<PAGE>
 
                       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 April 30, 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 incorporation or organization)     IRS Employer 
                                                                  Identification
 
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.

                                                       Outstanding at
               Class                                    June 12, 1998
               -----                                    -------------

     Common Stock, $.001 par value                         5,173,077
<PAGE>
 
                         GLOBAL MOTORSPORT GROUP, INC.

                                   FORM 10-Q
                FOR THE THREE-MONTH PERIOD ENDED APRIL 30, 1998
<TABLE>
<CAPTION>
                                                                        PAGE NO.
                                                                        --------
               PART I.   FINANCIAL INFORMATION
<S>                                                                      <C>
Item 1.   Condensed Consolidated Financial Statements

               Condensed Consolidated Balance Sheets at
               April 30, 1998 and January 31, 1998......................     3

               Condensed Consolidated Statements of Operations for the
               three month periods ended April 30, 1998 and 1997........     4

               Condensed Consolidated Statements of Cash Flows for the
               three month periods ended April 30, 1998 and 1997........     5

               Note to Condensed Consolidated Financial Statements......     6

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations...........................     7


               PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings.............................................    16

Item 6.   Exhibits and Reports on Form 8-K..............................    18
</TABLE>

                                      -2-
<PAGE>
 
                        PART I. - FINANCIAL INFORMATION

ITEM 1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                         GLOBAL MOTORSPORT GROUP, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                       (In thousands, except share data)
<TABLE>
<CAPTION>
                                                         April 30,       January 31,
                                                           1998             1998
                                                        -----------      -----------
                       ASSETS                           (Unaudited)   
<S>                                                     <C>              <C>
Current assets:                                                       
Cash and cash equivalents............................     $     72          $  1,432
Accounts receivable, net.............................       16,194            12,958
Merchandise inventories..............................       64,677            66,338
Deferred income taxes................................        3,111             3,079
Prepaid income taxes.................................        1,076             1,926
Deposits and prepaid expenses........................        2,886             2,614
                                                          --------          --------
                                                            88,016            88,347
                                                                      
Property and equipment, net..........................       19,162            18,408
Other assets.........................................       35,128            35,327
                                                          --------          --------
                                                          $142,306          $142,082
                                                          ========          ========
LIABILITIES AND SHAREHOLDERS' EQUITY                                  
                                                                      
Current liabilities:                                                  
Current maturities of long-term debt and                              
 capital lease obligations...........................     $  4,160          $  4,176
Bank borrowings......................................        6,600            13,741
Accounts payable.....................................        9,350             6,757
Accrued expenses and other liabilities...............        6,794             4,775
                                                          --------          --------
                                                            26,904            29,449        
                                                                      
Long-term debt and capital lease obligations.........       51,321            52,302
Deferred income taxes................................        1,282               988
                                                                      
Shareholders' equity:                                                 
 Common stock, $.001 par value; 20,000,000                            
 shares authorized; 5,437,736 issued and 5,161,736                    
 shares outstanding as of April 30, 1998, and                         
 5,298,755 issued and 5,037,755 shares outstanding                    
 as of April 30, 1997................................            5                 5
 Additional paid-in capital..........................       29,972            28,977
 Retained earnings...................................       32,822            30,361
                                                          --------          --------
                                                            62,799            59,343
Commitments and contingencies                                         
                                                          $142,306          $142,082
                                                          ========          ========
</TABLE>

                                      -3-
<PAGE>
 
                         GLOBAL MOTORSPORT GROUP, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                           For the three
                                                           months ended
                                                             April 30,
                                                      -----------------------
                                                         1998         1997
                                                      ----------   ----------
<S>                                                   <C>          <C>
Sales, net.........................................   $   44,796   $   31,707
Cost of sales......................................       28,029       19,872
                                                      ----------   ----------
 
  Gross profit.....................................       16,767       11,835
                                                      ----------   ----------
Operating expenses:
  Selling, general & administrative................       10,337        7,166
  Costs associated with unsolicited tender offer...          437           --
  Product development..............................          252          363
                                                      ----------   ----------
                                                          11,026        7,529
                                                      ----------   ----------

