SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB


             /X/Annual Report Pursuant to Section 13 or 15(d) of the
               Securities Exchange Act of 1934 for the Fiscal Year
                              Ended January 2, 1999

                        Commission File Number: 000-24477

                              TITAN MOTORCYCLE CO.
                              --------------------
                                   OF AMERICA
                                   ----------
                 (Name of small business issuer in its charter)

           Nevada                                                 86-0776876
------------------------------                               -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

       2222 West Peoria Avenue
         Phoenix, Arizona                                           85029
----------------------------------------                         ----------
(Address of principal executive offices)                         (Zip Code)


Issuer's telephone number, including area code:        (602) 861-6977   
                                                    --------------------

Securities registered under Section 12(g) of the Exchange Act: common stock

         Check whether the issuer (1) filed all reports  required to be filed by
section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X  No
                                                                      ---   ---

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

      State issuer's revenues for its most recent fiscal year $ 27,913,025


                                       1
<PAGE>

         State the aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
common  equity  was sold,  or the  average  bid and asked  price of such  common
equity, as of a specified date within the past 60 days:  $31,156,527 as of March
25, 1999.

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 17,147,333

                    Documents incorporated by reference: None

Transitional Small Business Disclosure Format.  Yes    No X
                                                   ---   ---


                                       2
<PAGE>

                                     PART I

FORWARD LOOKING STATEMENTS

Certain  matters  discussed  in this report on Form 10-KSB are  "forward-looking
statements."  These  forward-looking  statements  can generally be identified as
such because the context of the statement will include words such as the Company
"believes,"  "anticipates,"  "expects," "estimates" or words of similar meaning.
Similarly,  statements that describe the Company's  future plans,  objectives or
goals are also forward-looking  statements.  Such forward-looking statements are
subject  to  certain  risks  and  uncertainties  which  are  described  in close
proximity  to such  statements  and which could cause  actual  results to differ
materially from those  anticipated as of the date of this report.  Shareholders,
potential  investors  and other  readers are urged to consider  these factors in
evaluating the  forward-looking  statements and are cautioned not to place undue
reliance on such  forward-looking  statements.  The  forward-looking  statements
included  herein  are only made as of the date of this  report  and the  Company
undertakes no obligation to publicly update such  forward-looking  statements to
reflect subsequent events or circumstances.

ITEM 1.  DESCRIPTION OF BUSINESS

The genesis of Titan  Motorcycle  Co. of America  ("Titan")  was a small  retail
aftermarket motorcycle shop known as Paragon Custom Cycles in Phoenix,  Arizona,
which was owned and  operated by the Company  founder,  Patrick  Keery.  Paragon
specialized  in  aftermarket  Harley  DavidsonTM  customizations,   repairs  and
upgrades,  as well as the sale of a wide range of optional  equipment  and parts
for the Harley DavidsonTM line.

Through the design  talents of its founder,  Paragon became known for its unique
award- winning  Harley  DavidsonTM  customizations.  It was not unusual for such
customizations to increase a stock vehicle's cost by 50% to 100% of the original
purchase  price. In the customizing  process,  a good deal of factory  installed
hardware was removed and discarded and major design restrictions improved.

Paragon   evolved  to  designing  and  building  custom  large  V-twin  cylinder
motorcycles  from the  ground  up using  various  OEM  parts.  Although  various
configurations   are  used  both  domestically  and   internationally  to  power
motorcycles;  including one, two and four cylinder engines, the engine of choice
in the United  States for the  larger  displacement  cruiser  and  touring  bike
classes of  motorcycles is the V-twin  engine.  This engine design  features two
cylinders configured in a 45(degree) "V" shaped orientation.


                                       3
<PAGE>

By 1994,  the  aftermarket  Harley  DavidsonTM  parts market had gestated to the
point where all major and minor  components,  including engine and drive trains,
required to design and build a unique  custom  motorcycle  from  inception  were
readily available. While quality and continuity of supply were major challenges,
a well connected shop owner could secure the necessary  parts and labor to build
the customer's dream creation.

Paragon,  under the  design and  engineering  skills of its  president,  Patrick
Keery,  became the shop of choice for more and more customers who sought him out
to have their concept bikes built.

Initially, the process was somewhat long and tedious. It was not unusual for the
total elapsed time from the design  concept to delivery of the finished  product
to be as long as six months.  The selling price for such  vehicles  could easily
reach the $40,000 to $50,000 range.

In late 1994,  Patrick  approached his principal  financial  backer (and father)
with the idea of creating an integrated  manufacturing  company to  dramatically
reduce the cost of production while enhancing delivery for new and unique custom
designed and manufactured V-twin cruiser motorcycle products.  This approach did
not  require  the  essential   rebuilding  of  other  large  V-twin   production
configurations.  The idea was to implement this design and production concept in
a disciplined "cell" manufacturing process and environment where a small team or
single  individual  artisan would  essentially build the custom motorcycle using
readily available and  scientifically  arranged component parts. The disciplined
cell  manufacturing  process  is a  production  methodology  whereby a  complete
motorcycle  is built  from all  components  by a single  builder/technician,  as
opposed to an assembly line methodology  where a team of individuals  assemble a
finished motorcycle by repetitive,  individual processes such as when one worker
puts on the wheels, another worker installs a motor, etc.


                                       4
<PAGE>

The  principal  suppliers of the  Company,  and the parts  purchased  from these
suppliers are identified in the table on the below page.

<TABLE>
<CAPTION>
========================================== ============================ ============================================
<S>                                        <C>                                       <C>
                VENDOR                           CITY AND STATE                        PARTS PURCHASED
------------------------------------------ ---------------------------- --------------------------------------------

------------------------------------------ ---------------------------- --------------------------------------------
S&S CYCLE                                  VIOLA, WI                                 MOTORS/MOTOR PARTS
------------------------------------------ ---------------------------- --------------------------------------------
DAYTEC                                     HESPERIA, CA                              FRAMES/SHEET METAL
------------------------------------------ ---------------------------- --------------------------------------------
CUSTOM CHROME                              MORGAN HILL, CA                               MISC. PARTS
------------------------------------------ ---------------------------- --------------------------------------------
PERFORMANCE MACHINE                        LA PALMA, CA                             WHEELS/ROTORS/BRAKES
------------------------------------------ ---------------------------- --------------------------------------------
JIMS USA                                   CAMARILLO, CA                          TRANSMISSIONS/MOTOR PARTS
------------------------------------------ ---------------------------- --------------------------------------------
DEANO'S                                    TEMPE, AZ                                    PAINTED PARTS
------------------------------------------ ---------------------------- --------------------------------------------
URSCHEL MANUFACTURING                      SCOTTSDALE, AZ                           FORWARD CONTROL/PEGS
------------------------------------------ ---------------------------- --------------------------------------------
WORKS PERFORMANCE                          CANOGA PARK, CA                                 SHOCKS
========================================== ============================ ============================================
</TABLE>

 There are alternative  sources for all items listed in the table. In some cases
there might be delays in the  manufacturing  process while  alternate  suppliers
gear up to meet production level requirements.  In some cases these delays could
be considered to be material.

Research and  development  activities  of the Company are  ongoing.  In calendar
years 1996 and 1997,  the Company  expended  approximately  $76,000 and $218,000
respectively in research and development.  Research and development efforts were
accelerated  in 1998 as the Company  focused its efforts on designing new models
for  introduction  in  1999,  as  well  as  continuing  to  design  and  develop
proprietary  components for its current  products.  In the fiscal year 1998, the
Company expended $301,000 in research and development.

The Company  provides a three year  warranty  program for its  motorcycles.  The
first six month period covers all parts and labor with regard to its  motorcycle
products  and is provided  directly  by the  company.  In fiscal year 1998,  the
Company  recorded a reserve for  warranty  expense of $65,000.  The Company also
provides  an  extended  warranty  for the thirty  months  following  the initial
warranty period (for a total warranty of 3 years) through a third party insurer.
In March 1999,  the  Company  extended  the  overall  warranty to 4 years on its
traditional  line of bikes,  while continuing to provide 3 years of coverage for
the new "Phoenix by Titan" line.

The present Company was incorporated in 1994 employing the foregoing  production
techniques. Shortly after the incorporation, it became apparent that the Company
needed additional  capital to grow and that it would be advantageous to seek out
and complete a merger with a publicly  held company  which,  as a result,  would
provide both a public market and a new source of capital.  Readily available was


                                       5
<PAGE>

Mojave Financial Services,  Inc. At the time, Mojave was essentially inactive. A
merger was  completed  in June of 1996,  with Mojave  Financial  Services,  Inc.
contributing its capital; and, as the surviving entity,  assuming the name Titan
Motorcycle  Co.  of  America,  a Nevada  corporation.  Titan  Motorcycle  Co. of
America,  the  pre-merger  entity,  was  incorporated  as an  Arizona  successor
corporation to Paragon  Custom Cycles on December 12, 1994 and ceased  existence
pursuant to the foregoing  merger and name change.  The  integrated  Company has
existed and continues since the date of merger on June 11, 1996.

All present financial  statements and other  disclosures  concerning the Company
are based  upon  acquisition  accounting.  The  merger  was  accounted  for as a
recapitalization  of Titan  because the  shareholders  of Titan  controlled  the
Company after the acquisition.  There was no adjustment to the carrying value of
the assets or liabilities of Titan in the exchange. The Company is the acquiring
entity for legal  purposes  and Titan is the  surviving  entity  for  accounting
purposes. In the merger, Titan assumed $8,000 of debt of Mojave.

Since the merger, Titan has traded as a public entity on a limited market basis.
From the merger  until  December  of 1998,  the common  stock of the Company was
quoted on the NASD Electronic Bulletin Board. In December of 1998, NASD approved
the Company to be listed on the NASDAQ SmallCap Market where it has been trading
since then.  Brokers  currently making a market in the stock are Paragon Capital
Corporation of Boca Rotan, Florida (1-800-521-8877); Harold, Thompson, Magid and
Company of Jersey City, New Jersey (212-233-2200); Sharpe Capital Corporation of
New York,  NY  (212-791-8700);  and Alpine  Securities  of Salt Lake City,  Utah
(1-800-274-5588).

In March of 1997,  the Company  authorized a  two-for-one  (2:1)  forward  stock
split.  In April 1997,  November  1997 to January  1998 and February  1998,  the
Company  privately placed 1,000,000  shares,  500,000 shares and 166,667 shares,
respectively,  of its Common Stock. In January 1998, the Company agreed to issue
an additional 60,000 to an industry publications company as part of an agreement
whereby the Company would receive publishing and advertising  services.  As part
of the  consideration  for  this  transaction  for  publishing  and  advertising
services,  the Company  provided the  publishing  company with $125,000 of Titan
motorcycles at the end of calendar year 1997.

The stock transactions  referred to in the preceding  paragraph raised the total
number of issued  and  outstanding  shares of the  Company to  16,437,333  as of
January 2, 1999.  In January  1999,  the Company  issued  10,000  shares for the
purpose  of  matching  contributions  for it's  401(k)  plan for  employees.  In
February and March 1999,  the Company  privately  placed  700,000  shares of its
Common  Stock.  These  transactions  raised  the  total  number  of  issued  and
outstanding shares to 17,147,333 as of March 22, 1999. Of this amount, the three


                                       6
<PAGE>

principal  officers  collectively  hold  approximately  54.7% of the  issued and
outstanding  common  stock,   prior  to  exercise  of  existing  options.   Such
individuals would collectively hold 55.7% of the outstanding  shares,  after the
exercise of their current options.

         DESCRIPTION OF THE COMPANY
         --------------------------

The Company has recently expanded is manufacturing  and distribution  facilities
at 2222 West Peoria  Avenue,  Phoenix,  Arizona 85029.  It presently  occupies a
leased   structure   having   approximately   64,000  square  feet  of  combined
administrative,  manufacturing, assembly and distribution space. It is currently
in the  process  of  moving  into an  adjacent  building  that will  provide  an
additional  60,000  square feet when fully  occupied.  The Company has five year
leases on each of these  facilities with a combined lease payment of $43,484 per
month in 1999 when the new facility is  occupied.  The company also has leased a
small facility of approximately 3,000 square feet near its main facility for new
product development activity. This has a monthly lease payment of $1,728.

It is reasonably  anticipated  that the present  physical  facilities  should be
adequate for the Company's anticipated manufacturing and distribution needs into
the year 2001.

The Company believes it has developed a unique design and manufacturing  process
for the large displacement,  customized motorcycle industry.  The Company offers
seven (7) custom model  configurations,  all of which lead the industry in power
to weight  ratios,  ride and handling  refinements,  capacity for future  custom
configuration and general aesthetics.  In addition,  the Company brings a unique
service to its customers by allowing the customers to  specifically  "predesign"
the end product down to the  customization  of colors and finish.  The completed
product,  in its  custom  design  configuration  and based upon one of the basic
models,  can be delivered  within eight to ten weeks of an order.  Customers not
desiring  individual  customization can choose one of the basic custom models in
standard finish and  configuration  and be assured of prompt  delivery,  usually
from dealer floor stock.

