<PAGE>
 
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q
(Mark One)

[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 1998

                                      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  0-19540
                                                -------
                                        
                         GLOBAL MOTORSPORT GROUP, INC.
--------------------------------------------------------------------------------
            (Exact name or registrant as specified in its charter)


         Delaware                                           94-171638
--------------------------------------------------------------------------------
(State or other jurisdiction or                    IRS Employer Identification
incorporation or organization)  


 16100 Jacqueline Court, Morgan Hill, California              95037
--------------------------------------------------------------------------------
(Address of principal executive offices)                   (Zip code)


Registrant's telephone number including area code    408-778-0500
                                                 -------------------------------


--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last 
report.


     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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.


<TABLE> 
<CAPTION>       
  <S>                                                <C>   
                                                       Outstanding at
             Class                                    December 10, 1998

   Common Stock, $.001 par value                          5,182,973
</TABLE> 

                                      -1-
<PAGE>
 
                         GLOBAL MOTORSPORT GROUP, INC.

                                   FORM 10-Q
          FOR THE THREE AND NINE MONTH PERIODS ENDED OCTOBER 31, 1998

<TABLE>
<CAPTION>
PART I.     FINANCIAL INFORMATION                                                       PAGE NO.
-------     ---------------------                                                       --------
<S>         <C>                                                                         <C>
     Item 1.      Condensed Consolidated Financial Statements
 
                  Condensed Consolidated Balance Sheets at
                  October 31, 1998 and January 31, 1998 (Unaudited)                         3
 
                  Condensed Consolidated Statements of Operations for the
                  three and nine month periods ended October 31, 1998 and 1997
                  (Unaudited)                                                               4
 
                  Condensed Consolidated Statements of Cash Flows for the
                  nine month periods ended October 31, 1998 and 1997 (Unaudited)            5
 
                  Notes to Condensed Consolidated Financial Statements                      6
 
     Item 2.      Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                       8

<CAPTION>
PART II.          OTHER INFORMATION
--------          ----------------- 
<S>              <C>                                                                    <C> 
     Item 2.      Legal proceedings                                                         17
 
     Item 6.      Exhibits and Reports on Form 8-K                                          20
</TABLE>

                                      -2-
<PAGE>
 
                         GLOBAL MOTORSPORT GROUP, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (In thousands, except share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                        October 31         January 31   
                                                           1998               1998
<S>                                                     <C>             <C>
                                                                   
ASSETS                                                             
Current assets:                                                    
Cash and cash equivalents.............................    $  1,379           $  1,432
Accounts receivable, net..............................      13,403             12,958
Merchandise inventories...............................      53,941             66,338
Deferred income taxes.................................       3,055              3,079
Prepaid income taxes..................................       1,026              1,926
Deposits and prepaid expenses.........................       2,519              2,614
                                                          --------           --------
                                                            75,323             88,347
                                                                            
Property and equipment, net...........................      18,450             18,408
Other assets..........................................      34,874             35,327
                                                          --------           --------
                                                          $128,647           $142,082
                                                          ========           ========
                                                                   
LIABILITIES AND SHAREHOLDERS' EQUITY                               
                                                                   
Current liabilities:                                               
Current maturities of long-term debt and                           
 capital lease obligations............................    $  4,137           $  4,176
Bank borrowings.......................................          --             13,741
Accounts payable......................................       4,372              6,757
Accrued expenses and other liabilities................       6,824              4,775
                                                          --------           --------
                                                            15,333             29,449
                                                                            
Long-term debt and capital lease obligations..........      46,998             52,302
Deferred income taxes.................................         858                988
                                                                            
Shareholders' equity:                                                       
 Common stock, $.001 par value; 20,000,000                                  
   shares authorized; 5,458,973 issued and 5,182,973                        
   shares outstanding as of October 31, 1998, and                           
   5,358,312 issued and 5,082,312 shares outstanding               
   as of January 31, 1998.............................           6                  5
 Additional paid-in capital...........................      30,077             28,977
 Retained earnings....................................      35,375             30,361
                                                          --------           --------
                                                            65,458             59,343
Commitments and contingencies                                               
                                                          --------           --------
                                                          $128,647           $142,082        
                                                          ========           ========
</TABLE>                                                                   

                                      -3-
<PAGE>
 
                         GLOBAL MOTORSPORT GROUP, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
 
                                              For three months ended       For nine months ended
                                                    October 31                  October 31
<S>                                        <C>           <C>            <C>            <C>
 
                                                1998          1997           1998          1997
                                                ----          ----           ----          ----
 
Sales, net................................    $38,526       $30,450       $128,647       $94,455
Cost of Sales.............................     23,637        19,498         79,835        59,334
                                              -------       -------       --------       -------
       Gross Profit.......................     14,889        10,952         48,812        35,121
                                              -------       -------       --------       -------
 
Operating Expenses
       Selling, general & administrative..     10,739         9,643         31,365        24,162
       Cost associated with unsolicited
             tender offer.................      1,556            --          3,263            --
       Product development................        376           347          1,041         1,048
                                              -------       -------       --------       -------
 
Operating income..........................      2,218           962         13,143         9,911
 
