manager of Tamarix, a warrant to purchase 1,250,000 shares
of common stock with an exercise price equal to the offering price per share of
common stock of $6.00 in the public securities offering of the Company completed
on June 6, 1997, exercisable for a three year period, (c) register the shares of
the Company purchased from Finprogetti as well as the shares underlying such
warrants, and (d) cause the By-Laws or the Articles of Incorporation of the
Company to be amended to provide for (i) a staggered Board of Directors which
shall include at least one person nominated by Tamarix in each of the three
classes, (ii) provide for a representative of Tamarix to be Chairman of the
Board of the Company, (iii) provide that Tamarix's consent will be required to
further amend the Company's Articles of Incorporation, and (iv) require that the
Board of Directors be expanded and limited to not more than 11 members, such
Board to include the Tamarix nominees and an additional three independent
directors who are experienced in business matters and otherwise reasonably
acceptable to Tamarix.

The Company estimated the fair value of the warrants issued to Centaurus
Management Ltd., the manager of Tamarix Investors LDC, as an inducement to
acquiring Finprogetti S.p.A.'s shares of the Company's common stock, at $1 per
warrant. The Company has accounted for the issuance of the warrants by crediting
additional paid-in capital in the amount of $1,250,000, Lit. 2,124 million at
the then prevailing exchange rate, and charging such amount to the statement of
operations as a charge for issuance of warrants. See Note 15 for a summary of
the potential dilutive effects in 1997 of these warrants.



                                                                             F-9
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


1.   BACKGROUND AND ORGANIZATION (CONTINUED)

     GOING CONCERN

The Company has suffered recurring losses from operations and negative cash
flows during the last three years. Furthermore, the Company's ability to fund
its liquidity needs depends on it being able to raise financing to meet debt
obligations and expense commitments and to fund the continuing growth of its
Moto Guzzi motorcycle business. In respect of this latter business, the Company
obtained a Lit. 10,000 million debt facility in February 1998 and believes that
such financing is sufficient to support the planned growth of operations of Moto
Guzzi through 1998. To meet its commitments other than Moto Guzzi, the Company
is seeking to realize liquidity from certain non-strategic assets. In order to
meet debt repayments of approximately US$ 2,000,000 (Lit. 3,538 million) due on
October 23, 1998, in addition to cash on hand the Company estimates that it
needs to raise an additional $1,000,000 either from asset sales, bank borrowings
or other forms of debt or equity financing by such date. While management
believes that the Company will be able to realize such liquidity, at the date of
these financial statements the Company does not have any agreements for the sale
of assets and has not arranged any other financing facilities to cover such
amounts. If such losses were to continue or if such financing is not obtained in
timely fashion, there is substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments that might be necessary should the Company be unable to continue as
a going concern.

     PUBLIC OFFERING OF THE COMPANY'S SECURITIES

On June 6, 1997, the Company completed a public offering of its securities (the
"Offering"), issuing 1,250,000 shares of common stock at $6.00 per share and
1,437,500 Redeemable Common Stock Purchase Warrants at $0.10 per Warrant. Each
Warrant is exercisable for five years at an exercise price of $7.20 per share of
Common Stock. The Company may redeem the Warrants at a price of $0.01 per
Warrant at any time if notice of not less than 30 days is given and the last
sale price of the Common Stock has been at least $9.60 on all 20 trading days
ending on the third day prior to the day on which notice is given. The Company
also sold for $100 to GKN Securities Corp., the Company's Representative for the
Offering, an option to purchase up to 125,000 shares of Common Stock and/or
125,000 Warrants. The option is exercisable for four years commencing June 6,
1998 at an exercise price of $6.12 per share of Common Stock and $0.102 per
Warrant.

The gross proceeds of the Offering amounted to $7,643,750 and the net proceeds,
after underwriting commissions and other costs, received by the Company amounted
to approximately $6,037,000, equivalent to Lit. 10,256 million at the then
prevailing exchange rate.

     REPORTING CURRENCY

The primary financial statements are shown in Italian Lire because all of the
Company's material operating entities are based and operate entirely in Italy.
Translation of lire amounts into U.S. Dollar amounts is included solely for the
convenience of the readers of the financial statements and has been calculated
at the rate of Lit. 1,769 to $1.00, the approximate exchange rate at December
31, 1997. It should not be construed that the assets and liabilities, expressed
in U.S. dollar equivalents, can actually be realized in or extinguished in U.S.
dollars at that or any other rate. All currency amounts in these financial
statements are in Lire unless specifically designated in other currencies.


                                                                            F-10
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


2.   SIGNIFICANT ACCOUNTING POLICIES

       PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its majority owned subsidiaries. Significant intercompany accounts and
transactions have been eliminated in consolidation.

     USE OF 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 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 these estimates.

     FOREIGN CURRENCY TRANSLATION

The financial statements of non-Italian entities have been translated from the
applicable functional currency to Italian lire using the year-end exchange rate
for balance sheet items and the average exchange rate for the year for statement
of operation items. The translation differences resulting from the change in
exchange rates from year to year have been reported separately as a component of
shareholders' equity.

     FOREIGN CURRENCY TRANSACTIONS

Transactions, receivables and payables denominated in currencies other than the
functional currency are recorded at the exchange rate in effect on the
transaction date. Such receivables and payables are adjusted to current exchange
rates as of the date paid or the balance sheet date, whichever is earlier. Gains
and losses are included in "other income, net" in the statements of operations.

     CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

     REVENUE RECOGNITION

Revenues from sale of products are recorded upon shipment, which is when title
passes.

     RESEARCH AND DEVELOPMENT

The Company's motorcycle business is continuously engaged in company-sponsored
programs of product improvement and development. Other businesses do not conduct
research and development activities. Research and development costs are expensed
as they are incurred.



                                                                            F-11
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     INVENTORIES

Inventories are stated at the lower of cost or market with cost being determined
principally by the last- in, first-out (LIFO) method applying average cost of
the year to increases in inventory quantities. If inventories had been
determined by the lower of cost or market value using the first-in, first-out
(FIFO) method, which approximates current cost, inventories would have been
greater by approximately Lit. 3,000 million in 1997 and Lit. 2,000 million in
1996.

     LONG-LIVED ASSETS

The Company adopted Financial Accounting Standards Board (FASB) Statement No.
121, "Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed of" in 1996. This statement requires impairment losses to
be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amounts and also addresses
the accounting for long-lived assets that are expected to be disposed of. The
effect of the initial adoption of FASB Statement No. 121 in 1996 was not
material. Subsequent to its adoption, the Company recorded impairment losses
against the carrying values of long-lived real estate assets in the third and
fourth quarters of 1996 -- see Notes 6 and 7.

The Company continually reviews the carrying value of long-lived assets and
long-lived assets to be disposed of. In determining the undiscounted cash flows
estimated to be generated by the Company's temporary management subsidiary, the
Company considers estimated cash flows from services to third parties and from
eventual realization of managed portfolio companies through divestiture. The
Company has made, at December 31, 1997, impairment adjustments to write down the
trademarks and other intangible assets of its temporary management subsidiary by
Lit. 3,000 million and to write down related goodwill by Lit. 1,001 million to
Lit. 150 million.

     GOODWILL AND OTHER INTANGIBLES

On purchases of businesses, the excess of the purchase price over the fair value
of assets acquired is accounted for as goodwill and is amortized on a
straight-line basis over a period determined by the Company taking into
consideration the nature of the business acquired. Trademarks and other
intangibles relating to the Company's temporary management subsidiary and
related goodwill, net of amounts recorded for impairment reserves -- See
"Long-lived assets", above, are being amortized over 10 years. Concession
rights, which last through 2041, are being amortized over 40 years.

     PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost. Depreciation is provided on
the straight-line method over the estimated useful lives of the assets.
Buildings are depreciated over 30 years and plant and machinery, tooling and
computer equipment over lives ranging from 3 to 10 years.



                                                                            F-12
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     MARKETABLE AND OTHER SECURITIES AND INVESTMENTS

Marketable and other securities and investments consist primarily of fixed
income investments which cannot be readily sold using established markets.
Marketable securities as of December 31, 1997, 1996 and 1995 are
held-to-maturity and are represented by Italian government-backed securities.
Such securities are carried at cost plus accrued interest.

     TERMINATION INDEMNITIES

All employees of the Company's Italian subsidiaries are entitled to receive
severance pay in accordance with the terms of applicable national labor law and
contracts. The liability for severance pay is accrued for service to date and is
payable immediately on termination. The liability is calculated in accordance
with the individual employee's length of service, employment category and
compensation and is adjusted annually by a cost of living index provided by the
Italian Government. There is no vesting period or funding requirement associated
with the liability. The liability recorded in the consolidated balance sheets is
the amount that the employee would be entitled to if the employee separates from
the Company immediately.

     INCOME TAXES

Income taxes are provided by each entity included in the consolidation in
accordance with local laws. Deferred income taxes have been provided using the
liability method in accordance with FASB Statement No. 109, "Accounting for
Income Taxes."

     NET LOSS PER COMMON SHARE

In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share" ("SFAS No. 128"). SFAS No. 128 replaced the calculation of
primary and diluted earnings per share with basic and diluted earnings per
share. Basic earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Diluted earnings per share gives effect to
all potentially dilutive common shares that were outstanding during the period.
All loss per share amounts for all periods have been presented to conform to
SFAS No. 128 requirements. As the Company has incurred losses in each of the
years 1995 to 1997, potentially dilutive common shares are antidilutive for each
of these years.

