<PAGE>

================================================================================
================================================================================

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 10-Q
               Quarterly Report Pursuant to Section 13 or 15(d)
                    of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2001  Commission File No. 001-14509

                               EASYRIDERS, INC.
            (Exact name of registrant as specified in its charter)


           Delaware                                              33-0811505
  (State or other jurisdiction of                          (I.R.S.  Employer
   incorporation or organization)                         Identification Number)



              28210 Dorothy Drive, Agoura Hills, California 91301
              (Address of principal executive offices) (Zip Code)

      Registrant's telephone number, including area code: (818) 889-8740

          Securities registered pursuant to Section 12(b) of the Act:
                    Common Stock, par value $.001 per share

          Securities registered pursuant to Section 12(g) of the Act:
                                Not Applicable

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

Yes  X          No
    ---            ---


  There were 25,481,112 shares of outstanding Common Stock of the Registrant as
of November 6, 2001.

================================================================================
================================================================================
<PAGE>

PART I -- FINANCIAL INFORMATION
-------------------------------

Item 1.  Financial Statements

EASYRIDERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS



<TABLE>
<CAPTION>
                                                                  September 30, 2001            December 31, 2000
                                                                ---------------------------------------------------
                                                                      (unaudited)

ASSETS

CURRENT ASSETS:
<S>                                                               <C>                          <C>
Cash and cash equivalents                                                $   524,525                    $   192,492
Accounts receivable, less allowance for doubtful accounts of               2,289,079                      2,008,505
 $706,596 (2001) and $882,234 (2000)
Inventories                                                                1,776,843                      2,177,344
Prepaid publication costs                                                  1,200,741                        819,210
Prepaid expenses and other                                                 1,593,591                        849,844
Receivable from shareholder                                                  265,518                        278,374
                                                                   -----------------            -------------------

    Total current assets                                                   7,650,297                      6,325,769

PROPERTY AND EQUIPMENT, net                                                  737,093                        841,158

GOODWILL, net of accumulated amortization of $4,903,939                   25,547,374                     26,257,024
 (2001) and $4,194,289 (2000)

OTHER ASSETS                                                                 149,726                        172,670
                                                                   -----------------            -------------------

                                                                         $34,084,490                    $33,596,621
                                                                   =================            ===================
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       1
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)


<TABLE>
<CAPTION>
                                                                       September 30, 2001       December 31, 2000
                                                                      ---------------------     -------------------
                                                                          (unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
<S>                                                                         <C>              <C>
Accounts payable                                                             $    390,449     $         5,237,813
Accrued payroll and payroll related expenses                                      253,732               1,204,786
Accrued interest payable                                                          334,777                 563,963
Other current liabilities                                                         490,498               1,528,143
Income taxes payable                                                                6,600                  17,900
Current portion of deferred subscription and advertising income                 4,626,540               3,941,853
Current portion of long-term debt                                                  26,841              21,832,113
                                                                             ------------     -------------------

    Total current liabilities                                                   6,129,437              34,326,571
                                                                             ------------     -------------------

NOTE PAYABLE TO STOCKHOLDER                                                             -               8,000,000

LONG-TERM DEBT, net of current portion and debt discount                           43,716                 571,165

OTHER LONG-TERM LIABILITIES, including deferred subscription                    1,648,163               3,529,359
 revenues of $1,338,963 (2001) and $1,477,385 (2000)

PRE-PETITION LIABILITIES, subject to compromise                                36,711,634                       -

REDEEMABLE COMMON STOCK (Note 3)                                                  500,000                       -

STOCKHOLDERS' DEFICIT:
Preferred stock, par value $.001 per share; 10,000,000 shares                           -                       -
 authorized, none outstanding
Common stock, par value $.001 per share; 50,000,000 shares                         24,263                  28,590
 authorized, 24,263,702 shares (2001) and 28,590,702 shares
 (2000) issued and outstanding
Additional paid in capital                                                     63,906,567              64,611,943
Receivable from the sale of stock, less allowance for doubtful                          -              (2,200,000)
 account of $5,100,000 (2000)
Accumulated deficit                                                           (74,879,290)            (75,271,007)
                                                                             ------------     -------------------

    Total stockholders' deficit                                               (10,948,460)            (12,830,474)
                                                                             ------------     -------------------

                                                                             $ 34,084,490            $ 33,596,621
                                                                             ============     ===================
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       2
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME/(OPERATIONS)