Titan  believes  itself to be the market  leader in high end  customized  V-twin
motorcycles  as evidenced by its rapidly  expanding  distribution  network.  New
designs, limited edition models and the introduction of four new standard models
in 1999 should insure continuing leadership in this market segment.

This  custom   manufacturing  and  service  concept  is  made  possible  by  the
application  of a  small  production  team  or  single  skilled  artisan  who is
responsible  for assembling  each unit from  component  parts.  This  technician
further continues to service his vehicle through road testing to ensure complete
customer satisfaction.


                                       7
<PAGE>

The Company  believes  it is unique in  providing  this degree of  customization
resulting  in  essentially  a "hand  built"  new  vehicle  at a cost and  design
advantage to purchasing a typical stock model V-twin, such as Harley DavidsonTM,
YamahaTM,  or HondaTM, and paying for customization  through an individual shop.
Additionally,  the customer is assured of state of the art design,  assembly and
testing technology. For comparison purposes, the price of the basic Titan models
range from the top of the line "Gecko",  currently  selling for $29,065,  to the
"Sidewinder"  model  at  $26,515.  This  compares  to a  non-customized  similar
displacement  stock Harley DavidsonTM at approximately  $15,000 to $20,000.  The
Company also produces limited edition  motorcycles and highly  customized models
that retail for prices between the base models and $50,000.

The Company  introduced a new product line of  motorcycles  at Daytona Bike Week
during the first week of March,  1999.  This new line,  which  includes 4 models
sold under the name  "Phoenix  by  Titan,"  will  retail for  $20,000 - $21,000.
Shipments are scheduled to begin early in the second  quarter of 1999.  This new
line will serve a larger  market share than the Company's  traditional  line and
has been enthusiastically received by the dealer base.

Currently the products of the Company are being distributed  through 67 domestic
dealers, and 21 foreign dealers with current expansion plans underway.

         FINANCIAL INFORMATION
         ---------------------

Registrant's  financial  statements  are included in Part II, Item 7:  Financial
Information.

         EMPLOYEES
         ---------

As of March 15, 1999, the Company had 193 full-time employees,  of whom 170 work
in engineering and manufacturing;  9 work full-time in marketing; and 14 work in
staff  and  administration.  The  Company  is  not  subject  to  any  collective
bargaining agreement.  The Company anticipates adding supervisory,  engineering,
manufacturing,  marketing and  administrative  staff as the Company  expands its
production in 1999.


         FOREIGN OPERATIONS
         ------------------

The foreign  operations of the Company  consist  solely of sales of its products
through  non-U.S.  dealers of the  motorcycles of the Company.  Foreign sales in


                                       8
<PAGE>

1997 were $1,681,613 and in 1998 were  $2,027,997.  Poor economic  conditions in
Asia and a focus on growing the domestic base slowed growth in the international
markets  in 1998.  With new  dealerships  opened in  Australia  and  Japan,  and
approval  of  the  Company's   products  for  full  European  Union   acceptance
anticipated in 1999, the Company is confident of building a strong international
business base over the next few years.  Titan Motorcycle GMBH (described  below)
has been  contacted  by  potential  dealers  throughout  Europe and the  Company
expects to add to its dealer base there in 1999. The Company  anticipates  that,
with continued expansion in the overall number of international dealers, it will
see an increase in foreign sales in 1999.

         SUBSIDIARIES OF THE COMPANY
         ---------------------------

The Company has only one subsidiary. Titan Motorcycle GmbH, Alte Hersfelder Str.
30, 36289 Friedewald,  Germany is wholly owned by the Company.  Titan Motorcycle
GmbH was  established in April 1998 to set up a marketing  organization  for the
Company in Europe.  Its  function  is to  coordinate  with and offer  support to
dealers and other marketing  partners in Europe,  to organize and participate in
trade shows and develop product advertising and promotional activities for Titan
and its  authorized  dealers,  and to  establish  a central  office in Europe to
handle the Company's business affairs.

PART I, ITEM 2.   DESCRIPTION OF PROPERTY.

In March 1997,  the  Company  began its move to the  present  manufacturing  and
distribution facilities at 2222 West Peoria Avenue,  Phoenix,  Arizona 85029. On
August 7, 1997, the Company  entered into a second lease agreement with the same
landlord for the remaining  space in the same building  which was fully occupied
in 1998. In October of 1998,  the Company  entered into a third lease  agreement
for a 60,000 square foot building on adjacent  property with the Company  taking
possession  of the first 30,000 square feet in 1999,  and the remainder  planned
for the year 2000. Under the combined  leases,  the Company will occupy 2 leased
facilities having approximately 124,000 square feet of combined  administrative,
manufacturing, assembly and distribution space. Approximately 15,800 square feet
are devoted to offices  with the  remaining  area  dedicated to  production  and
warehouse.  The  Company  has  negotiated  the lease  periods to  coincide  with
commitments running through March 2004 on both premises at an aggregate rate for
the two leases of $43,484 per month during 1999.  The Company has maintained its
former leased  facility at 2002 East Indian School Road,  Phoenix,  Arizona on a
month to month basis at the current  monthly cost of $3,978.  Additionally,  the
Company has also leased a small facility of approximately  3000 square feet near
its main facility for new product development activity. This has a monthly lease
payment of $1,728.


                                       9
<PAGE>

It is reasonably  anticipated  that the present  physical  facilities  should be
adequate for the Company's anticipated manufacturing and distribution needs into
the year 2001.

ITEM 3.  LEGAL PROCEEDINGS

The Company is presently involved as a defendant in a civil action filed against
it in the  Superior  Court (court of general  jurisdiction)  in and for Maricopa
County, Arizona, Civil No. CV98-03681, arising out of a dispute over payment for
and the adequacy of services  performed by the  plaintiff in  completing a paint
room  for  the  Company.  The  amount  alleged  owing  is the  principal  sum of
$52,898.59. The Company disputes the claims and has filed a counterclaim. In all
events, it is not believed the outcome of this litigation will have any material
affect on the Company's  business.  The Company is not aware of any other claims
or litigation of a material nature.

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

         NONE


                                       10
<PAGE>

                                     PART II

ITEM 5.  Market for Common Equity and Related Stockholder Matters.

The stock of the Company is traded on the NASDAQ  SmallCap  market.  As of March
15, 1999,  there were more than 650  shareholders  of record of the stock of the
Company. As of the same date, Seventeen Million One Hundred Forty-Seven Thousand
Three Hundred Thirty Three (17,147,333) shares of stock were outstanding. Actual
trading  volume  of the  stock of the  Company  in  calendar  year 1998 has been
moderate.  A significant portion of the stock of the Company is held by non-U.S.
investors.

Provided in the following  table is the price range of the  Company's  stock for
the eight most recent quarters  (adjusted to reflect the March 1997  two-for-one
forward  split of the  stock of the  Company),  and as of March  25,  1999.  The
referenced  quotations do not reflect inter-dealer prices, dealer retail markup,
markdown, or commissions, and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                           PRICE RANGE OF COMMON STOCK
                                Transaction Price
======================================== ===================================== =====================================
Quarter & Year                           High                                  Low
---------------------------------------- ------------------------------------- -------------------------------------
<S>                                      <C>                                   <C>
1st 1997                                 7.50                                  3.31
---------------------------------------- ------------------------------------- -------------------------------------
2nd 1997                                 6.125                                 4.50
---------------------------------------- ------------------------------------- -------------------------------------
3rd 1997                                 6.875                                 5.50
---------------------------------------- ------------------------------------- -------------------------------------
4th 1997                                 6.00                                 4.50
---------------------------------------- ------------------------------------- -------------------------------------
1st 1998                                 4.63                                  3.00
---------------------------------------- ------------------------------------- -------------------------------------
2nd 1998                                 6.50                                  3.37
---------------------------------------- ------------------------------------- -------------------------------------
3rd 1998                                 5.19                                  3.025
---------------------------------------- ------------------------------------- -------------------------------------
4th 1998                                 5.125                                 4.125
======================================== ===================================== =====================================

 March 25, 1999                          bid  $3.97                             ask    $4.06
</TABLE>

The Company has paid no  dividends  on common  stock  during its two most recent
calendar years,  and has no present  intention to pay dividends in calendar year
1999.


                                       11
<PAGE>

Recent Sales of Unregistered Securities.

The  following  information  does not include a discussion  of employee  options
granted  pursuant  to the  1996  Incentive  Stock  Option  Plan  of the  Company
discussed in item 10 of part III of this report.

On February 8, 1999,  the Company  agreed to sell  700,000  shares of its common
stock to a non-US investor for net proceeds to the Company of $1,575,000.  As of
the date of this  report  all of the  consideration  has not been paid for these
shares.  These 700,000 shares are subscribed for, but  certificates  are not yet
issued, and as such are included in the 17,147,333 shares outstanding.

The transaction is deemed exempt from registration pursuant to the provisions of
Regulation  S adopted by the  Securities  and Exchange  Commission.  The Company
reasonably believes, and the purchaser specifically warranted and represented to
the  Company,  that (a) the  purchaser  was not a U.S.  person  as that  term is
defined under Regulation S; (b) at the time the buy order for the securities was
originated,  the purchaser was outside of the United  States;  (c) the purchaser
was  purchasing the securities for its own account and not on behalf of any U.S.
Person;  (d) the sale had not been  pre-arranged  with a purchaser in the United
States;  (e) all offers  and  resales  of the  securities  would only be made in
compliance  with  Regulation  S;  and  (f) the  sales  transaction  was  made in
compliance with all laws of the country of domicile of the purchaser, and of any
political  subdivision thereof, and the customary practices and documentation of
such jurisdiction. The certificates representing the shares to be issued in such
transaction will bear the appropriate restrictive legend, and the transfer agent
of the Company has been given stop transfer  instructions  with regard to shares
issued under any Regulation S exemption.

No commission or finders fee was paid on the referenced transaction.

ITEM 6.  Management's Discussion and Analysis.

The audited financial  statements as of January 2, 1999 and for the fiscal years
ended January 2, 1999, and December 31, 1997 are enclosed with this Form 10-KSB.
Reference  is made to the  Consolidated  Financial  Statements  filed  with this
Registration  Statement for greater detail  regarding the financial  position of
the Company.

Effective  January 1, 1998, the Company  adopted a fiscal  accounting  period as
opposed to the calendar  accounting  period of prior  years.  The effect of this


                                       12
<PAGE>

change is that all quarters are now comprised of thirteen weeks, ending Saturday
at midnight  instead of the last calendar day of the month. The first two fiscal
months of a quarter  have four  weeks  each and the last  fiscal  month has five
weeks.  Although this  conversion  results in a difference of only 2 days in the
accounting  period  for 1998,  the use of fiscal  month  accounting  is a common
practice for  manufacturing  companies  and  simplifies  internal  inventory and
accounting functions.

The selected  financial data set forth below should be read in connection  with,
and is limited by, the more complete  information  in the attached  Consolidated
Financial Statements and the notes thereto.

<TABLE>
<CAPTION>
=======================   ============   ============    ============    ============    ================
                             1/2/99        12/31/97        12/31/96        12/31/95           12/31/94
-----------------------   ------------   ------------    ------------    ------------    ----------------
<S>                       <C>            <C>             <C>             <C>             <C>             
Revenue                   $ 27,913,025   $ 13,064,145    $  4,983,876    $    625,284    $              0
-----------------------   ------------   ------------    ------------    ------------    ----------------
Net Income (Loss)         $    237,479   ($ 1,673,743)   ($    95,496)   ($   257,513)   ($           213)
-----------------------   ------------   ------------    ------------    ------------    ----------------
Earnings (Loss) Per       $       0.01   ($      0.11)   ($      0.01)   ($      0.02)   ($          0.00)
Share1
-----------------------   ------------   ------------    ------------    ------------    ----------------
Total Assets              $ 18,420,223   $  8,769,057    $  3,318,289    $    187,244    $              0
-----------------------   ------------   ------------    ------------    ------------    ----------------
Long-Term Obligations     $  8,249,311   $  1,928,664    $    502,521    $    252,113    $              0
=======================   ============   ============    ============    ============    ================
</TABLE>


Fiscal Year Ended January 2, 1999,  Compared  with Calendar Year Ended  December
31, 1997

OVERALL

Net Sales for 1998 of $27.9 million were $14.8 million, or 113%, higher than net
sales for 1997. The Company recorded net income of $237,479, or $0.01 per share,
in 1998 compared with a loss of $1.67 million or $0.11 per share, for 1997.

 Over the past year,  the Company  invested in building an  infrastructure  that
will not only enable it to continue  to support  its rapid  growth,  but also to


---------------------
1 These figures have been restated to reflect the  two-for-one  forward split of
the stock of the Company which took effect in March 1997.