Interest expense..........................        869           814          3,498         1,687
                                              -------       -------       --------       -------
 
Income before income taxes................      1,349           148          9,645         8,224
 
Income taxes..............................      1,172            66          4,631         3,274
                                              -------       -------       --------       -------
 
Net Income................................    $   177       $    82       $  5,014       $ 4,950
                                              =======       =======       ========       =======
 
Net Income per share, basic...............    $  0.03       $  0.02       $   0.97       $  0.97
                                              =======       =======       ========       =======
 
Net income per share, diluted.............    $  0.03       $  0.02       $   0.92       $  0.94
                                              =======       =======       ========       =======
 
Shares outstanding:
 
    Basic.................................  5,174,000     5,056,000      5,160,000     5,126,000
    Diluted...............................  5,365,000     5,314,000      5,472,000     5,260,000
</TABLE>

                                      -4-
<PAGE>
 
                         GLOBAL MOTORSPORT GROUP, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In Thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                           For the nine months ended
                                                                                   October 31,
                                                                             1998             1997
                                                                            ------           ------ 
<S>                                                                     <C>                <C>
Cash flows from operating activities:
  Net income......................................................        $  5,014         $  4,950
  Adjustments to reconcile net income to net cash provided
    by operating activities:
      Depreciation and amortization...............................           3,557            2,097
      Deferred income tax.........................................            (106)              --
      Changes in items affecting operations:
        Accounts receivable.......................................            (444)           1,219
        Merchandise inventories...................................          12,397              981
        Deposits & prepaid expenses...............................             996              181
        Accounts payable, accrued expenses & other liabilities....            (338)           3,806
                                                                          --------         --------
 
Net cash provided by operating activities.........................          21,076           13,234
                                                                          --------         --------
 
Cash flows from investing activities:
  Purchase of intangible assets in connection with acquisition....            (733)         (26,376)
  Purchase of equipment in connection with acquisition............              --             (770)
  Purchase of net current assets in connection with acquisition...              --          (12,383)
  Acquisition costs...............................................              --           (1,966)
  Additions to property and equipment.............................          (2,413)          (3,474)
                                                                          --------         --------
 
  Net cash used in investing activities...........................          (3,146)         (44,969)
                                                                          --------         --------
 
Cash flows from financing activities:
  Bank repayment, net.............................................         (13,741)          (2,369)
  Borrowing (repayment) on capital lease obligations and
    long-term debt................................................          (5,343)          38,646
  Issuance of common stock........................................           1,101              786
  Repurchase of common stock......................................              --           (3,489)
                                                                          --------         --------
 
Net cash provided (used) by financing activities..................         (17,983)          33,574
                                                                          --------         --------
 
Net change in cash and cash equivalents...........................             (53)           1,839
Cash and cash equivalents at beginning of period..................           1,432               40
                                                                          --------         --------
 
Cash and cash equivalents at end of period........................        $  1,379         $  1,879
                                                                          ========         ========
 
Supplemental disclosures of cash paid during the period:
 
  Interest........................................................        $  3,498         $  1,878
                                                                          ========         ========
 
  Income taxes....................................................        $  1,581         $  3,107 
                                                                          ========         ========
</TABLE>

                                      -5-
<PAGE>
 
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
       ----------------------------------------------------------------

Note 1 - Basis of Presentation
------------------------------

  The accompanying unaudited interim condensed consolidated financial statements
have been prepared in conformity with generally accepted accounting principles,
consistent with those applied in and should be read in conjunction with, the
audited consolidated financial statements for the fiscal year ended January 31,
1998 included in the Annual Report on Form 10-K filed by Global Motorsport
Group, Inc. (the "Company") with the Securities and Exchange Commission. The
interim financial information is unaudited, but reflects all normal recurring
adjustments which are, in the opinion of management, necessary to provide a fair
statement of results for the interim periods presented. The results for the
interim periods are not necessarily indicative of results to be expected for the
fiscal year.

Note 2 - Earnings Per Share Calculation
---------------------------------------

  The Company has adopted Statement of Financial Accounting Standard ("SFAS")
No. 128, Earnings Per Share. In accordance with SFAS No. 128, basic net income
per share is computed using the weighted average number of common shares
outstanding during the period. Diluted net income per share is computed using
the weighted average number of common and dilutive common equivalent shares
outstanding during the period, using the treasury stock method for options and
warrants, after giving effect to contingently issuable shares under acquisition
agreements. The Company has restated net income per share for all periods
presented in accordance with SFAS No. 128.