  Operating income.................................        5,741        4,306
 
Interest expense...................................        1,508          457
                                                      ----------   ----------
  Income before income taxes.......................        4,233        3,849
 
Income taxes.......................................        1,772        1,506
                                                      ----------   ----------
 
Net income.........................................   $    2,461   $    2,343
                                                      ==========   ==========
 
Net income per share, basic........................   $     0.48   $     0.45
                                                      ==========   ==========
 
Net income per share, diluted......................   $     0.46   $     0.45
                                                      ==========   ==========
Shares outstanding:
 
  Basic............................................    5,111,000    5,218,000
  Diluted..........................................    5,393,000    5,224,000
 </TABLE>

                                      -4-
<PAGE>
 
                         GLOBAL MOTORSPORT GROUP, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                  (Unaudited)
<TABLE> 
<CAPTION> 
                                                           For the three months ended
                                                                     April 30,
                                                                 1998        1997
                                                                -------     -------
<S>                                                            <C>        <C> 
Cash flows from operating activities:
 Net income..................................................    $ 2,461    $ 2,343
 Adjustments to reconcile net income to net                    
  cash provided (used) by operating activities:                
   Depreciation and amortization.............................      1,047        583
   Deferred income tax.......................................        262         --
   Changes in items affecting operations:                     
    Accounts receivable......................................     (3,236)    (1,079)
    Merchandise inventories..................................      1,661      2,383
    Deposits & prepaid expenses..............................        578        381
    Accounts payable, accrued expenses & other liabilities...      4,612      1,166
                                                                 -------    -------
Net cash provided by operating activities....................      7,385      5,777
                                                                 -------    -------
Cash flows from investing activities:                         
 Additions to property and equipment.........................    (1,602)      (991)
                                                                -------    -------
                                                              
Cash flows from financing activities:                         
 Bank repayment, net.........................................    (7,141)    (1,066)
 Repayment on capital lease                       
  obligations and long-term debt.............................      (997)       (22)
 Issuance of common stock....................................       995        106
 Repurchase of common stock..................................        --     (3,199)
                                                                -------    -------
Net cash used in financing activities........................    (7,143)    (4,181)
                                                                -------    -------
Net change in cash and cash equivalents......................    (1,360)       605
Cash and cash equivalents at beginning of period.............     1,432         40
                                                                -------    -------
Cash and cash equivalents at end of period...................   $    72    $   645
                                                                =======    =======
Supplemental disclosures of cash paid during the period:
 
 Interest....................................................   $ 1,508    $   145
                                                                =======    =======
 Income taxes (refund).......................................   $  (990)   $    --
                                                                =======    =======
</TABLE>

                                      -5-
<PAGE>
 
        NOTE 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 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 computer 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 and pro forma net 
income per shares (in thousands, except per share data):

<TABLE> 
<CAPTION> 
                                        Three months ended April 30, 1998               Three months ended April 30, 1997
                                      --------------------------------------          --------------------------------------
                                      Net Income       Shares            EPS          Net Income       Shares            EPS
                                      ----------       ------            ---          ----------       ------            ---
<S>                                   <C>             <C>             <C>             <C>             <C>             <C>
Basic net income per share              $ 2,461         5,111           $ 0.48          $ 2,343         3,218           $ 0.45
Effect of dilutive shares                    --           282               --               --             6               --
                                        -------         -----           ------          -------         -----           ------
Diluted net income per share            $ 2,461         5,393           $ 0.46          $ 2,343         5,224           $ 0.45
</TABLE> 

                                      -6-
<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 indicated in the forward-looking statements.
A discussion of the factors most likely to affect future results are set forth
below under the caption "Factors That May Affect Future Results."

RESULTS OF OPERATIONS

     Net sales increased 41.3% to $44.8 million  for the three months ended
April 30, 1998, up from $31.7 million in the prior year period.  Net sales in
the quarter ended April 30, 1998 included $10.9 million in revenues generated by
the Company's Chrome Specialties subsidiary.  This subsidiary was acquired by
the Company in September 1997. Excluding revenues generated by Chrome
Specialties, net sales in the quarter ended April 30, 1998 increased
approximately 8.0% compared to the prior year period.  Net sales for the quarter
ended April 30, 1998 increased approximately 7% when compared to the pro forma
combined sales of Custom Chrome and Chrome Specialties for the same period of
the prior year.  Sales in the quarter ended April 30, 1998, were negatively
impacted by rainy weather in California, primarily in February of 1998 when
sales were below prior year levels for both Custom Chrome and Chrome
Specialties.  The increase in sales resulted primarily from increased product
shipments to small and medium sized U.S. based customers in all regions other
than the Western United States.