                                       13
<PAGE>

develop new models and features for its customer base.  Part of this  investment
is in the Company's engineering  capability,  which is focused on developing new
products  and  components  as well as  continuing  to improve  upon the  current
products and production processes.  Other investments have been made in building
the management team of the Company, developing marketing capabilities focused on
building the Titan brand name,  and  upgrading  computer  systems to support the
continued growth of the business.


RESULTS OF OPERATIONS
MOTORCYCLE UNIT SHIPMENTS AND NET SALES

                                     1998        1997       INCREASE    % CHANGE
                                     ----        ----       --------    --------

Motorcycle Units                     1,001        500         501         100%

Net Sales (in $ 000's):
Motorcycles                         $27,286     $12,870     $14,416       112%
Motorcycle Parts and Accessories    $   627     $   194     $   443       223%
Total Motorcycles and Parts         $27,913     $13,064     $14,849       113%

As indicated in the above chart,  the  Company's  business  continues to consist
primarily of motorcycles sales. A small, but rapidly growing, amount of business
has been done in parts and accessories.  The Company's  Clothing and Accessories
product  line,  introduced  in late 1997,  has been well  received.  While these
segments have not been material as yet, the Company  anticipates  these segments
could grow to 10 - 20% of total sales at some future date.

The increase in motorcycle shipments is due to several reasons. Chief among them
is the  continuing  growth in reputation of the  Company's  motorcycles  and the
resulting  demand  this has  created.  This,  combined  with the  growth  in the
dealership  network and the Company's  investment in new facilities and staff to
meet the growing demand, continues to drive the dramatic growth in shipments.

Over the last 3 years,  the Company has seen growth in revenues from $625,000 in
1995 to over $13,064,000 in 1997. 1998 continued to experience the same dramatic
growth,  with sales of $27,913,000;  an increase of 113% over 1997.  During this
same  period,  the dealer  network of the Company has grown from one location in
Phoenix to 88 dealerships worldwide with over 28 potential new dealers currently
being  evaluated by the Company.  The Company has developed a strong  dealership
network that includes Easyrider franchises,  Harley DavidsonTM dealers,  Bikers'
Dream  franchises,  independent  dealers  and  Titan  dealerships.  The  Company
believes this  expanding  network is one key element in the continued  growth of
the business.


                                       14
<PAGE>

The Company continued to invest in its engineering capability and infrastructure
to allow it to increase  production to meet the  projected  demand into the year
2000.  For 1998, the Company's  sales exceeded 1000 units.  The Company plans to
continue to develop its existing facilities and human resources,  as well as add
others as required,  to meet the growing  demand for its  products.  The Company
anticipates continued high levels of growth for at least the next five years.

While projecting sales for the future is an inexact process at best, the Company
believes that growth will continue for some of the following reasons:

            o   Management  believes that the overall  growth of the industry is
                strong and has been  out-pacing  the basic  economy  for several
                years;

            o   As the baby boomer generation continues to age, their disposable
                income  continues  to  increase,   and  this  demographic  group
                represents the largest segment of the Company's market;

            o   Since inception,  the Company has been capacity  constrained and
                demand for its product has  exceeded its ability to produce on a
                year-to year basis;

            o   The Company's dealership network is still young and continues to
                expand,  opening  new  geographic  markets to the  Company.  The
                dealerships  also are early in the life  cycle of this  product,
                and same store sales are  expected to increase as the  product's
                reputation   grows   in  the   market   place   and   dealership
                effectiveness improves;

            o   The international  market is still largely untapped.  Management
                of the Company believes that the international market represents
                approximately 30% of Harley- Davidson'sTM motorcycle sales; and

            o   The Company has new products being introduced in 1999 and others
                in the  planning  stage that should add to its product  line and
                expand its revenue base.

The  Company's  ability to reach these higher  production  levels will depend on
several  factors.  First and foremost  will be its ability to continue to create
high levels of demand in both the domestic and international  markets. Once this
is accomplished,  the Company must be able to continue to increase  efficiencies
in its current facilities through  engineering  advances,  adding facilities for
both motorcycle and parts production, working with its developing supplier base,
and  continuing to attract  production,  engineering  and support  talent to the
Company. There are no assurances the Company will be able to do all these things
simultaneously or in a timely way to match sales demand.  The Company could also
experience  delays in its growth or production as the result of supplier issues,
labor  shortages,  or unforeseen  competitive  actions,  as well as from natural


                                       15
<PAGE>

causes.  These risks, if not offset,  could  negatively  impact on the Company's
performance  and it's  resulting  cash flow.  The Company must also  continue to
raise appropriate levels of capital to support anticipated growth.

In 1997, the worldwide  market for  heavyweight  motorcycles  (651+cc)  exceeded
500,000 units,  with  approximately  40% of that market in North  America.  This
market grew at 15.7%  worldwide and 14.8%  domestically.2  With a market size of
over one-half a million  units and  presently  growing at a rate of about 75,000
units per year, the Company  currently has a minor position in both the domestic
and world-wide markets.  While data is not currently available to the Company by
price  segment,  it  believes  that  it  has  a  significant  market  share  for
motorcycles  in the over $25,000 price segment  domestically  and has positioned
itself well for growth in these segments in both the European and Asian markets.

GROSS PROFIT
                              1998       1997     INCREASE     % CHANGE
                              ----       ----     --------     --------
Gross Profit (In 000's)       $4,193     $433     $3,760       868%
Gross Margin %                15.0%      3.3%     11.7%

In 1998, gross profit  increased  $3,760,000 or 868%, as compared to 1997 due to
increased volumes and margin  improvement.  The gross profit margin was 15.0% as
compared  with 3.3% in 1997.  In 1997,  the  Company  saw its cost of goods sold
(COGS)  negatively  impacted as a result of the first year in new facilities and
costs  associated with ramping-up both the new facility and new employees as the
production  rates grew.  These  "ramping up" activities  consist  principally of
amassing the various  elements  necessary to rapidly  increase  unit  production
output, including:

o     adding  expanded  floor space for  manufacturing,  storage  and  personnel
      offices,
o     adding staff, both hourly and salaried, throughout the organization,
o     adding  inventories of raw materials and work in process to support higher
      volume production,  and
o     adding production equipment to facilitate higher unit volume output.

-----------------------------
2 Data from the Motorcycle Industry Council.


                                       16
<PAGE>

In 1998,  increased  costs were more than offset by an aggressive cost reduction
program  focused  primarily on component  purchase  costs.  The Company also saw
improvement  as the result of an improved  mix of sales  containing  motorcycles
with higher levels of  customization.  The 1998 margin has also been  positively
impacted  by an  average  price  per unit  increase  of 6.3% as the mix of bikes
changed to reflect  higher  levels of  customization  on ordered  units and more
orders for high-end models.

The Company anticipates  continuing improvement in its Gross Profit in 1999 as a
result of significant  engineering  and cost reduction  efforts,  as well as the
continued  increase in customization  of its products.  This improvement will be
slowed some in 1999 by the  introduction  of the new  "Phoenix by Titan" line of
motorcycles  and the start-up  costs  associated  with its  introduction.  Gross
margins   should  benefit  from  volume   purchases  of   components,   vertical
integration, manufacturing more parts in-house, and by redesigning components of
its motorcycles.

OPERATING EXPENSES
                                      1998        1997      INCREASE   % CHANGE
                                      ----        ----      --------    --------
Operating Expenses (In 000's)      $  3,486    $  2,060    $  1,426     69%
Operating Expense as % of Sales       12.5%       15.8%       (3.3%)

Total operating expense for 1998 increased  $1,426,000,  or 69%, over 1997. This
increase  was due to a number  of  causes,  including,  but not  limited  to the
following  principal  factors  listed in descending  order of  importance:

o     an  increase  in  salaries  and  wages  attributed  to  building  both the
      management  and support staff  necessary to support a rapidly  growing and
      significantly larger Company (43% of the increase);
o     supplies, both production and office (23% of the increase);
o     a  substantial  increase  in  advertising,   trade  show  and  promotional
      activities to build the  Company's  brand name and  recognition  and drive
      higher sales levels (10% of the increase);
o     postage and shipping (9% of the increase);
o     an increase in lease expense  associated with moving into the new facility
      (4% of the increase);
o     insurance,   including  general  business,   workers'  compensation,   and
      liability insurance (2% of the increase); and
o     an increase in legal and accounting expense (2% of the increase).


                                       17
<PAGE>

Each of these factors are the result of direct management action and are part of
a  continuing  trend to expand  production,  marketing,  facilities  and product
improvements.  While the increases were substantial, both as a percentage of the
prior year and in actual  dollars,  it was in keeping with the Company's plan to
invest heavily in infrastructure in 1998, to set the stage for profitable growth
in 1999 and the coming years.  Operating  expense,  expressed as a percentage of
total sales was  significantly  improved at 12.5% in 1998,  compared to 15.8% in
1997.

CONSOLIDATED INCOME TAXES

The  Company's  effective tax rate was 0.0% in both 1998 and 1997 as a result of
losses in 1997 and use of tax loss  carryforwards in 1998. The Company currently
has a tax loss carry forward of approximately $1.5 million.

WORKING CAPITAL MANAGEMENT
--------------------------

The Company supplies  motorcycles to its dealers in one of two ways.  First, the
dealer can specify the motorcycle  completely with customized paint and selected
options with a lead time of 6-8 weeks,  sometimes  slightly  longer  during peak
season. Alternatively, the dealer can select a completed bike from the Company's
available  Finished Goods inventory list for immediate  shipment or one from the
current  production  schedule that will be available inside the normal lead time
window.  The Company  builds some  inventory (up to one month's  production)  of
finished  motorcycles  during  the winter  months  that is  consumed  during the
spring/summer  peak  season.  During the rest of the year the  Company  normally
maintains a low level of finished goods inventory.

Motorcycles are typically  either floored with major  financial  institutions by
the dealer or are paid for in full prior to shipment by the Company. The Company
receives  payment for floored  bikes within 2 weeks of shipment.  During  winter
months the Company may provide free flooring for qualifying dealers depending on
model and stock  situation to help smooth  shipments  and keep higher  levels of
product available for customers.

Parts used to build the bikes are usually  available with short lead times,  but
some parts do require up to ten weeks lead time.  Due to high quality  standards
and reliability of delivery, the Company sets slightly higher stocking levels to
assure the  availability  of parts to  production.  The  Company  has an ongoing
program to  continue  to upgrade  its  supplier  base and to  selectively  bring
additional parts in house for production,  reducing required inventory levels as
well as part costs.


                                       18
<PAGE>

The  Company  has  built a strong  network  of  dealers  both  domestically  and
internationally.  Collectively,  there are approximately 88 dealers currently in
place with more being  added  every  month.  There are 5 types of dealers in the
Company's network; independent dealers, Easyrider stores and franchises, Bikers'
Dream franchises,  existing Harley DavidsonTM dealers, and Titan dealerships. In
1998, 3 dealers with common ownership (Titan of Los Angeles, Titan of Las Vegas,
and Paragon  Custom dba Titan of  Phoenix)  represented  22.4% of the  Company's
sales. In 1997, no dealer represented more than 10% of the Company's revenue and
only 2 were  over  5%.  Majority  ownership  of  these  dealerships  are held by
principals in the Company. No other dealer represents more than 5% of sales.

As of March 15,  1999,  backlog  orders  stood at  approximately  $1.4  million,
compared with  approximately  $1.2 million at the same time in 1998. The Company
is presently  completing  an average of more than 25  motorcycles  each week. At
this  production  volume  the  entire  backlog  can be  shipped  within 1 month,
assuming the availability of customized options.

DESCRIPTION OF MARKETS
-----------------------

The  typical  buyer  of  the  Company's   products  is  a  male  businessman  or
professional  between  35 and 55  years  of  age,  who  has  previously  owned a
production line motorcycle. The average age of a motorcycle owner is increasing,
with the customer's median annual earnings exceeding $70,000.  It is anticipated
that the population of foreign motorcycle enthusiasts may actually increase at a
greater rate near the end of the century than the domestic market.

It is generally  accepted that demand for the customized  V-twin motorcycle will
significantly  outstrip  production for the next several years. At present,  the
Company occupies a unique niche and is without any significant competitor in its
capacity to produce, from the ground up, a customized high-end V-twin motorcycle
on a production basis, while preserving the capacity to complete special orders.
The Company does not anticipate  significant  competition in this sector for the
next twelve to twenty-four  months.  Several  companies compete in the market in
and below the $20,000 price range,  headed by Harley  DavidsonTM  who is clearly
the dominant manufacturer.  There is currently no indication that they intend to
move into Titan's  market niche,  but the  possibility of that happening at some
time in the  future  cannot be  discounted.  There are other  builders  that are
currently  smaller  than the Company in the below  $20,000  price range that are
starting to produce some motorcycles at higher prices. The Company believes that
none of these builders has any significant position in the Titan's niche at this
time.


                                       19
<PAGE>

Over the next three years, the Company projects it can increase its market share
of V-twin  motorcycles,  including  both  production  line  products  and custom
models, from its projected 0.5% market share in 1997 to 2% by the year 2000. The
Company  estimates that it has a major market share for V-twin  motorcycles over
$25,000 and anticipates that this market sector will also continue to increase.