  Reconciliation of basic and diluted net income per share (in thousands, except
per share data):

<TABLE>
<CAPTION>
                                 Three months ended October 31, 1998      Three months ended October 31, 1997
                                 -----------------------------------      -----------------------------------
                                 Net Income       Shares        EPS       Net Income       Shares        EPS
                                 ----------       ------        ---       ----------       ------        ---
<S>                             <C>              <C>          <C>        <C>              <C>          <C>
Basic net income per share             $177        5,174       $0.03             $82        5,056       $0.02
Effect of dilutive shares                --          191          --              --          258          --
                                       ----        -----       -----             ---        -----       -----
Diluted net income per share           $177        5,365       $0.03             $82        5,314       $0.02
                                       ====        =====       =====             ===        =====       =====

<CAPTION>  
                                 Nine months ended October 31, 1998       Nine months ended October 31, 1997
                                 ----------------------------------       -----------------------------------
                                 Net Income       Shares       EPS        Net Income       Shares        EPS
                                 ----------       ------       ---        ----------       ------        ---
<S>                             <C>              <C>          <C>        <C>              <C>           <C> 
Basic net income per share           $5,014        5,160       $0.97          $4,950        5,126       $0.97
Effect of dilutive shares                --          312          --              --          134          --
                                     ------        -----       -----          ------        -----       -----
Diluted net income per share         $5,014        5,472       $0.92          $4,950        5,260       $0.94
                                     ======        =====       =====          ======        =====       =====
</TABLE>


Note 3 - Agreement and Plan of Merger
-------------------------------------

  On November 8, 1998, the Company entered into an Agreement and Plan of Merger
(the "Stonington Merger Agreement") by and among the Company, Stonington
Acquisition Corp., a Delaware corporation ("Parent") and GLOBAL MOTORSPORT
GROUP, INC. Acquisition Corp., a

                                      -6-
<PAGE>
 
Delaware corporation and wholly-owned subsidiary of Parent ("Purchaser").
Pursuant to the Stonington Merger Agreement, Parent and Purchaser filed on
November 16, 1998 a Tender Offer with the Securities and Exchange Commission,
relating to an offer to purchase (the "Offer") all of the Company's issued and
outstanding shares of common stock (the "Shares") at a price of $19.50 per
Share, net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in Purchaser's Offer to Purchase, dated November 16,
1998, and in the related Letter of Transmittal. The Offer expired on December
14, 1998, and Purchaser accepted for payment all Shares validly tendered and not
withdrawn as of 12:00 midnight, New York City time, on December 14, 1998.

                                      -7-
<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

     This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Actual results
could differ materially from those projected in the forward-looking statements
as a result of, among other things, the risk factors set forth below under
"Factors That May Affect Future Results."

     RESULTS OF OPERATIONS

     Net sales increased 26.5% to $38,526,000 for the three months ended October
31, 1998 when compared to the same period of last year. Net sales increased
36.2% to $128,647,000 for the nine months ended October 31, 1998 from
$94,455,000 for the same period of the prior fiscal year. Net sales in the three
and nine months ended October 31, 1998 included $8.4 million and $30.1 million,
respectively, in revenues generated by the Company's Chrome Specialties
subsidiary. This subsidiary was acquired by the Company in September, 1997.
Excluding sales generated by Chrome Specialties, net sales in the three and nine
month period ended October 31, 1998 increased 14.9% and 9.2% respectively
compared to the same periods of the prior year. Net sales in the three and nine
month periods ended October 31, 1998 increased approximately 12.9% and 8.4%
respectively, when compared to the pro forma combined sales of Custom Chrome and
Chrome Specialties for the same periods of the prior year. Sales growth in the
period was the result of increased product shipments to a wide range of domestic
customers. International shipments were down during the period by 2.0% due to
the strength of the U.S. dollar, the Company's selling currency, and poor
economic conditions in Europe and the Far East. International sales accounted
for 18.0% of total sales for the nine months ended October 31, 1998.

     Gross profit as a percentage of sales was 38.6% and 37.9% respectively, in
the three and nine month periods ended October 31, 1998 compared with 36.0% and
37.2%, respectively, in the same periods of last year. Gross margins were higher
in the current year quarter and nine months when compared to the same periods of
the prior year due to improved product gross margins on parts imported from Far
Eastern countries where currencies have weakened compared to the U.S. dollar. In
addition, in the current year there was a higher sales mix of product imported
from Far Eastern countries which resulted from problems encountered in the prior
year with the importation of the Company's products from the Far East (primarily
Taiwan) as a result of compliance deficiencies noted by the U.S. Customs
Service. These deficiencies delayed the release of these traditionally high
gross margin products to the Company's distribution centers for sale to
customers. Management has taken steps to correct these deficiencies and return
the transit times to historical norms.

     Selling, general and administrative expenses were $10.7 million and $31.4
million or 27.8% and 24.4% of net sales, respectively, for the three and nine
month periods ended October 31, 1998, compared with $9.6 million and $24.2
million or 31.7% and 25.6% of net sales, respectively, in the same periods last
year. The increase in the absolute amount of selling, general and administrative
expense levels over the prior year is principally attributable to the higher
expense levels associated with managing both the Company's historical operations
and the operations of Chrome Specialties

                                      -8-
<PAGE>
 
which was acquired by the Company in September, 1997. Additionally, selling,
general and administrative expenses for the three and nine months ended October
31, 1998 includes $332,000 and $996,000 resulting from amortization of the
excess of the Chrome Specialties purchase price over the net tangible assets
acquired and other intangible assets related to the acquisition.

     For the quarter and nine months ended October 31, 1998, the Company
incurred $1.6 million and $3.3 million in costs associated with matters related
to litigation and an unsolicited tender offer commenced by Golden Cycle, LLP.
See "Legal Proceedings" below. The Company expects to continue to incur
significant costs on this matter until such time as the matter is resolved.