     STATEMENTS OF CASH FLOWs

The cash flows for the roll-over of maturing fixed-term securities into new
securities is included in the caption "Net decrease/(increase) in investments"
in the Consolidated Statements of Cash Flows. Advances from banks arise
primarily under the Company's short-term lines of credit with its banks. These
short-term obligations are payable on demand. The cash flows for these items are
included in the caption "Net increase/(decrease) in advances from banks" in the
Consolidated Statements of Cash Flows.

     RECLASSIFICATIONS

Comparative figures for 1996 and 1995 have been reclassified to conform with the
1997 presentation.



                                                                            F-13
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


3.   SHARES SUBJECT TO REPURCHASE - PRO FORMA LOSS PER SHARE INFORMATION

Interest income on investments securing share repurchase commitments and on cash
and investments maintained against unsecured share repurchase commitments is
included in the statements of operations. On a Pro Forma basis the net loss and
the net loss per share for 1997, 1996 and 1995, as if all shares subject to
repurchase had been repurchased as of the earlier of the date on which
repurchase commitments were made or January 1 of each respective year, would
have been as follows.


<TABLE>
<CAPTION>
                                                                  1997           1997            1996            1995
                                                                 US$'000         LIRE M.         LIRE M.         LIRE M.

<S>                                                           <C>             <C>             <C>             <C>
       Net loss.........................................        (13,316)       (23,555)        (15,855)         (7,505)
                                                            =============   ============    ============    ============

       Net loss per share...............................          (3.51)        (6,206)         (4,238)         (2,508)
                                                            =============   ============    ============    ============

</TABLE>


4.   REPURCHASE OF SHARES AND SHARES SUBJECT TO REPURCHASE

     1997 SHARE REPURCHASES

As described in Note 5, the Company repurchased 120,000 shares as of December
31, 1997 in connection with the sale of its Cologne, Italy, real estate. In
1997, the Company also repurchased 44,760 shares for Lit. 900 million pursuant
to arrangements described below under "1996 commitment to repurchase shares from
Finprogetti".

     1996 STOCK REPURCHASE PROGRAM

The Company completed a stock repurchase program on October 23, 1996. Two
mutually exclusive alternative offers were made to shareholders. The first offer
was to purchase up to 80% of a shareholder's common stock for a combination of
cash and non-negotiable promissory notes having a face value aggregating $12.26
per share ("the 80% offer") and the second offer was to purchase up to 50% of a
shareholder's common stock for $12.26 cash (the "50% offer"). Of the 4,742,865
issued shares of the Company at the date of the repurchase program, shareholders
representing 3,167,010 shares (66.8%) had agreed in advance not to participate.

Of the remaining 1,575,855 shares, 506,359 were tendered under the 80% offer and
255,636 under the 50% offer, all of which were accepted by the Company. On
consummation of the transaction, the Company repurchased 761,995 shares for a
total amount of $7,478,658 (Lit. 11,345 million at the approximate exchange rate
on October 23, 1996 of Lire 1,517 to $1.00) in cash and $1,863,401 (Lit. 2,827
million at the exchange rate then prevailing) in the form of non-negotiable
promissory notes, bearing interest at 8% per annum, maturing on October 23,
1998.



                                                                            F-14
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


4.   REPURCHASE OF SHARES AND SHARES  SUBJECT TO REPURCHASE (CONTINUED)

     1996 COMMITMENT TO REPURCHASE SHARES FROM FINPROGETTI

On November 7, 1996, the Company entered into an agreement with Finprogetti
S.p.A. to resolve certain open matters deriving from the acquisition of the
majority of Finprogetti's operating subsidiaries in July 1995 -- See Note 5. A
balance due by Finprogetti of Lit. 763 million was settled by the Company
repurchasing 46,000 shares at a value of Lit. 16,587 per share ($10.89 per
share). Finprogetti also agreed to accept responsibility for a claim which was
successfully brought against one of the subsidiaries acquired in the Finprogetti
Acquisition for Lit. 2,120 million. In accordance with the terms of the
Finprogetti Agreement, the Company would have paid such claim and received in
compensation 105,440 of the shares issued to Finprogetti in July 1995. The
Company and Finprogetti agreed that Finprogetti would assume the responsibility
for payments resulting from the claim, which are payable in installments through
June 1998, and that the Company would, on the request of Finprogetti, repurchase
shares for cash at the dates and in the amounts of each installment payment.

The Company reclassified the 105,440 shares subject to repurchase outside of
shareholders' equity in the amount of the present value of the amounts payable
under the repurchase commitment applying a discount rate of 10%. The resulting
value of the 105,440 shares subject to repurchase was Lit. 1,940 million or Lit.
18,399 per share ($12.08 per share). Immediately following the agreement,
Finprogetti requested that the Company repurchase 9,950 shares for Lit 200
million in respect of the first installment and on December 31, 1996 requested
that a further 22,380 shares be repurchased for Lit. 450 million. Finprogetti
further requested on each of June 30, 1997 and December 31, 1997 that 22,380
shares be repurchased for Lit. 450 million. There is a residual financial
commitment as of December 31, 1997 for further possible repurchases of 28,350
shares from Finprogetti at June 30, 1998 for Lit. 570 million, shown in the
balance sheet at the net present value of Lit. 544 million.

     1995 PURCHASE OF TREASURY STOCK FROM FORMER CHAIRMAN

In April 1995, the Company entered into an agreement with Mr. Alejandro De
Tomaso (De Tomaso Agreement), the then Chairman of the Board, under which the
Company would repurchase Mr. De Tomaso's 1,000,000 shares of preferred stock and
480,304 shares of common stock at a negotiated price of Lit. 18,400 per share,
converted into dollars at the exchange rate in effect on closing date of Lit.
1,637. Prior to the closing of that transaction, Mr. De Tomaso conveyed such
shares, subject to the DeTomaso Agreement, by gift. The shares are currently
held by a trust.

Performance under the De Tomaso Agreement was conditional upon the consummation
of the Finprogetti Acquisition -- see Note 5. Contemporaneously with the closing
of that transaction, 703,774 of the preferred and common shares formerly owned
by Mr. De Tomaso were delivered to the Company in exchange for cash of Lit.
5,000 million and properties (a hotel valued by the Board of Directors based
upon independent appraisals of Lit. 4,700 million and a museum collection of
Maserati vehicles and engines valued by the Board of Directors at Lit. 3,200
million) that had a book carrying value of Lit. 6,629 million. The remaining
preferred and common shares formerly owned by Mr. De Tomaso were exchanged for
an equal number of shares of newly issued common stock, which the Company is
required to register for sale at the request of the holder.

The value of Lit. 11,826 million (Lit. 16,804 per share; $10.26 per share)
placed on the Treasury stock acquired in 1995 pursuant to the De Tomaso
Agreement represents the book value of the consideration, including taxes
payable of Lit. 197 million, given in exchange for the treasury stock and no net
gain or loss was recognized on the transaction.



                                                                            F-15
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


4.   REPURCHASE OF SHARES AND SHARES  SUBJECT TO REPURCHASE (CONTINUED)

Under the terms of the De Tomaso Agreement, if the remaining 776,530 shares are
not sold by their current owner prior to June 30, 1998, the Company is committed
to acquire the shares at $11.27 per share. The Company has obtained a letter of
credit to guarantee payment of the repurchase price which is collateralized by
certain investment securities owned by the Company and reported in the balance
sheet in the amount of Lit. 14,479 million. The agreement also provides that (a)
at any time prior to June 30, 1998, the Company may offer to buy any part or all
of such shares at $11.27 per share and (b) if such an offer made by the Company
is not accepted, the Company's commitment to buy the remaining 776,530 shares is
reduced by the number of shares stipulated in the offer that was not accepted.
These 776,530 shares were recorded on the balance sheet at June 30, 1995 at
estimated market value of $10.00 (Lit. 16,400 per share) as shares subject to
repurchase and are not included in shareholders' equity. The difference between
$10.00 and the redemption price of $11.27 is being amortized over the period to
June 30, 1998.

5.   ACQUISITIONS AND DISPOSALS

   1997 AGREEMENT TO SELL REAL ESTATE AFFILIATE AND LOANS DUE BY SUCH AFFILIATE

In December 1997, the Company entered into agreement to dispose of its 25%
interest in Domer S.r.l. and loans due by Domer S.r.l. resulting from the 1996
disposal of Immobiliare Broseta S.r.l. (See below). The consideration for such
sale was Lit. 2,900 million in cash, of which Lit. 1,400 million was paid on
December 31, 1997 and Lit. 1,500 million was paid on March 31, 1998, plus the
proceeds from the sale of 45,977 shares of the Company's common stock, plus the
proceeds from the sale of certain apartments located in Bergamo, the sales of
which are expected to be completed within 1998.

The Company estimates that the aggregate of the consideration received and to be
received will at least equal the aggregate carrying value of Lit. 6,238 million
of the 25% interest in Domer S.r.l. and the loan notes due by Domer S.r.l. No
gain has been recorded in respect of this transaction in the financial
statements as at December 31, 1997 and the amounts due are shown in `Other
receivables' at the aggregate book value of the assets disposed less the Lit.
1,400 million received in 1997.

     1997 SALE OF REAL ESTATE SUBSIDIARY

On March 18, 1997, the Company entered into an agreement to sell its Cologne,
Italy property to a Company affiliated with Rag. Bertoni, a shareholder of the
Company and of Finprogetti, the Company's then largest shareholder. The
agreement was consummated on April 15, 1997 by transfer of the shares of
Finprogetti Investimenti Immobiliari S.p.A., the subsidiary holding the Cologne
property. Under the terms of the agreement, the purchaser assumed the mortgage
loans over the property and paid Lit. 500 million on March 18, 1997, Lit. 1,928
million on April 15, 1997 and Lit. 2,040 million on July 1, 1997. As part of the
terms of sale, the Company granted the purchaser an option to settle the final
installment in cash of Lit. 2,040 million or by way of paying in up to 120,000
shares of the Company's common stock to be valued at the higher of $10.00 or the
market value of the shares as at December 31, 1997. The Company reclassified
these 120,000 shares subject to the option from `Shareholders' equity' to
`Shares subject to repurchase' at their estimated fair value, at the date of the
transaction, of $8.00 (Lit. 13,416) per share for an amount of Lit. 1,610
million ($960,000). At December 31, 1997, the purchaser exercised their option
to settle the final instalment by way of delivery of such 120,000 shares.