<TABLE>
<CAPTION>
                                                     For the Three Months Ended                   For the Nine Months Ended
                                                            September 30,                                September 30,
                                                    2001                    2000                 2001                    2000
                                                -----------------------------------      -------------------------------------------
                                                                (unaudited)                               (unaudited)
<S>                                             <C>                    <C>                     <C>                <C>
CONTINUING OPERATIONS:

SALES                                           $ 6,312,414             $ 6,347,464             $21,549,386        $22,032,056

COST OF SALES                                     4,635,639               5,350,107              15,076,279         18,173,806
                                                -----------             -----------             -----------        -----------

GROSS MARGIN                                      1,676,775                 997,357               6,473,107          3,858,250

EXPENSES:
Selling, general and administrative               1,230,434               1,374,432              2,671,829           4,443,166
Depreciation and amortization                       316,066                 561,596                953,981           2,594,186
Stock issuance expenses                                   -                   6,721                      -             202,305
                                                -----------             -----------            -----------         -----------

    Total expenses                                1,546,500               1,942,749              3,625,810           7,239,657
                                                -----------             -----------            -----------         -----------

INCOME (LOSS) FROM OPERATIONS                       130,275                (945,392)             2,847,297          (3,381,407)

OTHER INCOME (EXPENSE)                                  733                 116,364                120,026            (234,366)
INTEREST EXPENSE                                   (745,619)             (1,157,092)            (2,532,981)         (3,246,511)
                                                -----------             -----------            -----------         -----------

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES    (614,611)             (1,986,120)               434,342          (6,862,284)

PROVISION FOR INCOME TAXES                            9,900                   3,705                 42,625              13,557
                                                -----------             -----------            -----------         -----------

NET INCOME (LOSS) FROM CONTINUING OPERATIONS       (624,511)             (1,989,825)               391,717          (6,875,841)

DISCONTINUED OPERATIONS:
 LOSS FROM OPERATIONS                                     -                (932,603)                     -            (811,537)
 GAIN (LOSS) ON DISPOSAL                                  -               1,100,000                      -          (1,000,000)
                                                -----------             -----------            -----------         -----------

NET INCOME (LOSS)                               $  (624,511)            $(1,822,428)           $   391,717         $(8,687,378)
                                                ===========             ===========            ===========         ===========

NET INCOME (LOSS) PER SHARE:
  BASIC
  CONTINUING OPERATIONS                         $    (0.026)            $    (0.070)           $     0.015         $    (0.259)
  DISCONTINUED OPERATIONS                                 -                   0.006                      -              (0.068)
                                                -----------             -----------            -----------         -----------
  NET INCOME (LOSS) PER SHARE                   $    (0.026)            $    (0.064)           $     0.015         $    (0.327)
                                                ===========             ===========            ===========         ===========
  DILUTED
  CONTINUING OPERATIONS                         $    (0.026)            $    (0.070)           $     0.014         $    (0.259)
  DISCONTINUED OPERATIONS                                 -                   0.006                      -              (0.068)
                                                -----------             -----------            -----------         -----------
  NET INCOME (LOSS) PER SHARE                   $    (0.026)            $    (0.064)           $     0.014         $    (0.327)
                                                ===========             ===========            ===========         ===========

WEIGHTED AVERAGE SHARES OUTSTANDING:
  BASIC                                          24,259,626              28,399,002             25,625,490          26,536,163
                                                ===========             ===========            ===========         ===========
  DILUTED                                        24,259,626              28,399,002             27,809,447          26,536,163
                                                ===========             ===========            ===========         ===========
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                              For the Nine Months Ended
                                                                                                    September 30,
<S>                                                                                         <C>             <C>
                                                                                                   2001             2000
                                                                                          ------------------------------
CONTINUING OPERATIONS:                                                                              (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)                                                                            $  391,717      $(6,875,841)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating
 activities:
  Stock issuance expenses                                                                             -          202,305
  Common stock issued for services                                                               31,047           55,125
  Common stock issued for interest                                                                    -           60,055
  Common stock issued in settlement of litigation                                                58,750           43,750
  Depreciation and amortization                                                                 953,981        2,594,186
  Loss on sale of Easyriders of Columbus to related party                                             -          532,818
  (Gain) Loss on sale of fixed assets                                                           (59,437)          55,072
  Gain on Martin Unwind                                                                         (47,167)               -
  Amortization of debt issuance costs                                                           229,396          236,079
  Non-cash interest expense                                                                     100,500          323,903
  Increase (decrease) in cash resulting from changes in operating accounts:
    Current assets                                                                             (992,495)         381,872
    Other assets                                                                                (25,520)             756
    Current liabilities                                                                         105,865          346,761
    Other long-term liabilities                                                                (134,286)       1,077,201
                                                                                          -------------      -----------
Net cash provided by (used in) operating activities                                             612,351         (965,958)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets                                                               10,028           10,000
Purchases of fixed assets                                                                       (90,711)         (97,727)
                                                                                          -------------      -----------
      Net cash used in investing activities                                                     (80,683)         (87,727)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of convertible debentures and debt                                                           -          465,748
Common stock issued for cash                                                                          -          500,000
Proceeds from stockholders' and other advances                                                  300,000                -
Payments on debt and capital leases                                                            (499,635)        (236,079)
                                                                                          -------------      -----------
      Net cash provided by (used in) financing activities                                      (199,635)         729,669
                                                                                          -------------      -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS                 332,033         (324,016)