     Product development expenses were $376,000 and $1,041,000 or 1.0% and 0.8%
of net sales, respectively, for the three and nine month periods ended October
31, 1998.  Product development expenses as a percentage of net sales have
decreased from the 1.1% for the three and nine month periods in the prior year
due to the consolidation of the operations of Chrome Specialties, which has no
material product development expenditures.

     Interest expense increased to $0.9 million and $3.5 million or 2.3% and
2.7% of net sales, respectively, for the three and nine month periods ended
October 31, 1998. This is compared to $0.8 million and $1.7 million or 2.7% and
1.8% for the same periods in the prior year. The higher interest in the current
period resulted from higher bank borrowings used to complete the acquisition of
the net assets of Chrome Specialties in September, 1997. The lower interest
expense in the current quarter compared to the three months ended July 31, 1998
reflects the Company's reduction of bank borrowings in the period as the result
of cash flow from operations and reduced working capital.

     The Company's effective consolidated income tax rate was 86.9% and 48.0% in
the three and nine months ended October 31, 1998, respectively. This compares
with 44.6% and 39.8% in the same periods in the prior year. The current three
and nine month period includes a $725,000 charge in the income tax provision
related to a judgement rendered by the United States Tax Court on various
petitions for redetermination raised by the Company (see Legal Proceedings,
Internal Revenue Service Matters). This charge accounts for the significant
increase in the effective income tax rate.

     LIQUIDITY AND CAPITAL RESOURCES

     On September 16, 1997, the Company completed the acquisition of
substantially all of the assets, and assumed certain liabilities, of Chrome
Specialties, Inc. Chrome Specialties was a privately held, independent,
wholesale distributor of aftermarket parts and accessories for Harley Davidson
motorcycles, which operated from its 100,000 sq. ft. warehouse and headquarters
in Fort Worth, Texas.

     In connection with the acquisition of Chrome Specialties, the Company
entered into a $73.5 million credit agreement which: (i) provided funding for
the acquisition price for Chrome Specialties, Inc.; (ii) provided funding to
retire $15,000,000 of Senior Secured Notes; and (iii) provided the Company
additional working capital borrowing ability. Borrowings under the new credit
facility bear interest at the Bank's Base Rate or the London Interbank Borrowing
Rate plus 1.75%. The agreement provides that the interest rate reduces as the
Company reduces the initial debt level. In

                                      -9-
<PAGE>
 
addition, the Company has fixed the rate for two-thirds of the borrowing by
means of a swap transaction. The financing agreement required the Company to
achieve or maintain certain financial results or ratios, and restricts the
Company's ability to pay dividends, repurchase common stock, make further
acquisitions and effect certain other transactions without the Bank's consent.
For the period for September 16, 1998 to January 31, 1998, the Company was not
in compliance with a number of its covenants under the credit agreement. The
syndicate of Banks provided waivers for these violations in return for a fee, a
 .25% interest rate increase and certain modifications of the agreement. The
Company was also not in compliance with one covenant under the credit agreement,
as modified by the waiver previously received, during the quarter ended October
31, 1998. The syndicate of Banks has provided a waiver for the current violation
in return for the continuation of the .25% interest rate increase and a fee. As
the result of the Stonington tender offer (see Change of Control Matters), which
closes December 14, 1998, it is anticipated that the Company's debt will be paid
off pursuant to change of control provisions in the agreement. Stonington has
arranged for a new credit agreement with a syndicate of banks to pay off the
Company's debt and provide working capital funds for the future operations of
the Company.

     Net cash provided by operating activities in the period ended October 31,
1998 was $21,076,000 compared with $13,234,000 in the same period of the prior
year. In the period ended October 31, 1998, the Company made capital
expenditures for computer and software equipment necessary to convert to a new
enterprise software system and tooling for new products. The Company believes
that cash flow from operations and funds from the working capital line of credit
will be adequate to meet its capital and cash requirements at least through the
next 12 months.

     CHANGE OF CONTROL MATTERS

     On November 8, 1998, the Company entered into an Agreement and Plan of
Merger (the "Stonington Merger Agreement") by and among the Company, Stonington
Acquisition Corp., a Delaware corporation ("Parent") and GLOBAL MOTORSPORT
GROUP, INC. Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Parent ("Purchaser"). Pursuant to the Stonington Merger Agreement,
Parent and Purchaser filed on November 16, 1998 a Tender Offer Statement on
Schedule 14D-1 with the Securities and Exchange Commission, relating to an offer
to purchase (the "Offer") all of the Company's issued and outstanding shares of
common stock (the "Shares") at a price of $19.50 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in Purchaser's Offer to Purchase, dated November 16, 1998, and in the related
Letter of Transmittal. The Offer expired on December 14, 1998, and Purchaser
accepted for payment all Shares validly tendered and not withdrawn as of 12:00
midnight, New York City time, on December 14, 1998.