                                                                            F-16
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997

5.   ACQUISITIONS AND DISPOSALS (CONTINUED)


     1996/7 SALE OF MOTORCYCLE SUBSIDIARY SECURITIES

In October 1996, the Company's newly formed wholly-owned subsidiary, Moto Guzzi
Corp., acquired all of the equity interest of the Company in Moto Guzzi S.p.A.
and in Moto America Inc. in exchange for 6,000,000 shares of common stock of
Moto Guzzi Corp. In December 1996 and January 1997, Moto Guzzi Corp. consummated
a private offering of convertible preferred stock and common stock purchase
warrants which raised an aggregate of approximately $5,250,000 (Lit. 8,034
million at the then prevailing exchange rates) for Moto Guzzi Corp., net of
expenses.

Moto Guzzi Corp. issued 1,500,000 units, each consisting of one share of Class A
Convertible Preferred Stock and one common stock purchase warrant exercisable
for three years for the lesser of $4.00 or the initial public offering price of
the common stock. The preferred stock is convertible at the option of the holder
into an equal number of shares of common stock, subject to adjustment to protect
against events of dilution and is automatically converted upon consummation of
an initial public offering of Moto Guzzi Corp. common stock which raises gross
proceeds of at least $8,000,000. The conversion rate for the preferred stock in
such event will be the lesser of the then applicable conversion rate or 75% of
the per share initial offering price. If such an initial public offering is not
consummated by June 30, 1998, the holders of a majority of the shares of
preferred stock will have the right to select a majority of the Moto Guzzi Corp.
board of directors. The holders of the Preferred Stock also have a right to
redeem their shares at $8.00 per share if no public offering is completed on or
before January 16, 2002.

The Moto Guzzi Corp. preferred stock was recorded in the consolidated balance
sheet as preferred stock of subsidiary in the amount of Lit. 5,101 million at
December 31, 1996 and a further Lit. 2,933 million was recorded in January 1997
as a result of the completion of the private placement. At December 31, 1997,
the Company has recorded Lit. 3,595 million as accretion expense in the
statement of operations to reflect amortization of the difference between the
net proceeds received and the contingent redemption of such shares in January
2002 and the effects of changing exchange rates on such repurchase commitment.

     1996 ACQUISITION OF MOTO AMERICA INC.

Effective January 1, 1996, the Company completed its acquisition of the
outstanding shares of Moto America Inc., the sole distributor of Moto Guzzi
motorcycles in the United States. The acquisition was consummated by the
issuance of 30,000 shares of common stock of the Company and the purchase price
of Lit. 471 million reflects the shares issued at a fair value of $10.00 per
share (Lit. 15,710 per share at such date). The acquisition has been accounted
for as a purchase and the excess of the purchase consideration over the fair
value of assets acquired has been accounted for as goodwill, determined in the
amount of Lit. 262 million, which is being amortized over 5 years. The effects
of the acquisition are not material to the operations of the Company.



                                                                            F-17
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


5.   ACQUISITIONS AND DISPOSALS (CONTINUED)

     1996 DISPOSAL OF IMMOBILIARE BROSETA S.R.L.

In June 1996, the Company sold its 66.7% equity interest in Immobiliare Broseta
S.r.l. to its 25% owned affiliate Domer S.r.l. The remaining 33.3% equity
interest in Immobiliare Broseta S.r.l. was owned by Interim S.p.A., a subsidiary
of Domer S.r.l. and was subsequently transferred to Domer S.r.l. The Company had
sought offers from third parties through an independent broker and the sale
price of Lit. 5,200 million offered by Domer S.r.l. was the highest of the
offers received. Lit. 1,800 million of the sale price was evidenced by a
promissory note of Domer S.r.l. due December 31, 1996 (subsequently renewed
until December 31, 1997), bearing an interest rate equal to the official Lire
discount rate plus 3%. The balance of Lit. 3,400 million will be received
pro-rata from the sales of apartments which are being developed from the
Immobiliare Broseta S.r.l. property or on June 30, 1999, whichever is earlier.
This amount of Lit. 3,400 million carries an interest rate of 6% payable
bi-annually and has been accounted for at its estimated net present value of
Lit. 2,908 million applying a discount rate of 12%, considered to be a fair
market rate for similar notes receivable. In December 1997, as described above,
the Company disposed of both its 25% interest in Domer S.r.l. and the two loan
notes resulting from sale of its 66.7% interest in Immobiliare Broseta S.r.l.

     1995 FINPROGETTI ACQUISITION

On July 17, 1995, effective July 1, 1995, the Company acquired from Finprogetti
S.p.A. (an Italian entity) all of that company's equity interests in its
principal operating subsidiaries and a tax receivable of Lit. 5,150 million in
exchange for shares of the Company. The operating subsidiaries comprised TIM, a
temporary management company specialized in the "turnaround" of troubled and
underperforming Italian and foreign companies, subsidiaries holding Italian real
estate buildings and concession rights and a leasing/factoring company. As part
of the same transaction, the Company acquired the minority interest in TIM from
Dott. Albino Collini, its founder and CEO. Under the terms of the Finprogetti
Agreement, the final number of the Company's shares to be issued was conditional
on the purchase before September 30, 1995 by Finprogetti S.p.A., or its
shareholders or third parties directed by it, of a specified number of shares in
the Company at a stipulated price of Lit. 20,106.73 ($12.26 at then current
exchange rates) per share. After the receipt of cash of Lit. 8,204 million
(approximately $5,000,000) for the subscription to 408,008 shares, the Company
adjusted the number of shares to be given so that 1,922,652 shares were issued
to effect the acquisition from Finprogetti S.p.A., in additi
on to the shares
issued in exchange for cash. 248,673 of the shares issued were initially placed
in escrow and were released in February 1997 following legal transfer to the
Company of the tax receivable included in the assets acquired.

The Lit. 39,447 million total purchase price reported in the balance sheet to
effect the Finprogetti Agreement reflects Lit. 38,223 million (Lit. 16,400 per
share; $10.00 per share) assigned to the 2,330,660 shares issued plus costs of
Lit. 1,224 million incurred in connection with the acquisition.



                                                                            F-18
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


5.   ACQUISITIONS AND DISPOSALS (CONTINUED)

The value of $10.00 per share represented the fair value of the shares issued,
approximating the trading price of the Company's shares at the date of the
acquisition and supported by the Company's estimate of the fair values of assets
and liabilities acquired. The acquisition was accounted for by the purchase
method. Accordingly, the purchase price was allocated to the assets purchased
and the liabilities assumed based on the fair values at the date of the
acquisition, as follows:

<TABLE>
<CAPTION>

                                                                               US$'0001           LIRE M.

<S>                                                                           <C>                 <C>
               Cash....................................................         5,166               8,204
               Real estate interest ...................................        21,479              34,109
               Concession rights over real estate......................         2,960               4,700
               Less: Related long-term debt............................       (12,238)            (19,431)
               Trademark and other intangibles.........................         3,148               5,000
               Other assets and liabilities, net.......................         3,355               5,329
               Goodwill................................................           967               1,536
                                                                             --------              ------
                                                                               24,837              39,447
                                                                               ======              ======
</TABLE>



     1. At the approximate exchange rate as of July 17, 1995 of Lire 1,640 to
        $1.00



The excess of the purchase price paid over the fair values of the net assets
acquired was recorded as goodwill, which is being amortized over 10 years.
Results of the Finprogetti companies are included in operations from July 1,
1995. Goodwill amortization for fiscal year 1997 was Lit. 154 million (1996 -
Lit. 154 million, 1995 - Lit. 77 million). At December 31, 1997, goodwill of
Lit. 1,151 million was written down by Lit. 1,001 million to Lit. 150 million.

     1995 L.I.T.A. ACQUISITION

On July 25, 1995, the Company acquired L.I.T.A. S.p.A., an Italian manufacturer
of steel tubes for the motor vehicle and furniture industries for cash in the
amount of Lit. 615 million. The fair value of the assets received was Lit. 1,649
million in excess of the purchase price. This excess has been allocated to
reduce the carrying value of property, plant and equipment by Lit. 1,482 million
and other non-current assets by Lit. 167 million. A valuation allowance was
established against the deferred tax asset arising from the adjustment of the
book basis of the assets. When realized, the tax benefit will be credited to
income.



                                                                            F-19
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997

5.   ACQUISITIONS AND DISPOSALS (CONTINUED)

     PROFORMA INFORMATION

The Pro Forma unaudited results of operations for the year ended December 31,
1995, assuming the Finprogetti and L.I.T.A. acquisitions and the repurchase of
shares from the former Chairman had been consummated as at January 1, 1995, are
as follows:

<TABLE>
<CAPTION>

                                                                        1995
                                                                      LIRE. M.
<S>                                                                 <C>
               Net sales                                               82,403
               Rental income                                            1,927
               Finance income                                           1,032
                                                                  ------------
               Net loss                                                (7,699)
                                                                  ============

               Net loss per common share                               (1,369)
                                                                  ============
</TABLE>


It cannot be inferred that the proforma operating results as shown above would
have resulted had the acquisitions and repurchase of shares been consummated as
at the assumed dates as transactions between the entities acquired and their
then parent companies may not have occurred or may have occurred on different
terms and conditions.