During  the first  quarter  of 1999,  the  Company  introduced  its new  website
(www.titanmotorcycle.com).  New features  will be  introduced  to the website in
several stages  throughout 1999. The site will provide  information to potential
motorcycle  customers and investors,  allow  customers to purchase  clothing and
accessories  directly  from the Company,  and provide  information  on available
motorcycle stock to the Company's dealers as well as other features.

ENVIRONMENTAL CONTROLS
----------------------

The Company's  products meet all federal and state  emission  requirements,  and
have been approved by the federal EPA and California CARB.

The Company's  manufacturing  facilities also meet all federal,  state and local
environmental  requirements.  The primary  area of  potential  discharge  is the
Company's paint facility, which meets all required standards.  Expansion of this
area would require  additional capital  requirements,  but it is not anticipated
that this would have any  significant  material  effect on  earnings  or capital
expenditures at this time.

OTHER MATTERS

IMPACT OF YEAR 2000
-------------------

The "Year 2000 Problem" exists because many existing  computer programs use only
two  digits  to refer  to a year.  Therefore,  these  programs  do not  properly
recognize a year that begins with "20" instead of "19". If not  corrected,  many
computer applications could fail or create erroneous results.

The Company has completed an analysis of its internal  systems and the potential
for issues  associated with the Year 2000 problem.  The Company began in 1997 to
bring on-line new systems to support both  operations  and  financial  reporting
requirements as part as of building the  infrastructure to support the Company's
growth.  As part of the  conversion,  the Company  received  assurances from its
software  suppliers  that all systems are Year 2000  compliant.  The Company has
installed  software  modules  that  address  inventory  management,   purchasing
components,  shop floor  control and  production  scheduling,  receiving,  order


                                       20
<PAGE>

entry, shipping and invoicing, and accounting. The Company is confidant that its
own  internal  systems are Year 2000  compliant or planned  upgrades  will be in
place.

Relative to areas other than information  systems,  the Company has investigated
this area for potential problems.  As the Company does not have a high degree of
sophisticated  equipment in its production process, the risk in this area is low
and the Company has not identified any areas of non-compliance in its analysis.

With regard to third party Year 2000 issues,  the Company has had, and continues
to have,  discussions  with its  supplier  base (and is  currently  completing a
survey of all  suppliers),  to ascertain the potential for a negative  impact on
the Company's  operations and what steps are being taken to ensure continuity of
supply of parts and  service.  While the Company  believes its plans and actions
are adequate to deal with the Year 2000 issues  internally,  and that it will be
compliant,  there is no guarantee  that all suppliers and other parties that are
essential to the Company's  operations  will similarly do so. The failure of any
supplier to adequately  address this issue in a timely manner will result in the
Company looking to other suppliers to fill the need. While the Company is single
sourced for many of its  components,  there are  alternative  suppliers  for all
required parts. The potential  exists for a material  negative effect on Company
operations if a key supplier does not  adequately  address the issue in a timely
manner. The Company will be working with all key suppliers  throughout this time
period to ensure  continuity  of supply.  The Company has  completed  reviews of
approximately  half of its suppliers to date with most reporting full compliance
already in place or to be completed by the end of the third  quarter  1999.  The
Company  will  continue  to solicit  information  from  suppliers  that have not
responded  and  follow up on those  that  have not  completed  their  compliance
activities.

The Company has also  evaluated the risks  associated  with this problem and its
customers  through  discussions  with key dealers.  As the ordering process from
dealers is a manual  one,  and stocks of  motorcycles  on  dealer's  floors is a
relatively low number  (typically  between 5 and 25 units),  the Company and the
dealers  involved in these  discussions  believe that the Year 2000 problem will
have no material impact to either the dealers or the Company.

The  Company's  cost to become  Year 2000  compliant  has been  minimal  and not
material to this  point,  nor  expected to be in the future.  As the Company had
already planned its systems conversions to facilitate its growth,  there were no
incremental  costs  associated  with  insuring  those  systems  were  Year  2000
compliant.  As a result,  costs of the effort are mainly focused on following up
with suppliers to determine their level of compliance.  These costs are imbedded
in  other   activities   and  are  not  expected  to  be  material   (less  than
$50,000.00/year in both 1998 and 1999).


                                       21
<PAGE>

The most  reasonable  likely  worst case Year 2000  scenario  would be for a key
supplier to not become compliant.  If no steps were taken to address this issue,
it could result in the  Company's  operations  being shut down until the problem
was resolved. As discussed above, the Company is in the process of analyzing the
readiness  of  all  its  suppliers  to  assure  continuity  of  supply,  so  the
probability of such a scenario is not yet known.

As the specifics of potential problems are not yet known, a detailed contingency
plan has not yet been developed.  Once more information is known from the survey
of vendors, a specific  contingency plan for likely scenarios will be developed.
The  Company  would  anticipate  this being  completed  by the end of the second
quarter of 1999.

After  identifying the likelihood of such an event,  the Company would take some
or all of the following steps:

o     Work  with the  vendor to put in place a manual  back-up  system to assure
      continued supply until the vendor becomes compliant,

o     Bring  on-line  alternate  vendors  with the  capacity to meet 100% of the
      Company's supply requirements, or

o     Put in place  additional  raw  material  inventory  at either the vendor's
      location or in the  Company's  warehouse,  or both,  until  continuity  of
      supply is assured.

LIQUIDITY AND CAPITAL RESOURCES

The Company used $7.07 million of cash in operating  activities in 1998 compared
with $5.56 million in 1997.  In 1998 net income  adjusted for  depreciation  and
amortization provided $405,000. In 1997 net losses adjusted for depreciation and
amortization consumed $1.58 million.  Inventories increased $5.4 million in 1998
over  the $5  million  increase  in  1997,  as the  Company  continued  to  ramp
production as well as stockpile some finished goods in  anticipation of a strong
spring season.  Accounts receivable  increased by only $3.7 million on increased
sales of $14.8 million as the Company operated under a  manufacturer's  flooring
agreement with Transamerica  Financial Corp., whereby most dealers finance their
motorcycle inventory directly with Transamerica  Financial Corp. and the Company
receives  funds  in  a  more  timely  manner.  The  contractual  agreement  with
Transamerica  Financial  Corp. is at no cost to the Company,  but provides for a
repurchase  obligation on the part of the Company should a Titan dealership fail
to meet  its  financial  obligation  and  Transamerica  Financial  Corp.  seizes
motorcycles  in new condition  upon a dealer's  default.  When Titan  invoices a
dealer using the Transamerica  Financial Corp. program, a copy of the invoice is
sent to Transamerica  Financial Corp. by Titan, and Transamerica Financial Corp.
pays the Company in full within 7 to 10 calendar days.  Approximately  60-65% of
all sales are  currently  paid for through this  arrangement  with  Transamerica
Financial Corp. The majority of the remainder are cash sales.


                                       22
<PAGE>

Capital  expenditures  totaled  $627,000 in 1998 compared with $621,000 in 1997.
These expenditures were  predominantly  associated with bringing on line the new
manufacturing facility.

Cash was provided through the issuance and sale of stock for $500,000 in 1998 as
compared with $4 million in 1997.  Additionally,  the Company had net borrowings
of $7.1 million in 1998 as compared  with $1.4 million in 1997. A more  detailed
description of cash flows can be found in the attached financial statements.

INFLATION
---------

Inflation  rates appear to be  relatively  stable after  several years of low to
moderate increases.  Inflation will result in the escalation of costs as well as
increasing  operating  expenses for the  Company.  The Company  anticipates  the
ability to offset most if not all of these increases  through its cost reduction
program and/or price increases,  provided that inflation rates do not accelerate
dramatically.

FOREIGN RISK FACTORS
--------------------

The primary risk to foreign  sales is the state of the economy in the  Company's
overseas  markets.  This  evidences  itself  both  in  the  willingness  of  the
marketplace to purchase the product and in the exchange  rates for  transactions
which  ultimately  impacts  the final price of the product of the Company in the
dealer's  country.  Other risks  include  the  relative  strength of  individual
dealerships in their  respective  countries,  marketing  expertise of the dealer
network,  transportation  delays associated with shipping products from Phoenix,
and individual  country  regulatory  requirements.  The Company  believes it has
taken the necessary steps and signed up strong dealers in the countries where it
is currently  represented to mitigate the above risks,  except for those related
to country economics.


                                       23
<PAGE>

                          ----------------------------
                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


To the Board of Directors
Titan Motorcycle Co. of America
Phoenix, Arizona


We have audited the accompanying statements of operations,  stockholders' equity
and cash flows of Titan  Motorcycle  Co. of America for the year ended  December
31, 1997.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion,  the  statements of  operations,  stockholders'  equity and cash
flows referred to above present fairly, in all material respects, the results of
the  operations  and the cash flows of Titan  Motorcycle  Co. of America for the
year ended December 31, 1997, in conformity with generally  accepted  accounting
principles.


/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
March 12, 1998


                                       24
<PAGE>

Report of Independent Accountants 
--------------------------------- 

To the Board of Directors and Stockholders of
Titan Motorcycle Co. of America

In our  opinion,  the  accompanying  consolidated  balance  sheet,  statement of
operations,  stockholders' equity and cash flows present fairly, in all material
respects the financial position of Titan Motorcycle Co. of America at January 2,
1999 and the results of its operations and cash flows for the year then ended in
conformity  with  generally  accepted  accounting  principles.  These  financial
statements   are  the   responsibility   of  the   Company's   management;   our
responsibility  is to express an opinion on these financial  statements based on
our audit. We conducted our audit in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to obtain reasonable
assurance that the financial  statements are free of material  misstatement.  An
audit includes examining,  on a test basis,  evidence supporting the amounts and
disclosures in the financial  statements;  assessing the  accounting  principles
used and  significant  estimates made by management;  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for the opinion expressed above.

As  discussed in Note 2 to the  financial  statements,  the Company  changed its
method of computing depreciation in 1998.


/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP

Phoenix, Arizona
April 2 ,1999


                                       25
<PAGE>

<TABLE>

Titan Motorcycle Co. of America
Consolidated Balance Sheet
As of January 2, 1999
--------------------------------------------------------------------------------------------
<CAPTION>
                                                                          January 2, 1999 

<S>                                                                        <C>            
 Assets
Current Assets:
   Cash                                                                    $      8,398   
   Accounts receivable, net of allowance for sales returns of $50,000         3,184,738   
   Accounts receivable - related party                                        1,465,624
   Inventories                                                               11,838,002   
   Prepaid expenses                                                             718,459   
                                                                           ------------   
      Total current assets                                                   17,215,221   

Property and equipment, net                                                   1,082,779   
Other assets                                                                     60,912   
Trademarks                                                                       61,311   
                                                                           ------------   
      Total assets                                                         $ 18,420,223   
                                                                           ============   
Liabilities and Stockholders' Equity

Current Liabilities:
   Bank overdraft                                                          $     77,737
   Accounts payable                                                           3,081,992   
   Accrued expenses                                                             950,562   
   Current portion of note payable - related party                              599,993
                                                                           ------------   
      Total current liabilities                                               4,710,284   

Notes payable                                                                 8,249,311
                                                                           ------------
      Total liabilities                                                      13,559,588   

Commitments and contingencies

Stockholders' Equity
   Common stock, par value $.001; 100,000,000 shares
      authorized and 16,437,333 shares issued and outstanding                    16,438   
   Additional paid-in capital                                                 7,272,417   
   Unearned compensation                                                        (38,741)  
   Accumulated deficit                                                       (1,789,486)  
                                                                           ------------   
      Total stockholders' equity                                              5,460,628   
                                                                           ------------   
      Total liabilities and stockholders' equity                           $ 18,420,223   
                                                                           ------------   
</TABLE>


   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

                                       26
<PAGE>

<TABLE>
Titan Motorcycle Co. of America
Consolidated Statements of Operations
For the years ended January 2, 1999 and December 31, 1997
-------------------------------------------------------------------------------------------------
<CAPTION>

                                                                   January 2,       December 31,
                                                                      1999             1997
<S>                                                              <C>               <C>         
Sales, net                                                       $ 27,913,025      $ 13,064,145

Cost of goods sold                                                 23,719,621        12,630,723
                                                                 ------------      ------------

      Gross profit                                                  4,193,404           433,422
                                                                 ------------      ------------

Operating expenses:
   Selling, general and administrative                              3,184,696         1,842,521
   Research and development                                           301,184           218,206
                                                                 ------------      ------------
      Total operating expenses                                      3,485,880         2,060,727

      Income (loss) from operations                                   707,524        (1,627,305)

Other income (expense):
   Other income (expense)                                             (31,883)           79,725
   Interest expense                                                  (476,765)         (126,163)
                                                                 ------------      ------------
      Total other income (expense)                                   (508,648)          (46,438)
                                                                 ------------      ------------