FACTORS THAT MAY EFFECT FUTURE RESULTS

RECENT ACCOUNTING PRONOUNCEMENTS

     In June, 1997, SFAS No. 130, Reporting Comprehensive Income was issued.
SFAS No. 130 requires disclosure of components of comprehensive income on an
annual and interim basis. Comprehensive income includes all changes in equity
during a reporting period, except those resulting from investments by owners and
distributions to owners. SFAS No. 130 is effective for

                                      -10-
<PAGE>
 
fiscal years beginning after December 15, 1997. The Company adopted this
statement for its year ending January 31, 1999. For the three and nine month
periods ended October 31, 1998 and 1997, the Company did not have any components
of other comprehensive income.

     In July 1997, SFAS NO. 131, Disclosures About Segments of an Enterprise and
Related Information, was issued. SFAS No. 131 requires certain financial and
supplementary information to be disclosed on an annual and interim basis for
each reportable segment of an enterprise. SFAS No. 131 is effective for fiscal
year beginning after December 15, 1997. Unless impracticable, companies will be
required to restate prior period information upon adoption. The Company will
adopt this statement in its year ended January 31, 1999 financial statements.

     In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and hedging Activities." SFAS
No. 133 establishes methods of accounting for derivative financial instruments
and hedging activities related to those instruments as well as other hedging
activities. The Company expects that the adoption of SFAS No. 133 will have no
material impact on its financial position, results of operations or cash flows.

     DEPENDENCE ON, AND COMPETITION WITH, HARLEY DAVIDSON

     The Company is the largest independent supplier of aftermarket parts and
accessories for Harley Davidson motorcycles. The Company's past success has
depended, and the Company's future growth depends, in large part on the
popularity of Harley Davidson motorcycles and the continued success of Harley
Davidson in maintaining a significant market share of motorcycle sales and the
number of units sold in the super heavyweight class. In particular, the
Company's continued growth in earnings is in large part dependent upon
continuing demand for Harley Davidson motorcycles and upon Harley Davidson's
ability to meet such demand. As competition in the heavyweight cruiser class of
motorcycles also increases, the market for new Harley Davidson motorcycles may
decline, or if the popularity of existing Harley Davidson motorcycles were to
decline, the Company's business, including earnings, could be materially
adversely affected.

     In addition, it appears that the Company's stock price has in the past and
may in the future be affected by fluctuations in the price of Harley Davidson's
stock. Adverse results in any of Harley Davidson's businesses, including its 
non-motorcycle businesses, could adversely affect the price of Harley Davidson's
stock, which could, in turn, adversely affect the Company's stock price.

     The Company also competes with Harley Davidson in the sale of parts and
accessories for both new and used Harley Davidson motorcycles to Harley
Davidson's franchised dealers, most of which are also customers of the Company.
Harley Davidson has substantially greater financial, marketing, manufacturing
and technical resources than the Company. There can be no assurance that the
Company will be able to compete effectively with Harley Davidson in the future.

     From time to time, the Company and Harley Davidson have had disputes
regarding alleged infringement of certain of each other's trademarks and
patents, and certain litigation related thereto was settled in 1990. There can
be no assurance that other disputes, including those which could lead to
litigation regarding trademarks, patents or other matters, will not occur in the
future between the Company and Harley Davidson.

                                      -11-
<PAGE>
 
     COMPETITION WITH OTHERS

     The market for the Company's products is highly competitive. Key
competitive factors in the parts and accessories aftermarket for Harley Davidson
motorcycles include the ability to promptly fill orders from inventory, the
range of unique products offered and the speed and cost of product delivery. The
Company's competitors include independent distributors ranging in size from
small to large, and the proximity of any distributor to a particular dealer and
the availability of unique products is often a competitive advantage.
Accordingly, even small local distributors may be able to compete effectively
against the Company. In addition, the Company competes with Harley Davidson in
the sales of parts and accessories to Harley Davidson franchised dealers. There
can be no assurance that the Company will be able to compete successfully in the
future with small distributors or with Harley Davidson.

     In 1995, the Federal Trade Commission (the "FTC") voted to dissolve a 1954
consent decree against Harley Davidson which, among other things, had prohibited
Harley Davidson from imposing exclusive dealing requirements upon its dealers.
This consent decree was lifted pursuant to the FTC's "sunset" policy, which
presumes that decrees which are more than 20 years old should be eliminated. In
response to extensive public comments to the FTC urging that it keep this
consent decree in force, Harley Davidson reported that it had no plans to change
its dealer agreements in order to require exclusive dealings. However, there can
be no assurance that Harley Davidson will not impose such exclusive dealing
requirements upon its dealers who now purchase parts and accessories from the
Company; nor can there be any assurance that, if Harley Davidson decided to
impose such requirements upon its dealers, that a legal challenge to prevent
such an action would be successful. If Harley Davidson is successful in imposing
exclusive dealing requirements on its dealers, such requirements could have a
material adverse effect on the Company's business.