6.   LAND FOR DEVELOPMENT

Undeveloped land, acquired as part of the Finprogetti transaction, represents an
area in Sardinia for development of hotel and leisure facilities and is owned by
the Company through an 80% interest in Grand Hotel Bitia S.r.l. The minority
shareholder had an option, which expired unexercised in 1996, to purchase the
Company's interest at a price above its then carrying value of Lit. 6,000
million. In accordance with FASB Statement No. 121, the Company recorded a
reserve of Lit. 2,500 million against the property in the third quarter of 1996
to reflect development uncertainties.

7.   REAL ESTATE HELD FOR SALE

<TABLE>
<CAPTION>

                                                1997          1997          1996
                                               US$'000       LIRE M.       LIRE M.
<S>                                            <C>          <C>            <C>
Building held for sale                              -             -        15,100
                                             ============  ============  ============
</TABLE>


As discussed in Note 5, on March 18, 1997 the Company disposed of this property.
In accordance with FASB Statement No. 121, the Company had recorded impairment
reserves of Lit. 1,680 million against this property in 1996 to reflect the
terms being negotiated for its disposal.



                                                                            F-20
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
    
                                                               December 31, 1997

8.   SECURITIES COLLATERALIZING

     SHARE REPURCHASE COMMITMENTS


<TABLE>
<CAPTION>

                                                                        1997         1997           1996
                                                                      US$'000       LIRE M.       LIRE M.
<S>                                                                   <C>            <C>           <C>
Italian Government backed floating rate note, 2004...............         4,411         7,803         8,923
Banco Nazionale di Lavoro, zero coupon 1998......................         2,883         5,100         5,100
Other............................................................           891         1,576           488
                                                                     ===========  ============   ===========
                                                                          8,185        14,479        14,511
                                                                     ===========  ============   ===========
</TABLE>


All marketable and other securities are held-to-maturity. See Note 4 with
respect to share repurchase commitments.

9.   OTHER ASSETS

<TABLE>
<CAPTION>

                                                                        1997         1997           1996
                                                                      US$'000       LIRE M.        LIRE M.
<S>                                                                   <C>           <C>            <C>
       Concession rights, net of amortization of Lit. 294........         2,491         4,406          4,549
       Tax receivables...........................................         4,875         8,623          9,085
       Other.....................................................           735         1,301            714
                                                                     ===========  ============   ============
                                                                          8,101        14,330         13,855
                                                                     ===========  ============   ============
</TABLE>


The concession rights expire in February, 2041 and are being amortized on a
straight-line basis over 40 years. Tax receivables represent amounts for which
reimbursement has been requested. The times for reimbursement in Italy have, in
the recent past, invariably been in excess of 12 months and, accordingly,
amounts for which reimbursement has been requested are not classified as current
assets. Interest accrues on these receivables at rates set from time to time by
the Italian Government.

10.  ADVANCES FROM BANKS AND CREDIT ARRANGEMENTS

The operating subsidiaries of the Company have lines of credit arrangements with
a number of Italian banks. Under these, the Company, at December 31, 1997, could
have borrowed up to approximately Lit. 52,600 million. The line of credit
arrangements do not have termination dates and are periodically reviewed. The
average interest rate on advances from banks was approximately 8.25% and 11.75%
at December 31, 1997 and 1996, respectively.

11.  ACCRUED EXPENSES AND OTHER PAYABLES

<TABLE>
<CAPTION>

                                                                           1997          1997          1996
                                                                          US$'000       LIRE M.       LIRE M.
<S>                                                                       <C>           <C>           <C>
       Salaries, wages and related items..........................          2,707        4,788         4,123
       Value added and other non income taxes.....................            454          804         2,444
       Other accrued expenses.....................................          2,506        4,433         4,847
                                                                      ============  ===========   ===========
                                                                            5,667       10,025        11,414
                                                                      ============  ===========   ===========
</TABLE>



                                                                            F-21
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


12.  LONG-TERM DEBT

Long-term debt from real estate activities, after principal repayments of Lit.
333 million in 1997, was eliminated as a consequence of the 1997 sale of the
property and assumption of such debt by the purchaser -- see Note 5.

<TABLE>
<CAPTION>

OTHER LONG TERM DEBT:                                                      1997           1997           1996

                                                                          US$'000       LIRE M.        LIRE M.

<S>                                                                        <C>          <C>            <C>
Mortgage note payable, secured by substantially all
fixed assets of motorcycle operations. Interest 10.08%,
payable in semi-annual installments through 2001..................          1,199         2,121          2,536

Notes payable, secured by second mortgage over properties of motorcycle
operations:
        Interest 12.40%, payable in semi-annual
        installments through 2001.................................          1,780         3,149          4,198

        Interest 12.36%, payable in semi-annual
        installments through 1999.................................            652         1,153          1,636

Industry Ministry L. 46/82, 1.9875% through 2002 and 7.95% 
thereafter, payable in installments commencing from 2002..........            496           878            878

Unsecured loan note denominated in US$, interest 8%,
payable on October 23, 1998.......................................          1,863         3,296          2,851

Mortgage note secured by property of Moto America
Inc., interest 8.25%, payable monthly through 2011................            231           409            365

Finance leases....................................................          1,027         1,817          1,512

Sundry notes payable..............................................            187           330             48
                                                                      ------------   -----------    -----------
                                                                            7,435        13,153         14,024
Less current portion..............................................         (3,397)       (6,009)        (2,270)
                                                                      ------------   -----------    -----------
                                                                            4,038         7,144         11,754
                                                                      ============   ===========    ===========
</TABLE>


           MATURITIES OF LONG-TERM DEBT AS OF DECEMBER 31, 1997:

<TABLE>
<CAPTION>

                                                                           US$'000       LIRE M.
<S>                                                                    <C>              <C>
       1998.......................................................          3,397         6,009
       1999.......................................................          1,617         2,860
       2000.......................................................          1,153         2,039
       2001.......................................................            508           898
       2002.......................................................            121           214
       Subsequent to 2002.........................................            639         1,133
                                                                      ------------   -----------
                                                                            7,435        13,153
                                                                      ============   ===========
</TABLE>



                                                                            F-22
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


13.  OTHER INCOME

<TABLE>
<CAPTION>

                                                                  1997          1997          1996           1995
                                                                 US$'000       LIRE M.       LIRE M.        LIRE M.
<S>                                                              <C>            <C>           <C>            <C>
Currency exchange gain/(loss)...........................          1,122         1,984          (848)          (443)
Gains on sale of assets.................................            196           346         1,211            321
Finance income..........................................            241           426         1,149            978
Finance expense.........................................           (408)         (721)       (1,037)          (890)
Government grants.......................................              -             -           450              -
Other...................................................            (16)          (28)          527            547
                                                            ============  ============  ============   ============
                                                                  1,135         2,007         1,452            513
                                                            ============  ============  ============   ============
</TABLE>


Finance income and expense represent the residual finance activities of
Finproservice, acquired as part of the Finprogetti acquisition in July 1995, and
whose operations are being wound down. Gains on sales of assets in 1996
principally relate to the sale of surplus properties in the United States and
Italy and sales of tooling by Moto Guzzi.

14.  INCOME TAXES

Loss before income taxes and minority interests consisted of the following:


<TABLE>
<CAPTION>

                                                                 1997          1997           1996           1995
                                                                US$'000       LIRE M.       LIRE M.        LIRE M.
<S>                                                         <C>            <C>            <C>            <C>
       United States....................................        (2,976)       (5,264)       (6,589)        (5,942)
       Italy............................................        (6,829)      (12,078)       (7,438)          (168)
                                                            ------------  ------------   -----------    -----------
                                                                (9,804)      (17,342)      (14,027)        (6,110)
                                                            ============  ============   ===========    ===========
</TABLE>


The provision for income taxes consisted of the following:

<TABLE>
<CAPTION>

                                                                 1997          1997           1996           1995
                                                               US$'000        LIRE M.        LIRE M.        LIRE M.

           Current:
<S>                                                              <C>            <C>            <C>            <C>
           United States................................            28             40             22              -
           Italy........................................           230            417            573            420
                                                            ------------   ------------  ------------   ------------
                                                                   258            457            595            420
                                                            ============   ============   ============   ============

       Deferred:........................................             -              -              -              -
                                                            ============   ============   ============   ============

                                                            ------------   ------------   ------------   ------------
       Total............................................           258            457            595            420
                                                            ============   ============   ============   ============
</TABLE>



                                                                            F-23
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


14.  INCOME TAXES (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Valuation allowances have
been recorded for the deferred tax assets as management believes it more likely
than not that these assets will not be realized. Significant components of the
Company's deferred tax assets are as follows:

<TABLE>
<CAPTION>

                                                                           1997          1997          1996
                                                                          US$'000      LIRE M.       LIRE M.
<S>                                                                      <C>          <C>            <C>
       Short-term reserves........................................          1,807        3,196           683
       Carrying value of fixed assets.............................          1,666        2,947         3,060
       Net operating loss carryforwards ..........................          4,873        8,620        14,259
       Other......................................................          1,129        1,997           821
                                                                      ------------  -----------   -----------
                                                                            9,475       16,761        18,823
       Valuation allowance........................................         (9,475)     (16,761)      (18,823)
                                                                      ------------  -----------   -----------
       Net deferred tax assets....................................              -            -             -
                                                                      ============  ===========   ===========
</TABLE>


The effective provision for income taxes varied from the income tax credit
calculated at the statutory U.S. federal income tax rate as follows:

<TABLE>
<CAPTION>
                                                                 1997           1997           1996           1995

                                                                US$'000        LIRE M.        LIRE M.        LIRE M.
<S>                                                         <C>            <C>            <C>            <C>
       Computed tax credit at U.S. federal rate.........        (3,431)        (6,070)        (4,910)        (2,138)
       Losses and reversals of short-term reserves 
       for which valuation allowance provided...........         3,680          6,512          6,125          3,181
       Utilization of tax losses........................          (241)          (427)        (1,441)          (780)
       Elimination of intercompany profits..............            75            133            326            496
       Non-deductible expenses and other................           175            309            495           (339)
                                                            ============   ============   ============   ============
                                                                   258            457            595            420
                                                            ============   ============   ============   ============
</TABLE>

For U.S. federal income tax purposes, the Company has net operating loss
carryforwards of approximately U.S. $7 million at December 31, 1997. These
losses expire from 2003 through 2011. United States income taxes have not been
provided on unremitted earnings of subsidiaries located outside the United
States as such earnings are considered to be permanently reinvested.
Approximately Lit. 4,800 million of retained earnings of Italian subsidiaries
cannot be distributed under local laws.