Income (loss) before income taxes and cumulative
   effect of change in accounting principle                           198,876        (1,673,743)
      Income taxes                                                       --                --
                                                                 ------------      ------------
Income (loss) before cumulative
   effect of change in accounting principle                           198,876        (1,673,743)
                                                                 ------------      ------------

Cumulative effect of change in accounting principle (Note 1)           38,603              --
                                                                 ------------      ------------
      Net income                                                 $    237,479      $ (1,673,743)
                                                                 ------------      ------------

Income (loss) per common share - basic and diluted:
   Income (loss) before cumulative effect
      of change in accounting principle                          $        .01      $       (.11)
   Cumulative effect of change in accounting principle                   --                --
                                                                 ------------      ------------
   Net income (loss) per common share                            $        .01      $       (.11)
                                                                 ------------      ------------

Weighted average number of common shares and equivalents
   Basic                                                           16,416,823        15,508,839
   Diluted                                                         16,723,294        15,508,839
</TABLE>


   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS


                                       27
<PAGE>

<TABLE>
Titan Motorcycle Co. Of America
Consolidated Statements of Stockholers' Equity
For the years ended January 2, 1999 and December 31, 1997
---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                          Additional
                                                     Common Stock           Paid-in     Unearned       Accumulated
                                                Shares        Amount        Capital    Compensation      Deficit         Total
                                              ----------    ----------    ----------    ----------     -----------    ----------
<S>                                           <C>          <C>           <C>            <C>           <C>            <C>        
Balance, December 31, 1996                    14,710,666   $    14,711   $ 2,482,289          --      $  (353,222)   $ 2,143,778

Issuance of common stock for cash
   at $2.50 per share                          1,000,000         1,000     2,498,980          --             --        2,499,980

Issuance of common stock for cash
   at $3.00 per share                            500,000           500     1,499,500          --             --        1,500,000

Net loss                                            --            --            --            --       (1,673,743)    (1,673,743)
                                              ----------    ----------    ----------    ----------     -----------    ----------
Balance, December 31, 1997                    16,210,666        16,211     6,480,769          --       (2,026,965)     4,470,015

Issuance of common stock for cash
   at $3.00 per share                            166,667           167       499,833          --             --          500,000

Issuance of common stock for
   advertising services at $4.17 per share        60,000            60       249,940          --             --          250,000

Issuance of stock options                           --            --          41,875       (41,875)          --             --

Amortization of unearned compensation               --            --            --           3,134           --            3,134

Net income                                          --            --            --            --          237,479        237,479
                                              ----------    ----------    ----------    ----------     -----------    ----------
Balance, January 2, 1999                      16,437,333   $    16,438   $ 7,272,417   $   (38,741)   $(1,789,486)   $ 5,460,628
                                              ----------    ----------    ----------    ----------     -----------    ----------
</TABLE>


   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS


                                       28
<PAGE>

<TABLE>
Titan Motorcycle Co. of America
Consolidated Statements of Cash Flows
For the Years ended January 2, 1999 and December 31, 1997
---------------------------------------------------------------------------------------------
<CAPTION>

                                                                  January 2,     December 31,
                                                                    1999             1997
<S>                                                             <C>              <C>         
Cash flows from operating activities:
   Net (loss)                                                   $   237,479      $(1,673,743)
   Adjustments to reconcile net (loss)
      to net cash used in operating activities:
        Depreciation and amortization                               167,621           89,994
        Cumulative effect of change in accounting principle         (38,603)
        Stock compensation expense                                    3,134
   Net changes in balance sheet accounts:
        Accounts receivable                                      (3,675,901)        (234,087)
        Inventories                                              (5,314,639)      (5,013,787)
        Other assets                                                 18,908         (423,374)
        Accounts payable                                          1,029,260        1,587,530
        Accrued expenses                                            504,231          110,858
                                                                -----------      -----------
          Net cash used in operating activities                  (7,068,510)      (5,556,609)
                                                                -----------      -----------

Cash flows from investing activities:
   Purchases of property and equipment                             (626,769)        (620,844)
   Purchase of trademarks                                            (8,852)
                                                                -----------      -----------
          Net cash used in investing activities                    (635,621)        (620,844)
                                                                -----------      -----------

Cash flows from financing activities:
   Bank overdraft                                                    77,737
   Issuance of stock                                                500,000        4,000,000
   Borrowings from related parties                                     --          1,426,142
   Line of credit                                                 7,049,324
                                                                -----------      -----------
          Net cash provided by financing activities               7,627,061        5,426,142
                                                                -----------      -----------

Net decrease in cash                                                (77,070)        (751,311)

Cash and cash equivalents at beginning of year                       85,468          836,779
                                                                -----------      -----------
Cash and cash equivalents at end of year                        $     8,398      $    85,468
                                                                -----------      -----------

Supplemental cash flow information:
Cash paid for:
   Interest                                                     $   251,593      $      --
   Income taxes                                                 $      --        $      --

Non-cash Investing and Financing Activities:
   Stock issued in exchange for advertising                     $   250,000      $      --
   Inventory in exchange for advertising                        $   112,305      $   124,309
</TABLE>


   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS


                                       29

<PAGE>

1.       Organization Description of Business

         Titan  Motorcycle  Co.  of  America  (the  "Company"  or  "Titan")  was
         incorporated  in the State of Arizona on  December  12, 1994 and merged
         with Mojave  Financial  Services,  Inc.  ("Mohave")  on June 11,  1996.
         Mohave,  the surviving legal entity,  was  incorporated in the State of
         Nevada on January 10, 1995.  Subsequent to the merger,  Mohave  changed
         its name to Titan.  On June 11, 1996, the  shareholders  of the Company
         authorized a reverse  stock split of 1-for-10 and on February  17,1997,
         the  shareholders  of the Company  authorized a forward  stock split of
         2-for-1.   All   references   to  shares  of  common  stock  have  been
         retroactively restated for these splits.

         The Company  manufactures  custom design  motorcycles and sells them to
         authorized dealers or to the general public. The consolidated financial
         statements  of the Company  include all of the accounts and balances of
         its  wholly  owned  subsidiary,  Titan  Motorcycle  GmbH.  Intercompany
         transactions and balances are eliminated.

2.       Summary of Significant Accounting Policies

         Fiscal Year End

         Effective January 1, 1998, the Company changed its fiscal year-end from
         December 31 to a 52-53 week fiscal year ending on the Saturday  closest
         to December 31.

         Cash and Cash Equivalents

         The Company considers all highly liquid  investments with a maturity of
         three months or less to be cash  equivalents.  The Company  maintains a
         savings account at a financial institution located in Phoenix, Arizona.
         The account is insured by the Federal Deposit Insurance  Corporation up
         to $100,000. The Company's balances occasionally exceed that amount.

         Accounts Receivable

         Accounts  receivable  potentially  subjects the Company to credit risk.
         The Company extends credit to its customers based upon an evaluation of
         the  customer's  financial  condition and credit  history and generally
         does not require  collateral.  The Company  has  historically  incurred
         minimal credit losses. Sales and accounts receivable to related parties
         represent  a  significant   concentration   as  discussed  in  Note  7.
         Additionally,  as of January 2 ,1999, two customers  represented 26% of
         accounts receivable-trade.

         Inventories

         Inventories  are  stated  at the  lower  of  cost  or  market.  Cost is
         determined using the first-in, first-out method.



                                       30
<PAGE>

         Property and Equipment

         Property and equipment are stated at cost.  Effective  January 1, 1998,
         the Company changed its method of  depreciation  from an accelerated to
         the  straight-line  method.  The Company  believes  the new method more
         appropriately reflects the economic benefit received from these assets.
         The  cumulative  effect of this change on net income was  $38,603.  The
         effect  of this  change  related  to  fiscal  1998  depreciation  was a
         decrease  of  approximately  $  55,000.  If this  change  had been made
         effective  January  1, 1997,  the effect on 1997 net income  would have
         been immaterial.

         Depreciation is provided on depreciable assets over an estimated useful
         life of 5 to 7 years, while leasehold improvements are amortized by the
         straight-line  method over the shorter of estimated useful lives or the
         remaining  lease term.  When items are retired or disposed of, the cost
         and accumulated depreciation are removed from the accounts and any gain
         or loss is included in the statement of operations.

         The Company  periodically  assesses the  recoverability of its property
         and  equipment in  accordance  with  Statement of Financial  Accounting
         Standards No. 121 Accounting  for the  Impairment of Long-Lived  Assets
         and for Long-Lived Assets to Be Disposed Of ("SFAS 121").

         Trademarks

         Trademarks  are stated at cost and amortized on a  straight-line  basis
         over a period  of 40  years.  The  Company  periodically  assesses  the
         recoverability of its trademarks in accordance with SFAS 121.

         Revenue Recognition

         The  Company's   revenue  is  derived   primarily   from  the  sale  of
         custom-built  motorcycles.  Revenue is recognized  upon shipment to the
         customer.  Expert sales totaled $2,027,997 and $1,681,613 for the years
         ended January 2, 1999 and December 31, 1997, respectively.

         Advertising Expense

         The Company expenses advertising costs as incurred. Advertising expense
         for  fiscal  year  1998 and 1997  totaled  approximately  $344,656  and
         $114,955, respectively.

         Non-monetary Transactions

         The Company records  non-monetary  transactions based on the fair value
         of the goods and/or services exchanged.

         Income Taxes

         The Company  accounts  for income taxes under the  liability  method in
         accordance with Statement of Financial  Accounting  Standards  ("SFAS")
         No. 109, "Accounting for Income Taxes."


                                       31
<PAGE>

         Newly Issued Accounting Standards

         Financial Accounting Standards No. 130, Reporting  Comprehensive Income
         (SFAS  130)   established   standards  for  reporting  and  display  of
         comprehensive  income and its components.  SFAS 130 requires a separate
         financial  statement to report the components of  comprehensive  income
         for each period  reported.  The  Company  does not  currently  have any
         components of other comprehensive  income and therefore has not shown a
         separate statement.

         Use of Estimates

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

         Reclassification

         Certain prior year financial  statement  amounts have been reclassified
         to conform to current year presentation.

3.       Inventories

         Inventories at January 2, 1999, consist of the following:

             Raw materials and supplies                          $  7,780,800
             Work-in-process                                        2,462,837
             Finished Good                                          1,594,365
                                                                 -------------
             Total inventories                                   $ 11,838,002
                                                                 =============

                                       32
<PAGE>

<TABLE>
4.       Property and Equipment

         Property and equipment at January 2, 1999, consist of the following:
<CAPTION>

<S>           <C>                                                                               <C>           
              Vehicles                                                                          $      234,165
              Machinery and equipment                                                                  760,847
              Displays                                                                                  42,834
              Leasehold improvements                                                                   263,237
                                                                                                --------------
                Gross property and equipment                                                         1,301,083
              Less accumulated depreciaiton and amortization                                           244,854
                                                                                                --------------
                Net property and equipment (excluding construction in process)                       1,056,229
              Construction in process                                                                   26,550
                                                                                                --------------
                Net property and equipment                                                      $    1,082,779
                                                                                                --------------
</TABLE>

5.       Notes Payable

         At January  2, 1999,  the  Company  has an asset  based line of credit,
         bearing  interest at Prime plus .5% (8.25% at January 2, 1999) which is
         due monthly. The line of credit has a $10 million maximum capacity with
         an outstanding  balance of $7,049,324 at January 2, 1999. The principal
         is due April 1, 2000 if the line is not renewed.  Borrowings  under the
         Asset  based  line of credit  are  collateralized  by a first  priority
         security  interest in substantially all of the Company's assets and are
         senior  to all  other  borrowings.  The  unused  line of  credit  bears
         interest  at a rate  of .25%  per  year  due  monthly.  This  financing
         agreement  contains certain  financial  covenants and precludes capital
         expenditures  in excess of  $500,000  per year.  During  the year,  the
         Company's capital  expenditures  exceeded this amount.  The Company has
         received a waiver for this violation.

         Accrued interest on the line of credit at January 2, 1999, approximated
         $49,000.

         At January 2, 1999, the Company was obligated to an investment bank and
         stockholder,  which has handled stock issues under Regulation 5 for the
         Company,  under an unsecured note payable for  $1,799,980.  The current
         portion  of the  obligation  at  January  2,  1999  was  $599,993.  The
         obligation  bears  interest at 8%.  Payments of principal  and interest
         begin on January 1, 2000 with the  balance  being paid off evenly  over
         three  years,  or as  jointly  agreed by the  parties.  The note may be
         converted to common stock,  upon mutual  agreement by both parties,  at
         any time  after  January  1, 2000.  The  conversion  price will be at a
         ten-percent  discount  to the market  price on the common  stock on the
         date of the  conversion.  Accrued  interest  on the note at  January 2,
         1999, approximated $278,000.