CASH USED FOR DISCONTINUED OPERATIONS                                                                 -         (105,240)
                                                                                          -------------      -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                            332,033         (429,256)
CASH AND CASH EQUIVALENTS, beginning of period                                                  192,492          429,256
                                                                                          -------------      -----------
CASH AND CASH EQUIVALENTS, end of period                                                     $  524,525      $         -
                                                                                          =============      ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid for interest (Note 1)                                                            $1,390,179      $ 1,990,334
                                                                                          =============      ===========
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock issued in settlement of litigation                                              $   58,750      $   325,000
                                                                                          =============      ===========
Common stock issued in settlement of debt                                                    $        -      $ 3,446,787
                                                                                          =============      ===========
Common stock issued upon conversion of debentures                                            $        -      $   316,667
                                                                                          =============      ===========
Redeemable common stock issued in settlement of accrued liability (Note 3)                   $  155,000      $         -
                                                                                          =============      ===========
Conversion of accrued liability to note payable (Note 3)                                     $  250,000      $         -
                                                                                          =============      ===========
Purchase of fixed assets under lease                                                         $   61,197      $         -
                                                                                          =============      ===========
</TABLE>

          See accompanying notes to consolidated financial statements

                                       4
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)
--------------------------------------------------------------------------------

1.  GENERAL BASIS OF PRESENTATION

    Easyriders, Inc. (Easyriders or the Company) was incorporated in the State
    of Delaware on May 13, 1998, and for financial reporting purposes is the
    successor to Newriders, Inc. (Newriders), a Nevada corporation.  On
    September 23, 1998, Easyriders, Inc. consummated a series of transactions
    (collectively, the Reorganization), including the following:  (i) the merger
    of a subsidiary of Easyriders with and into Newriders (the Merger) upon
    which the shareholders of Newriders exchanged their stock on a 2-for-1 basis
    for Easyriders, Inc. common stock; (ii) the acquisition by Easyriders of all
    of the outstanding common stock of Paisano Publications, Inc. (Paisano
    Publications), a California corporation, and certain affiliated corporations
    (collectively, the Paisano Companies); and (iii) the acquisition by
    Easyriders of all of the outstanding membership interests of M&B
    Restaurants, L.C. dba El Paso Bar-B-Que Company (El Paso), a Texas limited
    liability company.

    As a result of the merger, the Newriders common stock was exchanged for
    Easyriders common stock on the basis of one share of Easyriders common stock
    for each two shares of Newriders common stock, and the stockholders of
    Newriders immediately prior to the merger became stockholders of Easyriders.
    The merger was accounted for as a combination of entities under common
    control, similar to a pooling of interest.  Therefore, the historical
    financial statements represent the combined financial statements of
    Easyriders and Newriders.  The acquisitions of the Paisano Companies and El
    Paso were accounted for as a purchase.