                                                                            F-24
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


14.  INCOME TAXES (CONTINUED)

At December 31, 1997 the Company had net operating loss carryforwards for
Italian federal income tax purposes which expire as follows:

<TABLE>
<CAPTION>

                                                                 1997           1997
                                                                US$'000        LIRE M.
<S>                                                             <C>            <C>
       1998.............................................          4,455          7,881
       1999.............................................          2,158          3,818
       2000.............................................            178            314
       2001.............................................              5              8
       2002.............................................            565          1,000
                                                            ------------   ------------
                                                                  7,361         13,021
                                                            ============   ============
</TABLE>


15.  STOCK OPTIONS

The Company's "1995 Non-Qualified Plan" provides for the grant of non-qualified
stock options for officers and key employees. Total options of 2,000,000 shares
have been authorized by the Board. Grants were made in 1996 and 1995 of 22,500
and 960,000 shares respectively, all at an exercise price of $12.26. 130,000
options were forfeited in 1997. The options granted can be exercised as follows:

<TABLE>

<S>                                                              <C>
       Currently exercisable............................          389,000
       1997.............................................          194,500
       1998.............................................          194,500
       1999.............................................          134,500
       2000.............................................          134,500
                                                            --------------
                                                                  852,500
                                                            ==============
</TABLE>


Under the "1995 Director's Plan," 5,000 options are granted annually on January
2 of each calendar year to each non-employee Director serving at such date and a
reduced pro quota number of options, at the date of election, to Directors
initially elected at a date other than January 2. The exercise price was fixed
at $12.26 for options granted at 2 January 1996 and at the reported closing
price of the stock on January 2, or date of election of Directors for subsequent
grants. 20,000 options were granted on January 2, 1996 at $12.26 and 15,000
granted on January 2, 1997 at $9.3125, respectively, all of which were forfeited
in 1997 pursuant to changes in the composition of the Board. 18,751 options were
granted in 1997 at a weighted average exercise price of $7.446 in respect of
incoming Board members and a further 40,000 options were granted on January 2,
1998 at an exercise price of $4.875.

Additionally, the Company issued to GKN Securities Corp. 125,000 options
exercisable through June 10, 2002 at an exercise price of $6.12 and issued
173,306 warrants exercisable through June 10, 2000 at a price of $6.00 to
certain shareholder's as an inducement for them to enter lock-up agreements with
the Company and with GKN Securities Corp. in connection with its June 1997
public offering. As described in Note 1, the Company also issued 1,250,000
warrants exercisable through May 2, 2000 at an exercise price of $6.00, to
Tamarix.



                                                                            F-25
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


15.  STOCK OPTIONS (CONTINUED)

As the Company incurred losses in 1997, all warrants and options described above
are considered antidilutive. The potentially dilutive effects of outstanding
options and warrants in 1997 is summarized below:

<TABLE>


<S>                                                         <C>
Weighted average number of common shares
outstanding during the year..........................
Basic................................................        4,600,285
Tamarix warrants.....................................           85,116
GKN options and lock-up warrants.....................           17,983
1995 Director's Plan options.........................              619
                                                          -------------
Diluted..............................................        4,704,003
                                                          =============
</TABLE>



The Company has elected the disclosure-only provisions of FASB Statement No.
123, "Accounting for Stock Based Compensation" and applies APB Opinion No. 25
and related interpretations in accounting for their stock option plans. If the
Company had elected to recognize compensation cost based on the fair value of
awards at grant dates, the pro forma net loss and loss per share for 1996 would
have been Lit. 18,230 million ($11,916,000) and Lit. 3,971 ($2.60) per share.
Pro Forma compensation costs under the Company's stock option plans for 1997
based on the value of awards at the grant date were not material.

The fair value of the Company's options is the estimated present value at the
date of grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions: risk-free interest rate of approximately 5.5%;
expected volatility of approximately 60%; expected life of 4 years; and dividend
yield of 0%.

The following is a summary of transactions pertaining to the Plans:


<TABLE>
<CAPTION>

                                          DECEMBER 31, 1997       DECEMBER 31, 1996       DECEMBER 31, 1995
                                        ----------------------- ----------------------- -----------------------
                                                    Weighted                Weighted                Weighted
                                                     Average                 Average                 Average
                                         Shares     Exercise     Shares     Exercise     Shares     Exercise
                                         (000's)      Price      (000's)      Price      (000's)      Price
                                        ---------- ------------ ---------- ------------ ---------- ------------
<S>                                      <C>          <C>         <C>         <C>         <C>         <C>
Outstanding, January 1                      1,003       $12.26        960       $12.26          -           $0
Granted                                        18         7.45         43        12.26        960        12.26
Exercised                                       0            -          -            -          -            -
Forfeited                                    (150)       12.26          -            -          -            -

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

Outstanding, December 31                      871       $12.16      1,003       $12.26        960       $12.26
                                        ========== ============ ========== ============ ========== ============

Options exercisable, December 31              389       $12.16        233       $12.26          0           $0
                                        ========== ============ ========== ============ ========== ============
</TABLE>



                                                                            F-26
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


15.  STOCK OPTIONS (CONTINUED)

The following is a summary of the status of stock options outstanding and
exercisable under the Plans as of December 31, 1997:

<TABLE>
<CAPTION>

                                                                                     STOCK OPTIONS
                                                STOCK OPTIONS OUTSTANDING             EXERCISABLE
                                          -------------------------------------- -----------------------
                                                                     Weighted
                                                        Weighted      Average                 Weighted
                                                         Average     Remaining                Average
                                            Shares      Exercise    Contractual   Shares      Exercise
              Range of Exercise Price       (000's)       Price        Life       (000's)      Price
----------------------------------------- ------------ ------------ ------------ ----------  -----------

<S>               <C>                       <C>          <C>        <C>            <C>         <C>
                   $12.26                         853       $12.26  2.77 years         389       $12.26

                   $5.125 - $7.95                  18        $7.45  3.50 years           -            -
                                          ------------ ------------              ----------
                                                  871       $12.16                     389       $12.26
                                          ============ ============              ==========
</TABLE>


16.  RELATED PARTY TRANSACTIONS

              Receivables from related parties and affiliates consists of the
following:

<TABLE>
<CAPTION>

                                                                         1997           1997           1996
                                                                        US$'000        LIRE M.        LIRE M.
<S>                                                                   <C>              <C>          <C>
          MGI Motorcycle GmbH.....................................          3,043         5,383              -
          Finprogetti S.p.A. and affiliates.......................              -             -             63
                                                                      ------------   -----------    -----------
          Included in current assets..............................          3,043         5,383             63
                                                                      ============   ===========    ===========
          Domer S.r.l., due after more than 12 months.............              -             -          4,708
                                                                      ============   ===========    ===========
</TABLE>


The balance with Domer S.r.l. at December 31, 1996 related to promissory notes
resulting from the sale by the Company of its 66.7% interest in Immobiliare
Broseta S.r.l. -- see Note 5. The amounts at December 31, 1997 due from MGI
Motorcycle GmbH, a 25% owned entity acquired in 1997, resulted from the purchase
of products and services from the Company. Sales to MGI Motorcycle GmbH,
consisting primarily of motorcycles and parts were Lit. 14,410 million in 1997.

              TRANSACTIONS AND ARRANGEMENTS WITH FORMER CHAIRMAN

The 1995 repurchase of shares formerly owned by the ex-Chairman and commitment
of the Company to acquire the remaining shares formerly owned by him are
detailed in Note 4.



                                                                            F-27
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


16.           RELATED PARTY TRANSACTIONS (CONTINUED)

              MORRISON COHEN SINGER & WEINSTEIN, LLP

The law firm of Morrison Cohen Singer & Weinstein, LLP, of which Howard E.
Chase, a Director of the Company and its Chief Executive Officer, was a member
until September 1, 1995, and to which he is now of counsel, was paid by the
Company and its subsidiaries in 1997 an aggregate of Lit. 824 million ($484,000)
in legal fees and disbursements for services rendered (1996 - Lit. 793 million,
1995 - Lit. 1,327 million).

              DEBORAH S. NOVICK

Deborah S. Novick, a Director of the Company since September 7, 1997 is
Executive Vice President Investment Banking for GKN Securities Corp. who acted
as underwriters for the public offering of the Company's common stock in June
1997 (see Note 1) and for the private placement of Moto Guzzi Corp. preferred
stock in December 1996 and January 1997 (see Note 5). GKN Securities Corp. was
paid $1,368,000 in underwriting commissions and expenses in relation to these
transactions.

              CARLO GARAVAGLIA

Carlo Garavaglia, a former Director of the Company, is a member of a law firm
which was paid an aggregate of Lit. 178 million by the Company and its
subsidiaries in 1997 for legal, statutory audit and tax consulting services
rendered (1996 - Lit. 228 million, 1995 - Lit. 268 million).