     Gross profit as a percentage of sales was 37.4% in the three months ended
April 30, 1998, compared to 37.3% in the prior year period.  Gross margins were
largely unchanged in the current quarter period when compared to the prior year
period primarily as a result of improved margins on goods imported from the Far
East, partially offset by lower gross margins on products supplied by domestic
vendors and increased discounting of slower moving inventory by the Company.

     Selling, general and administrative expenses were $10.3 million, or 23.1%
of net sales, in the three months ended April 30, 1998, compared to $7.2
million, or 22.6% in the prior year period. The increase in absolute amount is
primarily attributable to the higher expense levels associated with managing
both the Company's historical operations and the operations of Chrome
Specialties,  which was acquired by the Company in September 1997.  In addition,
selling, general and administrative expenses for the quarter ended April 30,
1998, includes approximately $332,000 resulting from the amortization of the
excess of the Chrome Specialties purchase price over the net tangible assets
acquired and other intangible assets related to that acquisition.

     For the quarter ended April 30, 1998, the Company incurred $437,000 in
costs associated with an unsolicited tender offer.  See "Change of Control
Matters" below for a

                                      -7-
<PAGE>
 
discussion of the tender offer and related matters. The Company expects to
continue to incur significant costs on this matter until such time as the matter
is resolved.

     Product development expenses were $252,000, or 0.6% of net sales, in the
three months ended April 30, 1998, compared to $363,000, or 1.1% of net sales,
in the prior year period.  Product development expenses decreased in absolute
amount due to the discontinuation of certain functions of that department which
have been outsourced. Product development expenses as a percentage of sales has
decreased due to the consolidation of the operations of Chrome Specialties,
which has no material product development expenditures.

     Interest expense increased to $1.5 million, or 3.4% of net sales, for the
quarter period ended April 30, 1998, compared to $457,000, or 1.4% of net sales,
in the prior year period.  The higher interest costs in the current period
resulted from higher bank borrowings used to complete the acquisition of Chrome
Specialties.

     The Company's effective consolidated income tax rate was 41.9% for the
three months ended April 30, 1998, compared to 39.1% in the prior year period.
The higher effective tax rate in the current quarter reflects the U.S. Federal
tax rates associated with higher levels of corporate taxable net income and
higher foreign tax rates.


LIQUIDITY AND CAPITAL RESOURCES

     On September 16, 1997 the Company completed the acquisition of
substantially all the assets and assumed certain liabilities of Chrome
Specialties.  Chrome Specialties was a privately held, independent, wholesale
distributor of aftermarket parts and accessories for Harley Davidson motorcycles
which operates 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 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 in compliance with the
covenants under the credit agreement, as modified by the waiver previously

                                      -8-
<PAGE>
 
received, during the quarter ended April 30, 1998.  There can be no assurance
that the Company will be able to maintain such compliance.  Any failure to
comply with these or other requirements of the bank agreement could have a
material adverse effect on the Company's liquidity, business and results of
operations.

     Net cash provided by operating activities in the period ended April 30,
1998 was $7,385,000 compared with $5,777,000 in the same period of the prior
year.  In the period ended April 30, 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 March 23, 1998 the Company received a written proposal from Golden
Cycle, L.L.C. ("Golden") for a business combination between Golden and the
Company in which Golden Cycle proposed that the Company's shareholders would
receive cash consideration of $18.00 per share.  Shortly thereafter Golden Cycle
commenced a tender offer for all the issued and outstanding shares of the
Company for $18.00 per share.  In addition Golden Cycle commenced a consent
solicitation to remove the current Board of Directors and replace them with
Directors selected by Golden Cycle.  Golden Cycle and a number of third parties
have filed lawsuits in connection with the abovementioned tender offer and
consent solicitation.  The Company retained investment and legal advisors to
advise it in connection with the tender offer, consent solicitation and lawsuits
as well as to explore other acquisition proposals and other alternatives.  In
the three months ended April 30, 1998 the Company had charges of $437,000
related to the unsolicited tender offer by Golden and the subsequent litigation.