    The Paisano Companies consist of Paisano Publications; Easyriders of
    Columbus, Inc., an Ohio corporation; Easyriders Franchising, Inc., a
    California corporation; Teresi, Inc. (DBA Easyriders Events, Inc.), a
    California corporation; Bros Club, Inc., a California corporation and
    Associated Rodeo Riders on Wheels, a California corporation; Paisano
    Publications publishes 11 special-interest magazines directed to motorcycle,
    hot-rod, and tattoo enthusiasts, and 2 industry related magazines, Eagles
    Eye and Tatoo Industry.  Other Paisano Companies market a line of apparel
    and other products designed to appeal to motorcycle, hot-rod, and tattoo
    enthusiasts.  Through the end of 1999 Easyriders Franchising had established
    franchise stores that sold Easyriders apparel, customized new and used
    American-made motorcycles, and motorcycle accessories. Subsequently, the
    operations of Easyriders Franchising were assumed by Easyriders Licensing,
    Inc., a California corporation, and a wholly-owned subsidiary of Newriders,
    under a new program pursuant to which franchisees signed agreements
    converting their franchise arrangement to licensing arrangements.
    Currently, there are 39 licensed stores and 1 retail store still operating
    under an expired franchise agreement.

    El Paso owns and operates barbecue and smoked meat restaurants located in
    Arizona and Oklahoma.  The restaurants are operated under the name "El Paso
    Bar-B-Que."   On October 5, 2000, the Company sold its interest in El Paso
    to a related party.

    Easyriders currently derives substantially all of its revenues from the
    operations of Paisano Publications.

    Basis of presentation - The accompanying unaudited interim consolidated
    financial statements of Easyriders, Inc. for the three and nine month
    periods ended September 30, 2001 and 2000, respectively, reflect all
    adjustments (consisting of normal recurring accruals) which, in the opinion

                                       5
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)
--------------------------------------------------------------------------------

    of management, are necessary for a fair presentation of the results for the
    interim periods presented.

    These financial statements have been prepared in accordance with the
    instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly,
    they do not include all of the information and footnotes required by
    generally accepted accounting principles for complete financial statements.

    Certain reclassifications have been made to the 2000 financial statements in
    order to conform them to the 2001 presentation.

    These financial statements should be read in conjunction with the Company's
    annual audited financial statements for the year ended December 31, 2000.

    Operating results for the three and nine month periods ended September 30,
    2001 are not necessarily indicative of the results that may be expected for
    the full year ending December 31, 2001.  In this regard, readers are
    cautioned to consider the fact that on July 17, 2001, Easyriders and Paisano
    Publications filed voluntary petitions for relief under Chapter 11 of the
    United States Bankruptcy Code in the United States Bankruptcy Court for the
    Central District of California, San Fernando Valley Division.  The immediate
    consequences of these filings are discussed herein, but the longer-term
    consequences are substantially uncertain at this time, and could include,
    among other things:

      .  An outright sale of assets for a price which is less than the Company's
         total indebtedness, in which case no value would remain for
         shareholders.

      .  Restructuring of the Nomura Indebtedness through modified terms, or
         replacing the Nomura Indebtedness with alternative financing.

      .  Restructuring or elimination, in whole or in part, of the Company's
         unsecured debt.

      .  Cancellation or dilution of all, or a portion of, the Company's
         currently outstanding equity securities.

      .  Events which disqualify the Company from remaining a publicly traded
         enterprise.

      .  Changes in ownership control and/or management of the Company.

    This list in not intended to be exhaustive, nor to reflect management's
    expectations as to the most likely outcome of the Chapter 11 cases, but
    merely to serve as a notice to readers that the future of the Company is
    substantially uncertain at this point in light of the issues still to be
    resolved in the Bankruptcy Court.

    The Company's financial statements are prepared using the generally accepted
    accounting principles applicable to a going concern, which contemplates the
    realization of assets and liquidation of liabilities in the normal course of
    business.  The above referenced bankruptcy filings were prompted primarily
    by various repayment demands and other disputes that Easyriders was having
    with its primary secured lender, Nomura Holding America Inc. ("Nomura"),
    including Nomura's unwillingness to extend the September 23, 2001 maturity
    date of its secured loan in the principal amount of approximately $21
    million.  The unpredictability of the outcome of these

                                       6
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)
--------------------------------------------------------------------------------

   bankruptcy filings raises substantial doubt about the Company's ability to
   continue as a going concern.