     DEPENDENCE ON KEY PERSONNEL

     The Company's success depends, in part, upon the continued performance of
Joseph Piazza who serves as President and Chief Executive Officer, and other key
executives, including James J. Kelly, Jr. (Executive Vice President, Finance),
R. Steven Fisk (Senior Vice President, purchasing, Operations and Product
Development), Dennis Navarra (Vice President, Administration), Joseph Piazza,
Jr. (Vice President, Sales) Frederick Saunders (Vice President, marketing) and
Gustav Kuelbs (President, Chrome Specialties, Inc.). In addition, the Company's
success also depends in part on the continued performance of certain other key
employees. Although incentives exist for these individuals to remain with the
Company, the loss of the services of any one of them could have a material
adverse effect on the business of the Company. In addition, recent litigation
against the Company has strained the Company's management resources and there
can be no assurance that such developments will not have a material adverse
effect on the Company. See "Item 2. - Legal Proceedings".

     SEASONALITY AND WEATHER

     The Company's net sales for its last two quarters of any particular fiscal
year are generally lower than the net sales for the first two quarters of such
year. This decrease in net sales is due to a lower number of orders by dealers
in anticipation of, and during, the cold weather months, during

                                      -12-
<PAGE>
 
which motorcycle riding decreases relative to the warm weather months. In
particular, the Company's operating results may be negatively affected by
adverse weather conditions, especially in the Spring and Summer months. Any such
decrease has a significant impact on the Company's quarterly operating expenses,
which remain relatively constant throughout the year. The Company seeks to
mitigate this seasonality through various promotional efforts and incentives,
but no assurance can be given that such seasonality will not have a material
adverse effect on the Company's revenues and earnings during this period.

     DEPENDENCE ON THIRD PARTY AND FOREIGN MANUFACTURING RELATIONSHIPS;
     TAIWANESE POLITICAL VOLATILITY

     A significant portion of the Company's products are purchased from third
party manufacturers, often through independent trading companies. Although the
Company believes it has close working relationships with its trading companies
and most of its suppliers, the Company does not have long-term arrangements with
these parties, and, therefore, cannot be assured that products will be delivered
on a timely basis or on terms favorable to the Company in the future. In
addition, any disruption in the Company's trading company or manufacturing
relationships could result in supply delays. Many of the Company's suppliers are
located in Asia, and, therefore, the Company is subject to certain risks
associated with dealing with foreign suppliers, including currency exchange
fluctuations, trade restrictions and changes in tariff and freight rates, any of
which could materially and adversely affect the Company. Moreover, many of the
Company's suppliers are located in Taiwan, and the Company's relationships with
such suppliers are subject to disruption in the event of any change in the
volatile political and military relationship between Taiwan and the People's
Republic of China.

     A substantial number of the Company's products are manufactured in Taiwan,
South Korea, Japan and Mexico. Consequently, the availability and cost of
products manufactured overseas could be adversely affected if political or
economic conditions in these countries were to deteriorate. In addition,
although the prices for the products purchased by the Company are stated in
United States dollars, because the prices often are not determined until the
manufacturing process is completed, the Company bears risk with respect to
changes in exchange rates. The cost of products could also be affected by the
tariff structure imposed on imports or other trade policies of the United States
or other governments, which could adversely affect operations. The Company
attempts to minimize this risk by maintaining a pricing policy with its dealers
that allows the Company to change its prices at any time. In certain
circumstances, the Company also contracts to purchase foreign currencies at
fixed prices in the future for major foreign currency exposures. In addition,
because the Company has relationships with United States manufacturers, the
Company believes that it is capable of obtaining many of the products presently
sourced overseas from domestic sources, although not necessarily at prices as
favorable to the Company as non-U.S. manufacturers are able to provide. In this
manner, the Company believes that it can also reduce its exposure to currency
fluctuations and other risks of manufacturing outside the United States.

     MANAGEMENT OF GROWTH

     The Company's success depends in part on its ability to manage growth, both
domestically and internationally. Such growth will require the Company to
enhance its operational, management

                                      -13-
<PAGE>
 
information and financial control systems. In addition, continued growth will
require the Company to increase the personnel in its sales, marketing and
customer support departments. If the Company is unable to successfully enhance
its systems or to hire a sufficient number of employees with the appropriate
levels of experience in a timely manner, the Company's business, financial
condition and results of operations could be materially and adversely affected.

     INTERNATIONAL OPERATIONS

     In the fiscal years ended 1998, 1997 and 1996, international sales
accounted for 17%, 19% and 20%, respectively, of the Company's total net sales.
The Company expects that international sales will continue to represent a
significant portion of its net sales in the future. The Company's results of
operations may be adversely affected by fluctuations in exchange rates,
difficulties in collecting accounts receivable, tariffs and difficulties in
obtaining export licenses. Moreover, the Company's international sales may be
adversely affected by lower sales levels that typically occur during the summer
months in Europe and other parts of the world. International sales and
operations are also subject to risks such as the imposition of governmental
controls, political instability, trade restrictions and changes in regulatory
requirements, difficulties in staffing and managing international operations,
generally longer payment cycles and potential insolvency of international
dealers. There can be no assurance that these factors will not have a material
adverse effect on the Company's future international sales and, consequently, on
the Company's business, financial condition and results of operations.

     COMPLIANCE WITH ENVIRONMENTAL LAWS

     Both federal and state authorities have various environmental control
requirements relating to air, water and noise pollution that affect the business
operations of the Company. The Company endeavors to ensure that all its
facilities comply with applicable environmental requirements. However, there can
be no assurance that its operations do not violate such requirements or that any
steps taken by the Company to remediate any former noncompliance with such
requirements would not have a material effect on the Company's operations.