     On May 26, 1998 the Company signed a Letter of Intent with Fremont Partners
for the acquisition of the outstanding shares of Global for $23.00 per share in
cash.  In order to achieve the desired accounting treatment, the letter of
intent provides that certain members of Global's management will not sell all of
their shares in the transaction, but will exchange such retained shares for an
equity interest in the acquiring entity. Consummation of the proposed
acquisition is subject to a number of conditions, including negotiation of a
definitive Merger Agreement and the finalization by Fremont of financing
arrangements for the transaction.  Fremont has received commitments for such
financing from major financial institutions.

     The letter of intent provides that Global will not solicit, negotiate or
provide information to any other potential buyers until June 27, 1998, and also
provides of a cash payment of $5 million to Fremont if the transaction is not
consummated and Global enters into an alternative sale transaction at a higher
price.

                                      -9-
<PAGE>
 
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 all
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 fiscal years beginning after December 15, 1997. The Company
will adopt this statement for its year ending January 31, 1999 and does not
anticipate this statement will have a significant impact on its financial
condition or results of operations.

     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
years beginning after December 15, 1997.  Unless impracticable, companies would
be required to restate prior period information upon adoption.  The Company will
adopt this statement in its year ending January 31, 1999 and does not
anticipate this statement will have a significant impact on its financial
condition or results of operations.

     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 for 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.

                                      -10-
<PAGE>
 
     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.

     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 by 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

                                      -11-
<PAGE>
 
and there can be no assurance that such developments will not have a material
adverse effect on the Company. See "Item 1. - 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 which motorcycle riding decreases relative to the warm weather
months.  In particular, the Company's operating result 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
earnings during the last two quarters of its fiscal year because certain
operating expenses 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 process 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

                                      -12-
<PAGE>
 
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 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 1996, 1997, and 1998,
international sales accounted for 20%, 19%, and 17%, 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, 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

                                      -13-
<PAGE>
 
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.

     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. The Rights Plan, as
well as certain provisions of the Company's Amended and Restated Certificate of
Incorporation and Bylaws and of Delaware law, could delay or make difficult a
merger, tender offer or proxy contest involving the Company.

     As of the date hereof, there is pending an unsolicited tender offer for all
of the Company's shares by Golden Cycle, L.L.C. for $18.00 per share, which
regardless of outcome, could have a material adverse effect on the Company. See 
"Change of Control Matters" above.

     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
products in Taiwan and to 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 has been also
substantially from Taiwan where it

                                      -14-
<PAGE>
 
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 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 than 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, engage in
other similar normal business activities.  The Company is in the process of
installing a new computer software system which will increase operational and
financial efficiencies and information analysis.  The new enterprise system
recognizes dates beyond December 31, 1999 and addresses a substantial portion
of the Year 2000 issue as it impacts the Company.  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.

                                      -15-
<PAGE>
 
                          PART II. - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     On March 23, 1998 the Company received a written proposal from Golden
Cycle, L.L.C. ("Golden") for a business combination between Golden and the
Company in which Golden proposed that the Company's stockholders would receive
cash consideration of $18.00 per share.  Shortly thereafter Golden commenced a
tender offer for all the issued and outstanding shares of the Company for $18.00
per share.  In addition, Golden commenced a proxy solicitation to remove the
current Board of Directors and replace them with directors selected by Golden.
Golden, the Company, and a number of third parties have filed lawsuits in
connection with the above-mentioned tender offer and proxy solicitation.