   Prior to its filing for Chapter 11 relief on July 17, 2001, the Company made
   regular monthly interest payments to Nomura in respect of the Nomura
   Indebtedness.  After its bankruptcy filing, in accordance with orders of the
   Bankruptcy Court, the Company continued to make such payments to Nomura
   through October 31, 2001 (the "Post-Petition Payments").  No agreement was
   made between the parties and no order of the Bankruptcy Court was issued as
   to the application of any of the Post-Petition Payments made by the Debtors
   to Nomura.  Under the Bankruptcy Code, if the value of Nomura's collateral is
   less than the amount of Nomura's "allowed claim," Nomura is not entitled to
   any post-bankruptcy interest and Nomura's allowed claim is bifurcated into an
   allowed secured claim equal to the value of Nomura's collateral and an
   allowed unsecured claim equal to the balance of Nomura's allowed claim.  The
   Company believes that the funds used to make the Post-Petition Payments to
   Nomura was not part of Nomura's collateral and therefore should reduce the
   amount of Nomura's allowed secured claim on a dollar-for-dollar basis. No
   determination has been made by the Bankruptcy Court and no agreement has been
   reached between the parties in this regard. The Company has filed a motion
   with the Bankruptcy Court to determine the value of Nomura's allowed secured
   claim. A status conference on that motion is scheduled to be held on November
   21, 2001. The Company anticipates that the Bankruptcy Court will provide the
   parties with a trial date to litigate this issue at the November 21, 2001
   status conference. The Company is also in the process of preparing a
   complaint to file in the Bankruptcy Court to determine to what extent, if
   any, the Company's cash constitutes part of Nomura's collateral. Until the
   value of Nomura's allowed secured claim and the extent to which, if any, the
   Company's cash constitutes part of Nomura's collateral is determined by the
   Bankruptcy Court, the Company will continue to report all Post-Petition
   Payments made to Nomura as interest, and if a determination is made at some
   later date that such Post-Petition Payments to Nomura do not constitute
   interest to Nomura, the Company will show such adjustment in its financial
   reports. Pre-petition liabilities, including the Nomura indebtedness of
   $20,968,002, the notes payable to a stockholder of $8,000,000, and the trade
   accounts payable as of July 17, 2001 of $4,705,661, have been reclassified to
   a separate line item on the balance sheet. The following statement of cash
   flows for the nine months ended September 30, 2001 was prepared under the
   direct method:

                               Easyriders, Inc.
                            Statement of Cash Flows
                  For the Nine Months Ended September 30, 2001

<TABLE>
<CAPTION>
<S>                                                                 <C>
Cash flows from operating activities:
    Cash received from customers                                     19,003,384
    Cash received - expense reimbursements                              162,860
    Cash paid to suppliers and employees                            (16,454,103)
    Cash paid - franchise taxes                                         (19,400)
    Interest paid                                                    (1,390,179)
    Post-petition payments to Nomura                                   (310,820)
                                                                    -----------
        Net cash provided by operating activities before
         reorganization items                                           991,742
                                                                    -----------
 Operating cash flows from reorganization items:

    Professional fees paid for services rendered in connection
     with the Chapter 11 proceeding                                    (379,391)
                                                                    -----------
        Net cash used by reorganization items                          (379,391)
                                                                    -----------
        Net cash provided by operating activities                       612,351
                                                                    -----------
Cash flows from investing activities:
    Purchases of fixed assets                                           (90,711)
    Proceeds from sale of fixed assets                                   10,028
                                                                    -----------

        Net cash used for investing activities                          (80,683)
                                                                    -----------
Cash flows used by financing activities:
    Principal payments on pre-petition debt authorized by
      the Court                                                         (73,700)
    Payments on debt and capital leases                                (425,935)
    Proceeds from stockholder and other advances                        300,000
                                                                    -----------

        Net cash used for financing activities                         (199,635)
                                                                    -----------
Net increase in cash and cash equivalents                               332,033
Cash and cash equivalents at beginning of period                        192,492
                                                                    -----------

Cash and cash equivalents at end of period                          $   524,525
                                                                    ===========
</TABLE>

   Effective July 17, 2001, the American Stock Exchange ("AMEX") temporarily
   suspended trading in the Company's common stock, pending further developments
   in the Chapter 11 cases.  This suspension was implemented on an informal
   basis.  AMEX has taken no formal action with respect to the de-listing of the
   Company's securities.

2. LONG-TERM DEBT

   The Nomura Indebtedness - In November of 2000, Nomura asserted that the
   Company was in default with respect to numerous non-financial matters based
   on various negative covenants in the Nomura Credit Agreement.  Management
   took issue with each of these charges, and in good faith believed that no
   events of default had occurred.