     In the past, the Company utilized a chrome plating and polishing process,
and was subject to a variety of laws and regulations relating to environmental
matters. During the year ended January 31, 1994, the Company discontinued in-
house chrome plating of its products, and currently subcontracts such work to
outside vendors. The Company endeavors to ensure that all its facilities comply
with applicable environmental regulations and standards. Compliance with such
standards has not, to date, had a material adverse effect on the Company's
capital expenditures, earnings or competitive position, and no material capital
expenditures are anticipated for the remainder of this fiscal year. Although the
Company believes it is in compliance with all applicable environmental
requirements, there can be no assurance that this operation did not violate such
requirements or that compliance or noncompliance with any environmental
requirements would not have a material adverse effect on the Company's
operations.

                                      -14-
<PAGE>
 
     EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS

     The Board of Directors has the authority to issue up to 1,000,000 shares of
undesignated Preferred Stock and to determine the rights, preferences,
privileges and restrictions of such shares without further vote or action by the
Company's stockholders. The rights of the holders of Common Stock will be
subject to, and may be adversely effected by, the rights of the holders of any
Preferred Stock that may be issued in the future. The issuance, or possible
issuance, of Preferred Stock could have the effect of making it more difficult
for third parties to acquire a majority of the outstanding voting stock of the
Company. In addition, on November 13, 1996, the Board of Directors approved a
Preferred Shares Rights Plan and subsequently issued preferred share rights to
the Company's stockholders. On November 9, 1998, the Company amended the Rights
Plan to exclude from the definition of "Acquiring Person" the acquisition by
Parent and Purchaser of 15% or more of the Common Stock pursuant to the
Stonington Merger Agreement. The Rights Plan, as well as certain provisions of
the Company's Amended and Restated Certificate of Incorporation and Bylaws and
the Delaware law, could delay or make difficult a merger, tender offer or proxy
contest involving the Company.

     POSSIBLE VOLATILITY OF STOCK PRICE

     The Company's stock price may be subject to significant volatility,
particularly on a quarterly basis. Any shortfall in revenue or earnings from
levels expected or projected by securities analysts or others could have an
immediate and significant adverse effect on the trading price of the Company's
common stock in any given period. Additionally, the Company may not learn of, or
be able to confirm, revenue or earnings shortfalls until late in the fiscal
quarter or following the end of the quarter, which could result in an even more
immediate and adverse effect on the trading of the Company's common stock.

     RELIANCE UPON THIRD PARTIES

     The Company employs the services of various independent representatives,
the most significant of which is Zodiac Enterprises, Ltd. ("Zodiac"), to
expedite the activities of its foreign manufacturers and to act as a purchasing
agent for the Company. The Company has been doing business with Zodiac since
1984. Under the terms of the agreement between Zodiac and the Company, Zodiac is
an agent for the Company to purchase and manufacture products in Taiwan. The
agreement provides that Zodiac will supply the Company with products that meet
certain specifications designated by the Company and, when necessary, provide
the tooling that is necessary to manufacture such products. The Company's
agreement with Zodiac is renewed annually, and can be terminated by the Company
at any time on 90 days notice and by either party 90 days prior to the end of
each annual period. Products purchased through Zodiac represented, 18%, 11% and
9% of the Company's net sales in the fiscal years ended January 31, 1996, 1997,
and 1998, respectively. Chrome Specialties foreign product sourcing is also
substantially from Taiwan where it employs the services of a trading company,
Harness, Inc. ("Harness") to expedite its product purchase from numerous local
manufacturing sources. As a result of the acquisition of Chrome Specialties, the
Company has chosen Harness as its main source for both Chrome Specialties and
Custom Chrome products imported from Taiwan. As a result, it is anticipated that
the Company expects to increase its product sourcing from, and accordingly, its
reliance upon Harness in the

                                      -15-
<PAGE>
 
future. In addition, Chrome Specialties sources manufactured products from
Mexico. If Zodiac's or Harness's services were discontinued for any reason, the
Company believes it could replace such services in a timely manner by its own
capabilities and using other trading companies. In many cases, the Company would
expect to continue using the same manufacturers. There can be no assurance,
however, that it would not experience temporary supply delays.

     Although the Company, in certain instances, has chosen to purchase its
entire supply of certain products from a single manufacturer, the Company does
not regard any single manufacturer as essential to its operations. The Company
did not purchase products representing more that 2.0% of its total sales from
any single manufacturer during the fiscal year ended January 31, 1996, 1997, or
1998. As to products for which there is a single supplier, the Company has, in
many cases, pre-qualified an acceptable alternative source and believes that
such an alternative source could commence delivery of volume production
quantities within several months. In certain cases, the Company also seeks to
mitigate the potential adverse consequences of sole sources by maintaining
adequate levels of finished goods inventory in stock and in transit.
Nonetheless, the loss of a single source supplier or a major trading Company
relationship could have short-term adverse effects on operations.