6.       Income Taxes

         The income tax rate on  earnings  (loss)  before  cumulative  effect of
         change in accounting principle differed from the Federal statutory rate
         as follows:


                                       33
<PAGE>

<TABLE>
<CAPTION>
                                                                  1998             1997
                                                           ------------------------------------
<S>                                                              <C>               <C>  
     Federal income tax rate                                     34.0%             34.0%
     State income tax rate, net of federal benefit                6.0%              6.0%
     Non-deductable expenses                                      7.6%
     Effect of valuation allowance                              (47.6%)           (40.0%)
                                                           ====================================
     Effective income tax rate                                      0%                0%

                                                           ====================================
</TABLE>

         The income tax effects of loss carryforwards,  tax credit carryforwards
         and temporary differences between financial and tax reporting give rise
         to the deferred income assets and liabilities.  Management  believes it
         more likely than not that the Company  will not realize its tax assets,
         and as such, a full valuation  allowance is recorded.  Deferred  income
         tax asset (liabilities) at January 2, 1999, consist of the following:

     Current:
         Allowance for bad debts and sales returns              $ 30,160
               Inventories                                        25,941
                                                             ---------------
                                                                  56,101

           Long-term
               Property and equipment                            (39,748)
               Net operating loss carryforwards                  617,372
               Other                                              96,799
                                                             ---------------
                                                                 731,524
           Valuation Allowance                                  (731,524)
                                                             ===============
                                                                     -
           Net deferred tax asset                            ===============

         As of January 2, 1999,  the Company has federal and state net operating
         loss  carryforwards  of  approximately  $1,545,930.   The  federal  net
         operating  loss  carryforwards  expire  in 2011,  while  the  state net
         operating loss carryforwards expire in 2002.

7.       Related Party Transactions and Balances

         The  Company has  transactions  in the normal  course of business  with
         affiliated   dealerships   that  are   partially   owned  by   majority
         shareholders  of  the  Company.  In  1998  and  1997,  sales  to  these
         affiliated dealerships were $6,260,963 and $638,290,  respectively.  At
         January 2, 1999, accounts receivable from these affiliated  dealerships
         were $1,465,624.

8.       Commitments and Contingencies

         The Company leases its office, manufacturing and warehouse space. Total
         rent expense for 1998 and 1997 was $387,201 and $230,824, respectively.
         Future  minimum  lease  payments  required  under the  operating  lease
         agreements are as follows:


                                       34
<PAGE>

        1999                                               $       585,499
        2000                                                       560,192
        2001                                                       581,646
        2002                                                       422,938
        2003 and thereafter                                        398,010


         The  Company  provides  a  limited  warranty  on its  motorcycles.  The
         warranty  period is thirty-six  months.  The Company bears the costs of
         warranty work for the first six months.  The remaining  warranty period
         is covered by a warranty  insurance  policy that is  purchased,  by the
         Company,  from an insurance  carrier.  The Company has experienced only
         minimal costs associated with warranty work.

         The majority of the Company's  customers  finance their  purchases from
         the  Company  using a third  party  wholesale  financing  company.  The
         Company  and the  financing  company  have  entered  into an  agreement
         whereby,  if one of the Company's  customers defaults on its obligation
         to  the  finance  company  and  the  finance  company  repossesses  the
         motorcycle,  and the  motorcycle is in "like-new"  condition,  then the
         Company is obligated to repurchase the motorcycle. To date, the Company
         has experienced only de minimus  repurchases  under this agreement.  In
         certain  situations,  the  finance  company  will only grant  credit to
         customers  if the  Company  guarantees  the  collection  of the finance
         company's  receivable.  At  January 2,  1999,  amounts  subject to this
         guarantee total approximately 570,000.

9.       Employee Benefit Plan

         On January 1, 1999,  the Company  established a 401(k)  Profit  Sharing
         Plan for all employees of the Company that have completed six months of
         service and are 21 years of age. The Company  provides a  discretionary
         match of the employee contributions. There was no match in fiscal 1998.


10.      Stock Options and Awards

         The Company has adopted the  disclosure  only provision of Statement of
         Financial  Accounting  Standards  No. 123,  Accounting  for Stock Based
         Compensation  (SFAS 123) and follows  Accounting  Principle Opinion No.
         25,  "Accounting  for Stock Issued to Employees" (APB 25) in accounting
         for options issued to employees.  During 1998,  the Company  recognized
         $3,184 in compensation costs related to stock option grants.

         The Titan  Motorcycle  Co. of America Stock Option and  Incentive  Plan
         (the  "Plan"),  provides  for the  grant of  incentive  stock  options,
         non-qualified  stock options,  stock  appreciation  rights,  restricted
         stock, dividend equivalents and performance shares.


                                       35
<PAGE>

         A  summary  of  the  Company's   stock  option   activity  and  related
information is as follows:

<TABLE>
<CAPTION>
                                                             1998                                 1997
                                                             ----                                 ----
                                                                     Weighted                            Weighted
                                                    Shares            Average             Shares          Average
                                                 Under Option        Exercise          Under Option      Exercise
                                                                       Price                                Price
                                             ------------------------------------------------------------------------
<S>                                                       <C>               <C>                 <C>            <C>  
     Beginning balance outstanding                        422,000           $2.50               362,000        $2.50
     Granted                                              618,000           $2.91                60,000        $3.00
     Exercised                                                  -                                     -
     Cancelled                                            115,000           $3.17                     -
                                             ---------------------
                                                                                    --------------------
     Ending balance outstanding                           925,000           $2.69               422,000        $2.57
                                             ---------------------                  --------------------

     Exercisable at end of year                           280,667           $2.54               250,000        $2.50
                                             =====================
                                                                                    ====================
     Shares available for future grants
                                                        5,075,000                             5,578,000
                                             =====================                  ====================
</TABLE>


         The  following  table  summarizes  additional   information  about  the
Company's stock options outstanding as of January 2, 1999:

<TABLE>
<CAPTION>
                                      Options Outstanding                Options Exercisable
                                      -------------------                -------------------
                                                           Weighted
                                              Weighted      Average                      Weighted
                                 Shares       Average      Remaining       Shares         Average
                                 Under        Exercise    Contractual       Under        Exercise
                                 Option        Price         Life          Option         Price
                           ------------------------------------------------------------------------
<S>                              <C>            <C>        <C>              <C>              <C>  
Range of exercise price:
    $2.50 - $3.00                830,000        $2.54      8.8 years        280,667          $2.54
    $4.00                         95,000        $4.00      9.8 years            -              -
                           ------------------------------------------------------------------------
                                 925,000        $2.69      8.9 years        280,667          $2.54
</TABLE>

         Pro forma  information  regarding  net income and earnings per share is
         required by SFAS No. 123, and has been determined as if the Company had
         accounted  for its stock  option plan under the fair value based method
         of that  Statement.  The fair value for these  options was estimated at
         the date of grant using a  Black-Scholes  option pricing model with the


                                       36
<PAGE>

         following  weighted-average  assumptions,  risk free  interest  rate of
         5.84%, no common  dividend,  volatility  factor of 55%, and an expected
         average life of the option of five years.

         For purposes of pro forma disclosures,  the estimated fair value of the
         options is amortized to expense over the vesting period of the options.
         The pro forma information for 1998 and 1997 follows:

                                                        1998           1997
                                                  -----------------------------
                  Net income (loss)                $   237,479    $(1,673,743)
                  Pro forma compensation expense       320,098        237,798
                  Pro forma net income (loss)      $   (82,619)    (1,911,541)

         Had the Company elected to adopt the recognition provisions of SFAS No.
         123,  net income and net loss per share would have been reduced by $.01
         for 1998 and 1997, respectively.

11.      Fair Value of Financial Instruments

         The following  table  presents the carrying  amounts and estimated fair
         values of the Company's  financial  instruments at January 2, 1999. The
         fair  value of the  financial  instruments  is the  amount at which the
         instrument could be exchanged in a current  transaction between willing
         parties, other than in a forced or liquidated sale.

                                                  Carrying              Fair
                                                   Value                Value
                                              ----------------------------------
           Liabilities
               Line of credit                 $   7,049,324        $   7,049,324
               Unsecured note payable         $   1,799,980        $   1,553,301

         The interest rate on the line of credit is variable, and therefore, the
         carrying value approximates fair value. The fair value of the unsecured
         note payable was calculated  using a dicounted  cash flow approach.  It
         was assumed that the  conversion  feature would not be  exercised.  The
         discount rate used was 12%

12.      Earnings Per Share

         In  accordance  with  the  disclosure   requirements  of  Statement  of
         Financial   Accounting   Standards  No.  128,  Earnings  Per  Share,  a
         reconciliation  of the numerator and  denominator  of basic and diluted
         EPS is provided as follows:


                                       37
<PAGE>

<TABLE>
<CAPTION>
                                                              1998                                             1997
                                         ---------------------------------------------   -------------------------------------------
                                             Income          Shares       Per Share          Income           Shares       Per Share
                                          (Numerator)    (Denominator)      Amount         (Numerator)    (Denominator)     Amount
                                         ---------------------------------------------   -------------------------------------------
<S>                                       <C>              <C>            <C>         <C>                  <C>            <C>      
Basic EPS
Income before cumulative effect of
change in accounting principle, net
of tax                                    $   198,876      16,416,823     $   0.01    $   (1,673,743)      15,508,218     $  (0.11)
Income applicable to cumulative
effect of change in accounting
principle                                      38,603            --       $    --               --               --       $    --
Net income (loss) available to common
shareholders                              $   237,479            --       $   0.01    $   (1,673,743)      15,508,218     $  (0.11)
Effects of Dilutive Securities
Common stock options                             --           306,471     $    --               --               --       $    --
Diluted EPS
Net income (loss) available to common
shareholders                              $   237,479      16,723,294     $   0.01    $   (1,673,743)      15,508,218     $  (0.11)
</TABLE>

The dilutive effect of stock options is not included in the 1997  calculation of
diluted earnings per share as its inclusion would be anti-dilutive.

13.      Subsequent Events

         On February 8, 1999,  the Company  agreed to sell 700,000 shares of its
         common  stock to a non-US  investor  for net proceeds to the Company of
         $1,575,000.  These shares have not been registered under the Securities
         Act  of  1933  as  afforded  by  Regulation  S as  promulgated  by  the
         Securities  and  Exchange  Commission.  The Company  intends to use the
         proceeds from the Offering to fund operations.

         In February 23, 1999,  the Company issued 10,000 shares of common stock
         as a matching contribution for its 401(k) plan. Compensation expense of
         $ 41,400 was recognized on the transaction.

ITEM 8.  Changes and Disagreements  With Accountants on Accounting and Financial
         Disclosures.

Effective  December 28, 1998 the registrant  dismissed  Jones,  Jensen & Company
(herein referred to as the "former accountants") as the independent  accountants
who are engaged to audit the registrant's financial statements. This decision to
change  accountants  was  not  based  upon  any  disagreement  with  the  former
accountants.

The former accountants' report on the financial statements of the registrant for
either  of the  past  two  years  has not  contained  an  adverse  opinion  or a
disclaimer  of opinion,  and was not  qualified  or modified as to  uncertainty,
audit scope, or accounting principles.


                                       38
<PAGE>

During the registrant's two most recent fiscal years, and any subsequent interim
period  preceding  the dismissal of the former  accountants,  there have been no
disagreements with the former accountants on any matter of accounting principles
or practices,  or financial statement  disclosure,  which disagreements,  if not
resolved to the satisfaction of the former  accountants,  would have caused them
to make references to the subject matter of the disagreements in connection with
their report.

Further,  during  the  registrant's  two  most  recent  fiscal  years,  and  any
subsequent interim period preceding the dismissal of the former accountants, the
former  accountants  have not  advised  the  registrant  (a)  that the  internal
controls necessary for the registrant to develop reliable  financial  statements
do not exist; (b) that  information has come to the accountants'  attention that
has led them to no longer be able to rely on  management's  representations,  or
that has made them  unwilling to be  associated  with the  financial  statements
prepared by  management;  (c) or the need to expand  significantly  the scope of
their audit; (d) that information has come to the former accountants'  attention
that, if further investigated, may materially impact the fairness or reliability
of  either  a  previously  issued  audit  report  or  the  underlying  financial
statements  issued or to be issued covering the fiscal period  subsequent to the
date  of the  most  recent  financial  statements  covered  by an  audit  report
(including information that may prevent them from rendering an unqualified audit
report on those financial statements),  or cause them to be unwilling to rely on
management's  representations  or be associated with the registrant's  financial
statements;  or  (e)  that  information  has  come  to the  former  accountants'
attention  that  they  have  concluded   materially   impacts  the  fairness  or
reliability  of either,  (i) a previously  issued audit report or the underlying
financial  statements,  or (ii) the financial  statements issued or to be issued
covering the fiscal periods  subsequent to the date of the most recent financial
statements  covered  by an audit  report  (including  information  that,  unless
resolved  to the  former  accountants'  satisfaction,  would  prevent  them from
rendering an unqualified audit report on those financial statements).

The  registrant  engaged  as  its  new  independent  accountants,  the  firm  of
PricewaterhouseCoopers   LLP.  The   effective   date  of  the   engagement   of
PricewaterhouseCoopers LLP was December 22, 1998.