     DELAWARE STATE INSPECTION LITIGATION

     On March 25, 1998, Golden, by and through its agent Cede and Company,
served on the Company a demand for production of the Company's stockholder list
and inspection of a wide range of books and records of the Company (the "Demand
Letter").  On April 1, 1998, the Company responded by letter stating that the
Company could not ascertain from the Demand Letter whether a "proper purpose"
under Delaware General Corporation Law (S) 220 had been stated and requested
clarification.  On April 2, 1998, Golden Cycle initiated proceedings in Delaware
Chancery Court ("Chancery Court") seeking production of a stockholder list and
equitable relief in the form of an order allowing inspection.  Golden also
sought expedited treatment of the entire matter.  On April 3, 1998, the Chancery
Court bifurcated the proceedings and ordered discovery on an expedited basis.
On April 14, 1998, the Chancery Court ordered the Company to provide Golden
Cycle with a stockholder list, and that list was provided to Golden Cycle on
April 15, 1998.  With respect to Golden's request for books and records other
than a stockholder list, a trial was held in the Chancery Court on May 22, 1998
concerning, among other things, the issue of whether Golden's Demand Letter and
subsequent correspondence stated a "proper purpose" for demanding such books and
records.  The Chancery Court has not yet ruled on the issues presented at the
May 22, 1998 trial.

     DELAWARE STATE FIDUCIARY DUTY LITIGATION

     On April 7, 1998, Golden filed a complaint in Chancery Court against the
Company and each member of its board alleging interference with corporate
franchise, breach of fiduciary duty and fraud.  The action, as subsequently
amended, alleges various actions or inactions relating to Golden's consent
solicitation and tender offer and seeks, inter alia, redemption of the Rights,
injunctive relief and unspecified damages.  On April 9, 1998, Golden filed a
motion seeking, among other things, preliminary injunctive relief.  A hearing on
Golden'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's request in
all respects.

                                      -16-
<PAGE>
 
Although the Chancery Court denied Golden's request for preliminary injunctive
relief, that order was not a final judgment on Golden's claims, and the action
is ongoing.

     CALIFORNIA FEDERAL LITIGATION

     On April 2, 1998, the Company filed suit in the United States District
Court for the Northern District of California alleging, inter alia, that Golden
violated the Securities Exchange Act of 1934 by filing false and misleading
materials with regard to Golden's consent solicitation and that Golden's
submission pursuant to Section 13 of the Exchange Act was also false and
misleading. The Complaint seeks, inter alia, to enjoin the solicitation of
written consents pursuant to Golden's solicitation materials.

     DELAWARE FEDERAL LITIGATION

     On April 6, 1998, Golden filed suit against the Company and each member of
the Board alleging that the Board set the record date for the written consent
solicitation in contravention of the rules promulgated under the Exchange Act.
The complaint seeks, inter alia, a declaration that March 30, 1998 is
ineffective as a record date for Golden's written consent solicitation.  On
April 22, 1998, the Company filed its answer to the complaint, in which it
denied allegations that the record date for Golden's consent solicitation was
set in contravention of the Exchange Act, or any of the rules and regulations
promulgated thereunder.

     DELAWARE CLASS ACTION

     On March 26, 1998, the Great Neck Capital Appreciation Investment
Partnership, L.P. ("Great Neck") filed a class action complaint in the Delaware
Court of Chancery on behalf of the Company's stockholders against the Company,
each of the members of the Company's Board of Directors, and Ignatius J.
Panzica, alleging that each of the defendants breached their fiduciary duties to
the Company's stockholders by failing adequately to consider Golden's March 23,
1998 offer to purchase the Company, or to negotiate with Golden and/or other
potential acquirors.  On March 30, 1998, after Golden filed preliminary consent
solicitation materials with the Securities and Exchange Commission, a second
class action complaint was filed in the Delaware Chancery Court by Ralph Bonito,
on behalf of the Ralph Bonito IRA and Company stockholders, against the same
defendants.  The complaint filed by Mr. Bonito is virtually identical to the
complaint previously filed by Great Neck.  Both complaints seek mandatory
injunctive relief compelling the Company and the Board of Directors to take all
steps necessary to arrange for the sale of the Company to the highest bidder.

                                      -17-
<PAGE>
 
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          a.   Exhibits

               Exhibit 27 - Financial Data Schedule

          b.   Reports on Form 8-K

               No report on Form 8-K were filed during the quarter ended April
               30, 1998.

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

                                       (Principal Financial and
                                       Accounting Officer)