              RENTAL AGREEMENTS

Mr. Francesco Pugno Vanoni, a former Director of the Company, and his brother
own offices in Milan which are leased to certain subsidiaries of the Company
acquired from Finprogetti at a rental of approximately Lit. 161 million per
year. Management believes this rate of rental conforms with prevailing market
rates.



                                                                            F-28
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


17.           EXPORT SALES AND GEOGRAPHIC INFORMATION (CONTINUED)



              EXPORT SALES

The Company's motorcycle business exports its products throughout the world.
Sales of motorcycles by geographic destination were as follows:

<TABLE>
<CAPTION>

                                                                            1997           1996         1995
<S>                                                                        <C>             <C>           <C>
          Italy...................................................           37%            37%           35%
          Europe other than Italy.................................           46%            43%           49%
          United States...........................................           13%             7%            6%
          Elsewhere...............................................            4%            13%           10%
</TABLE>


Sales to Germany represented approximately 17.8% of motorcycle sales in 1997
(19% in 1996). No other country represented over 10% of motorcycle sales. The
Company's other businesses do not have significant export sales.

     TRANSFERS OF PRODUCTS BETWEEN GEOGRAPHICAL AREAS

Sales of motorcycles and parts from the Italian production facilities of the
Company's motorcycle business to its U.S. exclusive importer, Moto America Inc.,
amounted to Lit. 10,631 million in 1997 (1996 - Lit. 5,800 million). Prior to
1996, Moto America Inc. was an unaffiliated company. Sales to its French
exclusive importer, Moto Guzzi France Sarl, constituted in 1997, amounted to
Lit. 6,959 million in 1997. Sales prices are accounted for on a basis comparable
to those for non affiliated customers.

     IDENTIFIABLE ASSETS

As of December 31, 1997 and 1996 all material operating subsidiaries of the
Company were located in Italy. The Company has assets in the United States
consisting of offices which deal with regulatory matters and its exclusive
importer of Moto Guzzi motorcycles in the United States and in France.
Identifiable assets outside of Italy are not significant to the Company.



                                                                            F-29
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


18.  INDUSTRY SEGMENT ANALYSIS

<TABLE>
<CAPTION>

                                                                          Management
1997                                               Motor-       Steel     & Corporate     Real
LIRE M.                                            cycles       Tubes       Services     Estate    Eliminations    Total

<S>                                               <C>          <C>         <C>            <C>        <C>          <C>
Sales.........................................      98,578      20,480        3,633            -       (364)      122,327
Intrasegment sales............................     (17,590)          -       (1,098)           -          -       (18,688)
                                               ------------ -----------  ----------- ------------ -----------  -----------

Net sales.....................................      80,988      20,480        2,535            -       (364)      103,639

Cost of sales.................................     (71,474)    (18,215)      (1,570)           -          -       (91,259)
                                               ------------ -----------  ----------- ------------ -----------  -----------
                                                     9,514       2,265          965            -       (364)       12,380

Selling, general and administrative expenses..     (13,824)     (1,470)      (7,875)        (276)       455       (22,990)
Research and development......................      (3,125)          -            -            -          -        (3,125)
Impairment loss...............................           -           -       (4,001)                               (4,001)
Rental income.................................           -           -            -          477          -           477
                                               ------------ -----------  ----------- ------------ -----------  -----------
Operating profit/(loss).......................      (7,435)        795      (10,911)         201         91       (17,259)
                                               ============ ===========  =========== ============ ===========  ===========


                                                                          Management
1996                                               Motor-       Steel     & Corporate     Real
LIRE M.                                            cycles       Tubes       Services     Estate    Eliminations    Total

Sales.........................................      91,986      17,313        3,517            -       (973)      111,843
Intrasegment sales............................     (14,366)          -         (671)           -          -       (15,037)
                                               ------------ -----------  ----------- ------------ -----------  -----------

Net sales.....................................      77,620      17,313        2,846            -       (973)       96,806

Cost of sales.................................     (65,755)    (16,105)      (2,478)        (103)       276       (84,165)
                                               ------------ -----------  ----------- ------------ -----------  -----------

                                                    11,865       1,208          368         (103)      (697)       12,641

Selling, general and administrative expenses..     (10,210)     (1,593)     (10,760)        (511)     1,644       (21,430)
Research and development......................      (1,177)          -            -            -          -        (1,177)
Impairment loss...............................           -           -            -       (4,180)         -        (4,180)
Rental income.................................           -           -           43        1,440          -         1,483
                                               ------------ -----------  ----------- ------------ -----------  -----------
Operating profit/(loss).......................         478        (385)     (10,349)      (3,354)       947       (13,663)
                                               ============ ===========  =========== ============ ===========  ===========
</TABLE>



                                                                            F-30
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


18.  INDUSTRY SEGMENT ANALYSIS (CONTINUED)

<TABLE>
<CAPTION>

                                                                          Management
1995                                               Motor-       Steel     & Corporate     Real
LIRE M.                                            cycles       Tubes       Services     Estate    Eliminations    Total

<S>                                                <C>          <C>         <C>           <C>        <C>           <C>
Sales.........................................      72,854       5,836        2,458            -       (334)       80,814
Intrasegment sales............................      (8,183)          -         (378)           -          -        (8,561)
                                               ------------ -----------  ----------- ------------ -----------  -----------
Net sales.....................................      64,671       5,836        2,080            -       (334)       72,253
Cost of sales.................................     (56,231)     (4,537)      (1,828)        (276)        64       (62,808)
                                               ------------ -----------  ----------- ------------ -----------  -----------
                                                     8,440       1,299          252         (276)      (270)        9,445

Selling, general and administrative expenses..      (8,249)     (1,064)      (7,101)        (506)       690       (16,230)
Research and development......................        (602)          -            -            -          -          (602)
Rental income.................................           -           -           80          690          -           770
Other operating income........................         366           -            -            -       (366)            -
                                               ------------ -----------  ----------- ------------ -----------  -----------
Operating profit/(loss).......................         (45)        795       (6,769)         (92)        54        (6,617)
                                               ============ ===========  =========== ============ ===========  ===========
</TABLE>


Intrasegment sales represent sales of motorcycles and spare parts by the
Company's motorcycle production subsidiary to its US and French exclusive
importers. Intersegment sales represent management and corporate services.
Intrasegment and intersegment sales are accounted for at prices comparable to
unaffiliated customers.

     CAPITAL EXPENDITURE AND DEPRECIATION EXPENSE

Capital expenditure and depreciation expense relate primarily to the Company's
motorcycle segment in 1997, 1996 and 1995.

<TABLE>
<CAPTION>

     IDENTIFIABLE ASSETS                                          1997            1997            1996            1995
                                                                 US$'000         LIRE M.         LIRE M.         LIRE M.
<S>                                                            <C>            <C>             <C>              <C>
       Motorcycles......................................          47,917         84,765          73,731          58,656
       Steel tubing.....................................           7,566         13,385           9,661           8,808
       Real estate......................................           6,929         12,257          30,260          41,904
       Corporate........................................          19,983         35,348          42,860          73,462
                                                            -------------   ------------    ------------    ------------
                                                                  82,395        145,755         156,512         182,830
                                                            =============   ============    ============    ============
</TABLE>


Identifiable assets for operating industry segments are those identifiable
assets used by those industry segments. There are no shared assets. Corporate
assets are represented by cash, investments, tax and other receivables and
financing of the operating industry segments.



                                                                            F-31
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


19.  COMMITMENTS AND CONTINGENCIES


     COMMITMENTS TO REPURCHASE SHARES

The Company is required to deposit investments in the amount of Lit. 15,000
million, which amount has been reduced by investment in zero coupon securities,
as collateral for a letter of credit securing the repurchase of 776,530 shares
formerly owned by Mr. De Tomaso -- see Note 4. As of December 31, 1997,
investments for a total of Lit. 14,479 million are held as security for the
repurchase. The Company also has commitments, unsecured, to repurchase 28.350
shares from Finprogetti -- see Note 4. The estimated fair value of such
commitment is Lit. 544 million at December 31, 1997.

     LITIGATION

The Company and its subsidiaries are involved in litigation in the normal course
of business. Management does not believe, based on the advice of its legal
advisors, that the final settlement of such litigation will have an adverse
effect on the Company's consolidated financial statements as of December 31,
1997.

     LOSS OF CONTROL OVER MATERIAL SUBSIDIARY AND CONTINGENT SHARE REPURCHASE
     OBLIGATION.

As more fully described in Note 5, the terms of sale of preferred stock in the
Company's Moto Guzzi Corp. subsidiary provide for certain adverse consequences
if the Company does not complete an initial public offering of Moto Guzzi Corp.
common stock by June 30, 1998 or January 16, 2002.

20.  CONCENTRATION OF CREDIT RISKS

Concentrations of credit risk with respect to trade accounts receivable are
limited due to the large number of entities in the customer base. Sales to
governmental bodies in Italy are significant as a whole, but no single
government body represents more than 10% of net sales.

The Company maintains cash and cash equivalents, and short and long term
investments with various financial institutions of national standing in Italy
and the United States.


                                                                            F-32
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997



21.  FINANCIAL INSTRUMENTS

The Company does not enter into foreign exchange contracts in the normal course
of its operating activities. In 1997 the Company made forward purchases of US$
4,000,000 as partial coverage of its US Dollar share repurchase commitments at
June 30, 1997 and also entered into hedging operations in 1995 and 1996 in
respect of its planned redemption offer. The Company has not hedged against
foreign exchange risk on its US Dollar denominated loan, incurred in 1996 and
due in 1998.