ITEM 9.  Directors,   Executive   Officers,   Promoters  and  Control   Persons;
         Compliance with Section 16(a) of the Exchange Act.

Each  Director  and the CFO of the Company  have  notified the Company that they
were not  required  to file a Form 5 report for fiscal  year 1998  because  they
experienced no change in fiscal year 1998 in their stock ownership interest from


                                       39
<PAGE>

the time  that they  were  obligated  to file  their  Form 3  reports  after the
effective date of the Company's Form 10-SB registration statement.  Each of such
individuals  had a single  failure to timely file their  initial  Form 3 report,
which is defined as a known failure to file.  All other reports  required  under
Section 16(a) have been timely filed.

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

<TABLE>
<CAPTION>
================================== ======== ==================================== ===================================
              Name                   Age              Positions Held                     Period of Service
---------------------------------- -------- ------------------------------------ -----------------------------------
<S>                                <C>      <C>                                  <C> 
Francis S. Keery                   56       Chairman of the Board and CEO        Since December 1994
---------------------------------- -------- ------------------------------------ -----------------------------------
Patrick Keery                      29       President and Director               Since December 1994
---------------------------------- -------- ------------------------------------ -----------------------------------
Barbara S. Keery                   56       Vice President, Secretary and        Since December 1994
                                            Director
---------------------------------- -------- ------------------------------------ -----------------------------------
Harry H. Birkenruth                67       Director                             Since August 1998
---------------------------------- -------- ------------------------------------ -----------------------------------
H.B. Tony Turner                   62       Director                             Since August 1998
---------------------------------- -------- ------------------------------------ -----------------------------------
Robert P. Lobban                   44       Chief Financial Officer              Since November 1997
================================== ======== ==================================== ===================================
</TABLE>

The Board of Directors of the Company held eleven meetings in calendar year 1998
and one meeting to date in calendar  year 1999.  All  directors  were present at
these meetings.

Each of the members of the Board of  Directors  of the  Company  serve for a one
year term, or until their successors are elected.  Mr. Birkenruth and Mr. Turner
have  accepted  appointments  to serve  as the only  members  of the  audit  and
compensation  committees of Titan's Board of Directors.  The standing  audit and
compensation  committees were  established in the latter half of the fiscal year
1998, and held no formal  meetings in that year.  These  committees have met one
time thus far in fiscal year 1999. The  compensation  committee has been charged
with the  responsibility  of evaluating and  establishing  compensation  for the
management  of the  Company.  The  audit  committee  has been  charged  with the
responsibility of communicating with the auditors of the Company, and evaluating
the  accounting  controls,  functions  and  systems  of the  company.  The audit
committee  also evaluated the corporate  opportunities  referred to below in the
Related Transactions section of this Proxy Statement.

None of the  directors,  officers  or 5% owners of the stock of the  Company  is
involved in any significant legal proceedings adverse to the Company.


                                       40
<PAGE>

The key members of Titan's management team are introduced below.

Frank (Francis S.) Keery - Chairman and CEO
-------------------------------------------

Frank Keery, age 56, currently resides with his wife, Barbara Keery, in Phoenix,
Arizona.

Mr.  Frank  Keery  received a B.S.  degree in  Electrical  Engineering  from the
University  of  Detroit  in 1966 and an MBA  degree  from  Western  New  England
University in 1969.

Subsequent  to  completion  of his formal  education,  Mr.  Frank Keery has held
various management and administrative  positions.  For 17 years Mr. Keery worked
with Rogers Corporation, an AMEX listed corporation, involved in the manufacture
and marketing of specialty  materials,  components and systems to the automotive
and electronics markets internationally. In this capacity he served variously as
an  executive  in charge of new  division  startups,  manufacturing  management,
operation  "turnarounds",  and international  sales from  approximately  1969 to
1986. Most of these assignments carried full profit and loss responsibilities of
independent units.

From 1986 to 1994, Mr. Frank Keery was primarily  employed in multiple positions
as an outside and in-house business  consultant.  In 1989 to 1991 he was the CEO
for Swanson Manufacturing, Inc.

For the  three-year  period  ending in August  1994,  Frank Keery was CEO of the
Company  Store,  a  privately  held mail  order  company  with  annual  sales of
approximately Eighty Million Dollars ($80,000,000.00).

From August 1994 to the present,  Mr. Keery has been chairman of Paragon  Custom
Cycles,  which later became Titan Motorcycle of America. In this capacity he has
used his  management  and marketing  experience as the chairman of the board and
CEO.

Patrick Keery - President/Director
----------------------------------

Patrick Keery,  age 30, resides in Scottsdale,  Arizona.  He is the son of Frank
and Barbara Keery, who also serve as directors of the Company.

Mr. Keery has been  President of Titan since  inception,  and owned and operated
its predecessor  entity,  Paragon Custom Cycles. Mr. Patrick Keery brings unique
skills in the assembly, design and engineering of custom built motorcycles.


                                       41
<PAGE>

Mr.  Patrick  Keery is a 1992  graduate  of Arizona  State  University  where he
obtained a B.S. degree in finance.

Since 1993,  Mr. Keery  operated and was the owner and manager of Paragon Custom
Cycles doing  custom  design,  assembly  and  rebuilding  of  essentially  large
displacement  motorcycles  until he  became  the  President  of the  reorganized
Company in December of 1995.

During the  period of 1992 to 1993,  Mr.  Patrick  Keery  worked as a  financial
analyst for the George S. May International  Co., a consulting firm specializing
in providing services to small to medium capital companies.

Mr. Keery is heavily  involved in developing  the Company's  dealer  network and
overseeing the sales and marketing efforts.  He continues to play a lead role in
motorcycle styling and product development.

Barbara Keery - Vice President/Secretary/Director
-------------------------------------------------

Barbara  Keery,  age 56,  currently  resides with her husband,  Frank Keery,  in
Phoenix, Arizona.

Barbara S. Keery  received  her Masters  Degree in Business  Education  from the
University of Connecticut in 1970 and her Bachelors Degree in Business Education
from the State  University  of New York at Albany.  From 1964  through  1969 she
taught high school administration business courses in South Windsor, Connecticut
and Oak Park,  Michigan.  As a licensed  real  estate  agent,  she served on the
chairman's board of Russ Lyon Realty and was a member of the Scottsdale  Million
Dollar Club in 1987 and 1988.

From its inception in 1996, Mrs. Keery has served as the corporate secretary and
Vice-President  for the  Company.  In 1997,  a new product  line was created for
exclusive Titan clothing and accessories which is administered by Mrs. Keery.

Harry H. Birkenruth - Director
------------------------------

Harry H. Birkenruth, age 67, resides with his wife in Storrs, Connecticut.

Mr.  Birkenruth  graduated with high honors from the City College of New York in
1953. In 1957 he graduated with  distinction from the Harvard Graduate School of


                                       42
<PAGE>

Business  Administration.  In 1960 Mr. Birkenruth joined Rogers  Corporation and
became  its  Chief  Financial  Officer  in 1967 and  served as its  Senior  Vice
President Polymer Products in 1986. Rogers Corporation is engaged in the sale of
materials and components to the electronics  and automotive  industries with its
principal place of business in Rogers, Connecticut.

Beginning in 1990, Mr.  Birkenruth  served as Executive Vice President of Rogers
Corporation and in April 1992 became its President and Chief  Executive  Officer
until March 31, 1997,  when he became  Chairman of the Board of Directors of the
company.  On June 30,  1998,  Mr.  Birkenruth  retired  as  Chairman  of  Rogers
Corporation and continues to serve as a director and consultant to the company.

For the past two years,  Mr.  Birkenruth has also served as the Vice Chairman of
the  Board  of  Directors  of  Instrument   Manufacturing   Company,  a  company
specializing in electrical cable diagnostic instruments.

Mr. Birkenruth has previously served as a member of the Executive  Committee and
Board of Directors of the  Connecticut  Business  and  Industry  Association;  a
member of the Board of Overseers of the  University of  Connecticut's  School of
Business;  as a Trustee of the Connecticut Policy and Economic Counsel;  and has
served several terms as a member of the Board of Trustees and as an incorporator
of the Windham Community Memorial Hospital.

H. B. Tony Turner - Director
----------------------------

Tony Turner, age 62, resides in Paradise Valley, Arizona.

Mr. Turner graduated in 1958 with a Bachelors  degree from Duke  University.  In
1962 he graduated from the Harvard Graduate School of Business Administration.

Subsequent to his graduation from graduate  school,  Mr. Turner has engaged in a
broad variety of work  experiences  including as Chairman,  President and CEO of
Ardshield,  Inc., a leveraged  buy-out and investment  banking firm (1980-1992);
Executive Vice  President and Director of Investment  Banking for Shearson Haden
Stone  (1978-1980);  Vice  President  in the  leveraged  buy-out  department  of
Oppenheimer & Co. (1976-1978);  Vice President Finance and Chief  Administrative
Officer of N-REN Corp., a privately held fertilizer company; Assistant Secretary
for Administration of the U.S.  Department of Commerce  (1973-1975);  First Vice
President  and  Director of Mitchum,  Jones & Templeton,  a regional  investment


                                       43
<PAGE>

banking  company  (1967-1973);  Treasurer and Director of Corporate  Planning of
Star-Kist Foods, Inc., a subsidiary of H.J. Heinz (1964-1967); and Controller of
a  financial  corporation  of  Arizona  where he served as the Chief  Accounting
Officer of a financial holding company.

Robert P. Lobban - Chief Financial Officer 
------------------------------------------ 

Mr. Robert P. Lobban,  age 44,  currently  resides in Gilbert,  Arizona with his
wife Susan.

Mr.  Lobban  holds a Masters of Business  Administration  Degree  (M.B.A.)  from
Harvard  Graduate  School of  Business  which he obtained  in 1981.  Mr.  Lobban
earlier  obtained a B.S.  degree in  Industrial  Engineering  from  Northeastern
University  in 1977.  He graduated  first in his class and was a Magna Cum Laude
graduate.

During the period of his formal  education,  Mr.  Lobban  obtained  considerable
practical  experience in working in full-time positions as an engineer,  analyst
and  supervisor  with such  companies as Digital  Equipment  Corporation,  Texas
Instruments, New England Medical Center Hospitals and the Phillips Manufacturing
Company.  From 1981 through 1982,  he worked as a Controller  with the Fiberloys
Division of the Rogers Corporation.  From 1982 to 1984 he was the Controller for
the  Flexible  Interconnections  Division  of Rogers  Corporation  in  Chandler,
Arizona and was promoted to Administrative  Manager with that division from 1984
through 1987. From 1987 through 1988 he worked for Pacific  Biosystems,  Inc., a
start-up  company  involved  in the  medical  equipment  industry  as  its  Vice
President and Chief Financial Officer.

In 1988, he joined Gemini  Consulting as a Consultant  and was promoted  through
several positions to the level of Principal. In these positions,  Mr. Lobban was
responsible for leading large teams in multi-million  dollar projects to improve
the financial performance of over 30 companies,  most in the Fortune 500. Gemini
Consulting of Morristown,  New Jersey is an  international  business  consulting
firm.  In 1995,  he joined the George  Group of Dallas,  Texas as a Director and
then  Vice-President,  where he was  responsible  for managing  multiple  client
engagements in turnaround/major improvement situations.

During  1997 he  became  associated  full-time  with the  Company  and  provides
valuable service as its Chief Financial Officer  supervising general accounting,
finance, investor relations, information systems, and human resources as well as
its  procurement  and materials  management  functions.  He is also charged with
leading the Company's cost reduction efforts.


                                       44
<PAGE>

ITEM 10. Executive Compensation.

The table set forth below contains  information about the remuneration  received
and  accrued  during  the last  three  fiscal  years  from the  Company  and its
subsidiaries  by the CEO of the  Company.  None of the  employees of the Company
have received salary and bonuses of $100,000 or more in any calendar year.

<TABLE>
<CAPTION>
=========================== ============= ================= ================= ====================== ==================
Name and                    Year          Salary ($)        Bonus ($)         Other                  Securities
Principal                                                                     Annual                 Underlying
Position                                                                      Compensation           Options or
                                                                              ($)                    SARs (#)
--------------------------- ------------- ----------------- ----------------- ---------------------- ------------------
<S>                         <C>           <C>               <C>               <C>                    <C>   
Frank Keery                 1998          75,577            1,442             7,907                  75,000
Chairman/CEO                1997          61,154            1,154             6,942                  0
                            1996          60,000            0                                        150,000
=========================== ============= ================= ================= ====================== ==================
</TABLE>

In  December  1996,  the Board of  Directors  of the  Company  adopted the Titan
Motorcycle  Co. of America Stock Option and Incentive  Plan (the "Plan").  Under
the Plan, Incentive Stock Options ("ISOs"),  Non-qualified Stock Options,  Stock
Appreciation  Rights  ("SARs"),   Restricted  Stock,  Dividend  Equivalents  and
Performance  Shares may be awarded to key employees of Titan  Motorcycle  Co. of
America and its subsidiaries.