     IMPACT OF THE YEAR 2000 ISSUE

     The year 2000 issue results from computer programs written using a two
digit date field rather than four to define the applicable year. The Company's
current main computer program utilizing a two digit date field may recognize a
date using "00" as the year 1900 rather than the year 2000. This could
potentially result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices and engage in other similar normal business
activities. Because of the nature of the business market in which it operates,
the Company's operations are highly dependent on its extensive central computer
system which allows it to purchase numerous small dollar orders from numerous
suppliers, warehouse these parts five warehouse locations nationwide and accept
and ship numerous small sales orders from customers each business day. The
Company is in the process of installing a new computer software system, which
will increase operational and financial efficiencies and information analysis.
The upgrade of the Company's current computer system was not directly the result
of the Year 2000 software issue. The new enterprise system recognizes dates
beyond December 31, 1999 and it addresses a substantial portion of the Year 2000
issue as it impacts the Company. The total cost of the new computer system
upgrade is estimated at $3 million dollars. The cost of this project, as it
related to the year 2000 issue, is not expected to have a material effect on the
operations of the Company and will be funded through operating cash flows.

     The computer software system being installed is a standard enterprise
package acquired from a reputable third party supplier. This package is already
utilized by the Chrome Specialties division of the Company where it has been
operating for 18 months. Based on this the Company believes that the risk
involved in the implementation of the system is not significant.

     In addition, although the Company has identified general contingency plans,
such as the identification and, if necessary, replacement of non-compliant
product suppliers, a formal contingency plan will not be established until mid-
1999 when more information is available with

                                      -16-
<PAGE>
 
respect to non-compliant suppliers and non-critical systems. The Company is
unable to determine the effect of the failure of systems because of the Year
2000 issues by the Company or its suppliers or customers, but any significant
failures could have an adverse material effect on the Company's results of
operations and financial conditions.


ITEM 2.   LEGAL PROCEEDINGS

     DELAWARE STATE FIDUCIARY DUTY LITIGATION

     On April 7, 1998, Golden Cycle, LLP ("Golden Cycle") filed a complaint in
Delaware Chancery Court against the Company and each member of its Board of
Directors, alleging interference with corporate franchise, breach of fiduciary
duty and fraud. The action, as subsequently amended, alleges various actions or
inactions by the Board of Directors relating to Golden Cycle's now expired
tender offer of April 7, 1998 and its consent solicitations. On April 9, 1998,
Golden Cycle filed a motion seeking, among other things, preliminary injunctive
relief. A hearing on Golden Cycle's motion for preliminary injunctive relief was
held on May 8, 1998 and, on May 20, 1998, the Chancery Court issued an order
denying Golden Cycle's request in all respects. Although the Chancery Court
denied Golden Cycle's request for preliminary injunctive relief, that order was
not a final judgement on Golden Cycle's claims.

     On November 12, 1998, Golden Cycle filed a second motion for preliminary
injunctive relief seeking, among other things, invalidation of any termination
fee and expense reimbursement provisions in the Stonington Merger Agreement and
delay of the close of the Offer. A hearing on Golden Cycle's motion for
preliminary injunctive relief was held on December 7, 1998 and, on December 10,
1998, the Chancery Court issued an order denying Golden Cycle's request in all
respects.

     INTERNAL REVENUE SERVICE MATTERS

     In March, 1996 the Company received a Notice of Deficiency from the
Internal Revenue Service (IRS) arising out of an examination of its income tax
returns for the years ended January 31, 1992, 1993 and 1994. The Notice asserted
that the Company had underpaid its income taxes in those years by approximately
$4.3 million due to the IRS disallowance of deductions primarily for
compensation related issues. Based on the advice of outside tax counsel, the
Company petitioned the U.S. Tax Court for a redetermination of these alleged
deficiencies citing numerous errors in the IRS's allegation. In addition, the
Company asserted that it is due additional tax deductions totaling at least $3.1
million in the tax periods which were examined.

     On September 2, 1998, the United States Tax Court rendered decisions on the
Company's various petitions for redetermination. Based on the decisions of the
Court, $3.9 million of the income tax underpayment alleged by the IRS was
redetermined in the Company's favor. The Court did not allow the Company's claim
for additional tax deductions in the periods which were examined. The company
has recorded a $725,000 charge in the income tax provision for the three and
nine months. The Company, based on the advice and opinion of outside experts,
intends to file an appeal with respect to the Tax Court's denial of additional
tax deductions.

                                      -17-
<PAGE>
 
                         GLOBAL MOTORSPORT GROUP, INC.

<TABLE> 
<CAPTION> 
PART II.    OTHER INFORMATION
--------    -----------------
<S>        <C>
    Item 6.       Exhibits and Reports on Form 8-K

                  a.   Exhibits

                       Exhibit 27 - Financial Data Schedule

                  b.   Reports on Form 8-K

                       None.
</TABLE> 

                                      -18-
<PAGE>
 
                                   SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                         GLOBAL MOTORSPORT GROUP, INC.




Date: December 15, 1998              /s/ James J. Kelly, Jr.
      --------------------------         -----------------------
                                         James J. Kelly, Jr.
                                         Executive Vice President, Finance
                                         and Chief Financial Officer

                                         (Principal Financial and
                                         Accounting Officer)

                                      -19-