     OFF BALANCE SHEET RISK

As described in Note 5, the Company has a commitment denominated in U.S. Dollars
to repurchase shares formerly owned by its ex-Chairman, Mr. De Tomaso. At the
exchange rate at December 31, 1997, this commitment amounts to $ 8,751,000 (Lit.
15,481 million). The Company has hedged against $4,000,000 of this off balance
sheet exchange risk.

     FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in estimating its
fair value disclosure for financial instruments.

Cash and cash equivalents: the carrying amount of cash and cash equivalents
reported by the Company approximates their fair value.

Short and long term debt: the carrying amount of the Company's borrowings under
its short-term credit arrangements approximates their fair value. The fair
values of the Company's long-term debt are estimated using cash flow analyses,
based on the Company's incremental borrowing rates for similar types of
borrowing arrangements.

Fixed interest securities which have maturities from one to three years: fair
value for marketable quoted securities is based on market price and for non
marketable securities, is estimated using discounted cash flow analysis based on
similar investments available as at the balance sheet date. There are no
significant differences between fair value and carrying value for any of the
Company's financial instruments as at December 31, 1997 and 1996.



                                                                            F-33
<PAGE>

TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES
(De Tomaso Industries, Inc. through August 22, 1996)
Notes to Consolidated Financial Statements
December 31, 1997


TRIDENT ROWAN GROUP, INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>

-------------------------------------------- ------------- --------------------------------- --------------- ----------------
                  COL A                         COL. B             COL. C                        COL. D           COL. E
-------------------------------------------- ------------- ---------------- ---------------- --------------- ----------------
                                                                  (1)            (2)

                                             Balance at       Charged to      Charged to                        Balance at
                                             beginning         costs and        other         Deductions          end of
              Description                    of period         expenses       accounts.        Describe           period
                                                                              Describe
-------------------------------------------- ------------- ---------------- ---------------- --------------- ----------------


            IN MILLIONS OF ITALIAN LIRE

            YEAR ENDED DECEMBER 31, 1997

Deducted from asset accounts:
<S>                                                   <C>            <C>            <C>           <C>              <C>
        Allowance for doubtful accounts...........     3,700             956              -        (2,556) (a)      2,100
        Inventory obsolescence reserve............     5,301           2,400              -          (902) (b)      6,799
        Impairment losses for real estate.........     3,680             -                -        (1,180) (d)      2,500
                                                       ------       ---------      ------------    --------       -------

                                                      12,681           3,356              -        (4,638)         11,399
                                                      =======          ======      ============     =========     =======

            YEAR ENDED DECEMBER 31, 1996

Deducted from asset accounts:

        Allowance for doubtful accounts...........     3,468             708              -          (476) (a)      3,700
        Inventory obsolescence reserve............     6,612             702              -        (2,013) (b)      5,301
        Impairment losses for real estate.........       -             3,680              -            -            3,680
                                                  --------------     --------      -------------------------      -------

                                                      10,080           5,090              -        (2,489)         12,681
                                                    =========        ========      ============    =========      =======

            YEAR ENDED DECEMBER 31, 1995

Deducted from asset accounts:

        Allowance for doubtful accounts...........       571             433          2,464 (c)                     3,468
         Inventory obsolescence reserve ..........     5,451           1,772              -          (611) (b)      6,612
                                                    ---------        --------      ------------    --------       -------
                                                       6,022           2,205          2,464          (611)         10,080
                                                     ========        ========      ============    ========      ========


            IN THOUSANDS OF US DOLLARS(1)

            YEAR ENDED DECEMBER 31, 1997


Deducted from asset accounts:

        Allowance for doubtful accounts...........     2,091             540              -        (1,445)          1,186
        Inventory obsolescence reserve ...........     2,996           1,356              -          (510)          3,842

        Impairment losses for real estate.........     2,080             -                -          (668)(d)       1,412
                                                      -------   -------------      ------------    --------
                                                       7,167           1,896              -        (2,623)          6,440
                                                     ========      ==========      ============    ========        =======
</TABLE>


____________________________
        (a) Amounts written off
        (b) Disposal of inventory
        (c) Acquisitions of business
        (D) Disposal of business
        (1) Translated solely for the convenience of the reader at the
approximate exchange rate at December 31, 1997 of $1.000 :
              Lit. 1,769



                                                                            F-34
<PAGE>


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
        IN ACCOUNTING AND FINANCIAL DISCLOSURE

        None.

                                    PART III

     Information required to be included in Part III will be filed by amendment
to this Annual Report on Form 10-K within 120 days of the end of the Company's
fiscal year.


<PAGE>

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and
           Reports on Form 8-K

      (a)   (1)   Contained in Item 8 of this Report.
            (2)   Contained in Item 8 of this Report.
            (3)   Contained in paragraph (c) below.

      (b)   None.

      (c)   Exhibits.

EXHIBIT NO.    DESCRIPTION

 2.1           Agreement and Plan of Merger dated August 14, 1996 (filed on
               August 21, 1996 as Exhibit 99.1 to Current Report on Form 8-K).

 2.2           Mutual Release and Settlement Agreement dated February 12, 1997
               (filed as Exhibit 2.2 to 1996 Annual Report on Form 10-K).

 3.1           Restated Articles of Incorporation of the Company, as amended
               (filed as Exhibit 3.1 to 1996 Annual Report on Form 10-K).

 3.2           Bylaws of the Company (filed as Exhibit 3.2 to 1996 Annual Report
               on Form 10-K).

 3.3           Amended and Restated Bylaws of the Company (filed as Exhibit 3.3
               to Registration Statement on Form S-1, Amendment No. 1, file No.
               333-21595).

 4.3           Warrant Agreement with Warrant Certificate, each dated May 2,
               1997, with respect to 1,250,000 shares of Common Stock issued to
               Centaurus Management LDC (filed as Exhibits 4.1 and 4.2 to
               Current report on Form 8-K for Event Dated May 2, 1997).

10.1           1995 Non-Qualified Stock Option Plan (filed as Exhibit A to the
               Company's Preliminary Proxy Statement filed May 24, 1996).

10.2           1995 Directors Plan (filed as Exhibit B to the Company's
               Preliminary Proxy Statement filed May 24, 1996).


<PAGE>


EXHIBIT NO.    DESCRIPTION

10.3           Voting Agreement dated July 17, 1995 among Finprogetti, S.p.A.
               and Messrs Howard E. Chase, Mario Tozzi-Condivi and Albino
               Collini (filed as Exhibit 10.1 to Current Report on Form 8-K for
               Event Dated July 17, 1995).

10.4           Agreement dated July 20, 1995 between De Tomaso Industries, Inc.
               and Pirunico Trustees (Jersey) Limited (filed as Exhibit 10.2 to
               Current Report on Form 8-K for Event Dated July 17, 1995).

10.5           Amended and Restated Stock Purchase Agreement dated July 17, 1995
               between De Tomaso Industries, Inc. and Finprogetti S.p.A. (filed
               as Exhibit 2.1 to Current Report on Form 8-K for Event Dated July
               17, 1995).

10.6           Agreement dated May 17, 1993 between O.A.M. S.p.A., Fiat Auto
               S.p.A., and others (filed as Exhibit 10.1 to the Current Report
               Dated May 17, 1993 filed on Form 8-K).

10.7           Agreement dated April 27, 1993 between the Company and
               Finprogetti, S.p.A., together with Exhibits A-D thereto (filed as
               Exhibit 10(b) to 1994 Annual Report on Form 10-K/A, Amendment No.
               2).

10.8           Agreement dated April 10, 1995 between the Company and Alejandro
               DeTomaso (filed as Exhibit 10(c) to 1994 Annual Report on Form
               10-K/A, Amendment No. 2).

10.9           Agreement dated as of November 1, 1995 between the Company and
               Howard E. Chase (filed as Exhibit 10(g) to 1995 Annual Report on
               Form 10-K).

10.10          Agreement dated as of November 1, 1995 between the Company and
               Albino Collini (filed as Exhibit 10(h) to 1995 Annual Report on
               Form 10-K).

10.11          Agreement dated as of November 1, 1995 between the Company and
               Francesco Pugno Vanoni (filed as Exhibit 10(i) to 1995 Annual
               Report on Form 10-K).

<PAGE>

EXHIBIT NO.    DESCRIPTION

10.12          Agreement dated as of November 1, 1995 between the Company and
               Cuomo Consultants, Limited (filed as Exhibit 10(j) to 1995 Annual
               Report on Form 10-K).

10.13          Agreement dated as of November 1, 1995 between the Company and
               Domenico Costa (filed as Exhibit 10(k) to 1995 Annual Report on
               Form 10-K).

10.14          Agreement dated as of November 1, 1995 between the Company and
               Carlo Previtali (filed as Exhibit 10(l) to 1995 Annual Report on
               Form 10-K).

10.15          Agreement dated as of November 1, 1995 between the Company and
               Giovanni Avallone (filed as Exhibit 10(m) to 1995 Annual Report
               on Form 10-K).

10.16          Option Agreement between the Company and Howard E. Chase (filed
               as Exhibit 10(n) to 1995 Annual Report on Form 10-K).

10.17          Option Agreement between the Company and Albino Collini (filed as
               Exhibit 10(o) to 1995 Annual Report on Form 10-K).

10.18          Option Agreement between the Company and Cuomo Consultants,
               Limited (filed as Exhibit 10(p) to 1995 Annual Report on Form
               10-K).

10.19          Option Agreement between the Company and Domenico Costa (filed as
               Exhibit 10(q) to 1995 Annual Report on Form 10-K).

10.20          Option Agreement between the Company and Carlo Previtali (filed
               as Exhibit 10(r) to 1995 Annual Report on Form 10-K).

10.21          Option Agreement between the Company and Giovanni Avallone (filed
               as Exhibit 10(s) to 1995 Annual Report on Form 10-K).