A committee consisting of at least two Board members is authorized to administer
the Plan and is authorized to select from among eligible employees those persons
who will  receive  awards,  to select  the  appropriate  form of  awards  and to
determine  the  terms  and   conditions  of  such  awards.   After  taking  into
consideration  the  March  1997  two-for-one  forward  split of the stock of the
Company,  the  aggregate  number of shares of stock  subject to awards under the
Plan may not exceed 6,000,000.

The  committee  may make  awards of ISOs,  Non-qualified  Stock  Options,  SARs,
Restricted  Stock,   Dividend   Equivalents  and  Performance   Shares,  or  any
combination of the foregoing, to officers and other key employees of the Company
and its  subsidiaries.  For purposes of the Plan, the "key  employees" are those
employees who, in the opinion of the Committee,  are mainly  responsible for the
continued  growth,  development  and  financial  success  of  the  Company.  The
committee is not required to make awards to every  individual  who is an officer
or key employee,  but it may not make any award to any  individual who is not an
officer or key employee.

An ISO is a stock option that satisfies certain technical requirements specified
in Section 422 of the Internal  Revenue Code (the "Code").  Under the Code, ISOs


                                       45
<PAGE>

may only be granted to  employees.  In order for an option to qualify as an ISO,
the price  specified in the option must equal the fair market value of the stock
at the date of the grant,  and the option must lapse no later than 10 years from
the date of the grant.  As a general  rule,  the stock subject to ISOs which are
first  exercisable  by an employee in any calendar  year may not have a value of
more than $100,000 as of the date of grant. Certain other requirements must also
be met.

A  Non-qualified  Stock  Option is any stock  option  other  than an ISO.  These
options  are  referred  to as  "non-qualified"  because  they  do not  meet  the
requirements  of, and are not eligible for the favorable tax treatment  provided
by Section 422 of the Code.  Subject to applicable  federal and state securities
laws,  non-qualified  options can be subject to such terms and conditions as the
committee determines in its discretion. Thus, for example, a Non-qualified Stock
Option  could be  granted  which has an  exercise  price  which is less than the
stock's fair market value on the date of grant.

A Stock  Appreciation  Right  ("SAR")  is the right  granted to an  employee  to
receive the appreciation in the value of a share of Company stock over a certain
period of time.  Under the Plan,  the  Company may pay that amount in cash or in
Company stock or in a combination of both.  SARs are often issued in conjunction
with a grant of  stock  options  to give the  employee  the  cash  necessary  to
exercise  the option  and/or pay the tax  attributable  to the  exercise  of the
option  (in the case of a  Non-qualified  Stock  Option).  Although  SARs can be
exercised  independently  of an option,  in such cases,  the  underlying  option
lapses to the extent the SARs are exercised.

The Plan also authorizes the committee to award  Restricted  Stock to employees.
Under the  Restricted  Stock  feature  of the Plan,  the  employee  is granted a
specified number of shares of the Company's stock.  However,  his ownership with
respect to such stock is subject to certain  restrictions,  and if the  employee
violates any of the  restrictions  during the period specified by the Committee,
he  forfeits  his  stock.  The  committee  may,  in its  discretion,  impose any
restrictions  on an  employee's  Restricted  Stock Award.  It may not,  however,
require the employee to make any payment for the Restricted Stock.

The Plan  authorizes the committee to grant  dividend  equivalents in connection
with options.  Dividend  equivalents are rights to receive  additional shares of
Company  stock at the time of  exercise  of the  option to which  such  dividend
equivalents apply.  Dividend equivalents are always issued in connection with an
option,  however,  they can be issued at the time the option is granted or after
the option is granted.

Under the Plan, the committee may grant  performance  share units to an employee
which are to be credited  to a  performance  share  account  maintained  for the
employee.  Each  performance  share unit is deemed to be the  equivalent  of one


                                       46
<PAGE>

share of Company  stock.  An award of  performance  shares  does not  entitle an
employee to any ownership,  dividend,  voting,  or other rights of a shareholder
until  distribution  is made in the form of  shares of stock.  No  employee  may
receive as performance shares units more than 30 percent of the aggregate number
of shares that can be awarded under the Plan.

As of March 15,  1999,  the  Company has granted  ISOs and  Non-qualified  Stock
Options for an aggregate of 980,000 shares of stock. No grants have been made of
any of the other categories of awards available under the Plan.

Stock options  awarded in fiscal year 1998 to Directors  and Officers  under the
Plan of the Company are as follows:


<TABLE>
<CAPTION>
======================== ================= =============== ================== ============== =================
         Name               Number of       Date Awarded      % of Total       Exercise or   Expiration Date
                            Securities                       Options/SARs      Base Price
                            Underlying                        Granted to         ($/Sh)
                           Options/SARs                      Employees in
                           Granted (#)                        Fiscal Year
------------------------ ----------------- --------------- ------------------ -------------- -----------------
<S>                      <C>               <C>             <C>                <C>            <C>
Frank Keery              75,000            1/28/98         12.9%              $3.00          1/28/08
------------------------ ----------------- --------------- ------------------ -------------- -----------------
Patrick Keery            50,000            1/28/98           8.6%             $3.00          1/28/08
------------------------ ----------------- --------------- ------------------ -------------- -----------------
Barbara Keery            50,000            1/28/98           8.6%             $3.00          1/28/08
------------------------ ----------------- --------------- ------------------ -------------- -----------------
Robert Lobban            90,000            1/28/98         15.4%              $3.00          1/28/08
======================== ================= =============== ================== ============== =================
</TABLE>


                                       47
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

As of the March  15,1999,  the Company  had  17,147,333  shares of common  stock
outstanding.  The chart below sets forth the ownership, or claimed ownership, of
certain  individuals  and entities.  This chart discloses those persons known by
the Board of Directors  to have,  or to claim to have,  beneficial  ownership of
more than 5% of the outstanding  shares of the common stock of the Company as of
March 15, 1999; of all directors and executive  officers of the Company;  and of
the directors and officers of the Company as a group.


<TABLE>
<CAPTION>
               =========================================== ======================== ====================
                  Name and Address of Beneficial Owner        Number of Shares       Percent of Class
                               Beneficially Owned
               ------------------------------------------- ------------------------ --------------------
               <S>                                               <C>                       <C>
               Francis S. Keery
               8973 N. 45th Street                                3,524,722 3              20.29%
               Phoenix, Az 85028                                                     
               ------------------------------------------- ------------------------ --------------------
               Patrick Keery
               8973 N. 45th Street                                2,748,549 4              15.89%
               Phoenix, Az 85028
               ------------------------------------------- ------------------------ --------------------
               Barbara S. Keery
               12460 N. 116th Street                              3,483,106                20.31%
               Scottsdale, Az 85259
               ------------------------------------------- ------------------------ --------------------
               Harry H. Birkenruth
               81 Ball Hill Road                                      0                      0%
               Storrs, CT 06268
               ------------------------------------------- ------------------------ --------------------
               H.B. Tony Turner
               6116 East Yucca Road                                   0                      0%
               Paradise Valley, AZ 85253
               ------------------------------------------- ------------------------ --------------------
               Robert P. Lobban
               1326 E. Treasure Cove Dr.                            7,000                    * 5
               Gilbert, Az 85234
               ------------------------------------------- ------------------------ --------------------
               Officers and Directors                             9,763,377               55.72%
               as a group (6 members)
               =========================================== ======================== ====================
</TABLE>

-------------------------------------------
3 Includes 225,000 shares underlying unexercised employee options.

4 Includes 150,000 shares underlying unexercised employee options.

5 Represents less than one percent.


                                       48
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Prior to the  formation of Titan  Motorcycle  Co. of America,  Patrick Keery and
Frank Keery had been conducting the business of after-market  customizations  of
Harley Davidson motorcycles in the Phoenix area under the name of Paragon Custom
Cycles.  The  Phoenix  dealership  for the Company  has  retained  this name for
reasons of  established  name  recognition in the Maricopa  County market.  This
dealership  is  owned  by the  President  and  the  CEO of the  Company,  and an
independent  third party. The dealership sells the products of the Company under
the standard  dealership contract of the Company without any special concessions
or contract provisions.

In  early  1998,  the  CEO  and  the  President  of the  Company  joined  with a
third-party  investor to purchase  the Los  Angeles,  California  and Las Vegas,
Nevada dealerships of the Company. The third-party  investor,  is a principal of
an  investment  banking firm that has  assisted  the Company in capital  raising
functions. These three individuals have formed a limited liability company known
as BPF, LLC. The Los Angeles and Las Vegas dealerships have required significant
capital infusions, at a time when the Company was unable to invest in any of its
dealerships.  These two  dealerships  are continuing to sell the products of the
Company (as well as other  non-Titan  products)  under the  standard  dealership
contract of the Company without any special concessions or contract provisions.

The owner of another U.S.  dealership  of the products of the Company in a major
market  area has  notified  the Company  that his  dealership  is for sale.  The
Company  has  invited  other  dealerships  to  offer  to  purchase  the  offered
dealership,  and has not been advised of any material interest in an acquisition
of the offered dealership. The independent and unrelated directors of Titan have
evaluated the corporate opportunities of acquiring the Phoenix, Los Angeles, Las
Vegas  and  the  newly  offered  dealership,   but  have  determined  that  such
acquisitions  are not in the best  interests  of the  Company.  The BPF,  LLC is
evaluating the possibility of acquiring the offered dealership.


                                       49
<PAGE>

Item 13.  Exhibits and Reports on Form 8-K.
                                                                            Page
                                                                            ----
         (a)      Exhibits

                  Audited year end financial statements as of
                   January 2, 1999 and December 31, 1997......................26

         2.1      Restated Articles of Incorporation of the Company(Incorporated
                  by reference from Form 10-SB (Film No.  98648988) filed by the
                  Company with the Commission on June 16, 1998).

         2.2      By-Laws of the Company  (Incorporated  by reference  from Form
                  10-SB  (Film  No.  98648988)  filed  by the  Company  with the
                  Commission on June 16, 1998).

         3        Specimen  of  Common  Stock   Certificate   (Incorporated   by
                  reference  from Form 10-SB  (Film No.  98648988)  filed by the
                  Company with the Commission on June 16, 1998).

         10.1     Form of real estate lease  agreement  between  Holualoa Peoria
                  Avenue  Industrial,  LLC  and  the  Company  (Incorporated  by
                  reference  from Form 10-SB  (Film No.  98648988)  filed by the
                  Company with the Commission on June 16, 1998).

         10.2     Form  of  addendum  to  real  estate  lease  (Incorporated  by
                  reference  from Form 10-SB  (Film No.  98648988)  filed by the
                  Company with the Commission on June 16, 1998).

         10.3     1997  Stock   Option  and   Incentive   Plan  of  the  Company
                  (Incorporated by reference from Form 10-SB (Film No. 98648988)
                  filed by the Company with the Commission on June 16, 1998).

         10.4     Shelby American Inc. Contract  (incorporated by reference from
                  Form  10-QSB  (Film  No.  )  filed  by the  Company  with  the
                  Commission on November 17, 1998).

         10.5     Biltmore  Peoria LLC Lease  Agreement dated September 25, 1998
                  (incorporated  by reference from Form 10-QSB (Film No. ) filed
                  by the Company with the Commission on November 17, 1998).

         11       Statement regarding computation of per share earnings.......37

         18       Letter on change in accounting principles...................52

         21       Subsidiaries of the registrant ..............................8

         24       Powers of Attorney..........................................53

         27       Financial Data Schedule.....................................54

         (b)       Reports on Form 8-K

         The issuer filed a Form 8-K report on December 30, 1998  regarding  the
change of its accountants to the firm of PricewaterhouseCoopers LLP.


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<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements of Section 12 of the Securities  Exchange
Act of 1934, the registrant  has duly caused this  Registration  Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                             Titan Motorcycle Company of America



Date:        4/1/99                           By: /s/ Franks S. Keery
     -----------------------                     -------------------------------
                                                  Frank S. Keery
                                                  Chief Executive Officer



Date:        3/31/99                          By: /s/ Robert P. Lobban
     -----------------------                     -------------------------------
                                                  Robert P. Lobban
                                                  Chief Financial Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  registration  statement  has been signed by the  following  persons in the
capacities and on the dates indicated.

/s/ Frank S. Keery
-------------------------------------               March      31        , 1999
Frank S. Keery, Chairman of the Board                    ----------------

/s/ Patrick Keery
-------------------------------------               March      31        , 1999
Patrick Keery,  Director                                 ----------------

/s/ Barbara Keery
-------------------------------------               March      31        , 1999
Barbara Keery, Director                                  ----------------

/s/ Frank S. Keery signing for 
    Harry H. Birkenruth
-------------------------------------               March      31        , 1999
Harry H. Birkenruth, Director                            ----------------

/s/Frank S. Keery signing for 
   Tony Turner
-------------------------------------               March      31        , 1999
H.B. Tony Turner, Director                               ----------------


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