10.22          Option Agreement between the Company and Santiago De Tomaso
               (filed as Exhibit 10(t) to 1995 Annual Report on Form 10-K).

10.23          Description of 8% 2 year promissory notes issued in connection
               with the Company's Stock Repurchase Plan included in the
               Company's Schedule 13E-4 dated September 20, 1996 (filed as
               Exhibit 10.23 to 1996 Annual Report on Form 10-K).

<PAGE>

EXHIBIT NO.    DESCRIPTION

10.24          Retainer Agreement dated March 7, 1997 between the Registrant and
               Tamarix Capital Corporation (filed as Exhibit 10.24 to
               Registration Statement on Form S-1, Amendment No. 1, file No.
               333-21595).

10.25          Inducement Agreement dated April 8, 1997 between the Registrant
               and Tamarix Investors LDC (filed as Exhibit 10.25 to Registration
               Statement on Form S-1, Amendment No. 1, File No. 333-21558).

10.26          Agreement terminating July 17, 1995 Voting Agreement (filed as
               Exhibit 10.26 to Registration Statement on Form S-1, Amendment
               No. 2, File No. 333-21558).

10.27          Agreement terminating November 1, 1995 agreement between the
               Registrant and Francesco Pugno Vanoni (filed as Exhibit 10.27 to
               Registration Statement on Form S-1, Amendment No. 1, File No.
               333-21595).

21.            Subsidiaries: The Company's significant subsidiaries, the
               jurisdiction of their incorporation and nature of their
               respective activities is contained in this Report.

(d)            None.

<PAGE>


                                   SIGNATURES

            Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereupon duly authorized.

April 15, 1998                       /s/ Mark S. Hauser
                                    -------------------
                                    Mark S. Hauser
                                    President and Chief Executive Officer

April 15, 1998                       /s/ Emanuel Arbib
                                    -------------------
                                    Emanuel Arbib
                                    Chief Financial Officer

            Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacity and on the dates indicated.

April 15, 1998                       /s/ Emanuel Arbib
                                     -------------------
                                     Emanuel Arbib - Director

April   , 1998
                                     ---------------------
                                     Nicola Caiola - Director

April 15, 1998                       /s/ Giovanni Caronia
                                     ---------------------
                                     Giovanni Caronia - Director

April 15, 1998                       /s/ Howard E. Chase
                                     ---------------------
                                     Howard E. Chase - Director and Chairman
                                     of the Board

April 8, 1998                        /s/ Albino Collini
                                     ---------------------
                                     Albino Collini - Director and Executive
                                     Vice President

April 15, 1998                       /s/ Mark S. Hauser
                                     ---------------------
                                     Mark S. Hauser - Director


April 15, 1998                       /s/ Ronald Koenig
                                     ---------------------
                                     Ronald Koenig - Director

April 9, 1998                        /s/ Arno Morenz
                                     ---------------------
                                     Arno Morenz - Director

April 15, 1998                       /s/ Deborah S. Novick
                                     ----------------------
                                     Deborah S. Novick - Director

April 15, 1998                       /s/ William Spier
                                     ----------------------
                                     William Spier - Director

April 15, 1998                       /s/ Mario Tozzi-Condivi
                                     ----------------------
                                     Mario Tozzi-Condivi - Vice Chairman and
                                     Director

<PAGE>

                                    EXHIBIT INDEX

EXHIBIT NO.    DESCRIPTION

 2.1           Agreement and Plan of Merger dated August 14, 1996 (filed on
               August 21, 1996 as Exhibit 99.1 to Current Report on Form 8-K).

 2.2           Mutual Release and Settlement Agreement dated February 12, 1997
               (filed as Exhibit 2.2 to 1996 Annual Report on Form 10-K).

 3.1           Restated Articles of Incorporation of the Company, as amended
               (filed as Exhibit 3.1 to 1996 Annual Report on Form 10-K).

 3.2           Bylaws of the Company (filed as Exhibit 3.2 to 1996 Annual Report
               on Form 10-K).

 3.3           Amended and Restated Bylaws of the Company (filed as Exhibit 3.3
               to Registration Statement on Form S-1, Amendment No. 1, file No.
               333-21595).

 4.3           Warrant Agreement with Warrant Certificate, each dated May 2,
               1997, with respect to 1,250,000 shares of Common Stock issued to
               Centaurus Management LDC (filed as Exhibits 4.1 and 4.2 to
               Current report on Form 8-K for Event Dated May 2, 1997).

10.1           1995 Non-Qualified Stock Option Plan (filed as Exhibit A to the
               Company's Preliminary Proxy Statement filed May 24, 1996).

10.2           1995 Directors Plan (filed as Exhibit B to the Company's
               Preliminary Proxy Statement filed May 24, 1996).

10.3           Voting Agreement dated July 17, 1995 among Finprogetti, S.p.A.
               and Messrs Howard E. Chase, Mario Tozzi-Condivi and Albino
               Collini (filed as Exhibit 10.1 to Current Report on Form 8-K for
               Event Dated July 17, 1995).

10.4           Agreement dated July 20, 1995 between De Tomaso Industries, Inc.
               and Pirunico Trustees (Jersey) Limited (filed as Exhibit 10.2 to
               Current Report on Form 8-K for Event Dated July 17, 1995).

10.5           Amended and Restated Stock Purchase Agreement dated July 17, 1995
               between De Tomaso Industries, Inc. and Finprogetti S.p.A. (filed
               as Exhibit 2.1 to Current Report on Form 8-K for Event Dated July
               17, 1995).

10.6           Agreement dated May 17, 1993 between O.A.M. S.p.A., Fiat Auto
               S.p.A., and others (filed as Exhibit 10.1 to the Current Report
               Dated May 17, 1993 filed on Form 8-K).

10.7           Agreement dated April 27, 1993 between the Company and
               Finprogetti, S.p.A., together with Exhibits A-D thereto (filed as
               Exhibit 10(b) to 1994 Annual Report on Form 10-K/A, Amendment No.
               2).

10.8           Agreement dated April 10, 1995 between the Company and Alejandro
               DeTomaso (filed as Exhibit 10(c) to 1994 Annual Report on Form
               10-K/A, Amendment No. 2).

10.9           Agreement dated as of November 1, 1995 between the Company and
               Howard E. Chase (filed as Exhibit 10(g) to 1995 Annual Report on
               Form 10-K).

10.10          Agreement dated as of November 1, 1995 between the Company and
               Albino Collini (filed as Exhibit 10(h) to 1995 Annual Report on
               Form 10-K).

10.11          Agreement dated as of November 1, 1995 between the Company and
               Francesco Pugno Vanoni (filed as Exhibit 10(i) to 1995 Annual
               Report on Form 10-K).

<PAGE>

EXHIBIT NO.    DESCRIPTION

10.12          Agreement dated as of November 1, 1995 between the Company and
               Cuomo Consultants, Limited (filed as Exhibit 10(j) to 1995 Annual
               Report on Form 10-K).

10.13          Agreement dated as of November 1, 1995 between the Company and
               Domenico Costa (filed as Exhibit 10(k) to 1995 Annual Report on
               Form 10-K).

10.14          Agreement dated as of November 1, 1995 between the Company and
               Carlo Previtali (filed as Exhibit 10(l) to 1995 Annual Report on
               Form 10-K).

10.15          Agreement dated as of November 1, 1995 between the Company and
               Giovanni Avallone (filed as Exhibit 10(m) to 1995 Annual Report
               on Form 10-K).

10.16          Option Agreement between the Company and Howard E. Chase (filed
               as Exhibit 10(n) to 1995 Annual Report on Form 10-K).

10.17          Option Agreement between the Company and Albino Collini (filed as
               Exhibit 10(o) to 1995 Annual Report on Form 10-K).

10.18          Option Agreement between the Company and Cuomo Consultants,
               Limited (filed as Exhibit 10(p) to 1995 Annual Report on Form
               10-K).

10.19          Option Agreement between the Company and Domenico Costa (filed as
               Exhibit 10(q) to 1995 Annual Report on Form 10-K).

10.20          Option Agreement between the Company and Carlo Previtali (filed
               as Exhibit 10(r) to 1995 Annual Report on Form 10-K).

10.21          Option Agreement between the Company and Giovanni Avallone (filed
               as Exhibit 10(s) to 1995 Annual Report on Form 10-K).

10.22          Option Agreement between the Company and Santiago De Tomaso
               (filed as Exhibit 10(t) to 1995 Annual Report on Form 10-K).

10.23          Description of 8% 2 year promissory notes issued in connection
               with the Company's Stock Repurchase Plan included in the
               Company's Schedule 13E-4 dated September 20, 1996 (filed as
               Exhibit 10.23 to 1996 Annual Report on Form 10-K).

10.24          Retainer Agreement dated March 7, 1997 between the Registrant and
               Tamarix Capital Corporation (filed as Exhibit 10.24 to
               Registration Statement on Form S-1, Amendment No. 1, file No.
               333-21595).

10.25          Inducement Agreement dated April 8, 1997 between the Registrant
               and Tamarix Investors LDC (filed as Exhibit 10.25 to Registration
               Statement on Form S-1, Amendment No. 1, File No. 333-21558).

10.26          Agreement terminating July 17, 1995 Voting Agreement (filed as
               Exhibit 10.26 to Registration Statement on Form S-1, Amendment
               No. 2, File No. 333-21558).

10.27          Agreement terminating November 1, 1995 agreement between the
               Registrant and Francesco Pugno Vanoni (filed as Exhibit 10.27 to
               Registration Statement on Form S-1, Amendment No. 1, File No.
               333-21595).

21.            Subsidiaries: The Company's significant subsidiaries, the
               jurisdiction of their incorporation and nature of their
               respective activities is contained in this Report.

(d)            None.