   The Nomura Indebtedness, approximately $21.0 million, became due and payable
   on September 23, 2001.  In view of the Company's anticipated inability to
   repay the entire principal on such date, and Nomura's unwillingness to accept
   a lesser amount, or to extend the maturity date, in or about May 2001,
   management began discussing with Nomura the possibility of filing for Chapter
   11 relief, which led to protracted negotiations concerning a Cash Collateral
   Stipulation (the "First CCS").  The First CCS was based upon a detailed
   budget which Nomura reviewed and ultimately

                                       7
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)
--------------------------------------------------------------------------------

   approved, subject to reserving all of its rights under the Nomura Credit
   Agreement (the "First CCS Budget"). Easyriders, Inc. and Paisano Publications
   filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code
   on July 17, 2001, and the First CCS was formally approved by the Bankruptcy
   Court on an interim basis at an interim hearing held on July 20, 2001,
   pending a final hearing to be held on August 21, 2001. Between the time of
   the interim hearing and the final hearing, an Official Committee of Unsecured
   Creditors (the "OCC") was formed to represent the interests of the unsecured
   creditors. Prior to the final hearing, Easyriders, Inc., Paisano
   Publications, the OCC and Nomura entered into a cash collateral stipulation
   (the "Second CCS") which modified the terms of the First CCS and which
   provided for the Company to continue to pay expenses in accordance with an
   agreed upon budget (the "Second CCS Budget") through October 31, 2001. In
   accordance with the First CCS, the First CCS Budget, the Second CCS and the
   Second CCS Budget, the Company thereafter made payments to Nomura (with no
   agreement as to the application of such payments) computed in an amount equal
   to Nomura's pre-Chapter 11 interest (the "Computed Payments"), in the full
   amount thereof, for the months of May, June, July, August and September,
   2001, as follows:

             Month      Amount of Computed Payment
             -----      --------------------------
<TABLE>
<CAPTION>

          <S>           <C>
             May                $169,012
             June                154,814
             July                155,455
             August              155,365
             September           145,902
                                --------
                                $780,548
                                ========
</TABLE>

   The First CCS remained in effect until August 31, 2001.  Pursuant to the
   terms of the First CCS, in addition to the payments set forth immediately
   above, the Company made an "excess cash flow payment" in the amount of
   $23,699 to Nomura for the month of July, 2001.  Pursuant to the terms of the
   Second CCS, the Company is required to deposit all of their "Net Income" (as
   defined in the Second CCS) after payment of the amounts to Nomura set forth
   above into a segregated bank account (the "Blocked Account").  At a hearing
   held on October 24, 2001, the Bankruptcy Court granted the Company's motion
   for authority to continue using cash collateral (the "CCM") through February
   28, 2002 to pay expenses in accordance with the budget attached to the CCM
   (the "CCM Budget").   At the hearing held on October 24, 2001, the Bankruptcy
   Court also ordered the Company to stop making any further payments to Nomura
   and to deposit the payments that the Company would otherwise have made to
   Nomura into the Blocked Account.

   The Siena Loan - On April 13, 2000, Mr. Martin and Mr. Teresi each paid to
   Siena the sum of $137,500 and assumed the position of Siena with respect to
   the Siena Loan, with some modifications to the terms.  For the quarter ended
   March 31, 2001, the Company did not possess the resources to pay off this
   $275,000 loan from Messrs. Teresi and Martin.  As a result, as provided under
   the modified terms, through March 13, 2001 an additional 225,000 warrants
   vested to each of Mr. Martin and Mr. Teresi and the fair value of the
   warrants, aggregating $100,500, was recorded as interest expense.
   Effective March 30, 2001, in connection with the Martin Unwind transaction
   (see Note 4 - Stockholders' Deficit), Mr. Teresi purchased Mr. Martin's one-
   half interest in the Siena Loan, and all warrants vested thereunder, for cash
   in the amount of $137,500.

                                       8
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)
--------------------------------------------------------------------------------

    Concurrently, in an amendment to the terms of the loan effective April 1,
    2001, Mr. Teresi agreed to relinquish his right to receive additional
    warrants.

3.  REDEEMABLE COMMON STOCK

    On February 1, 2001, to resolve a dispute over legal fees and expenses, the
    Company entered into a settlement agreement with a law firm (the "Firm")
    which had provided litigation defense services for total consideration of
    approximately $750,000.  The settlement included (a) the delivery of a
    promissory note for $250,000, which bears interest at the rate of 10% per
    annum and was due and payable in full on April 30, 2001; and (b) the
    issuance of 500,000 shares of Easyriders, Inc, common stock (the "Issued
    Shares").  As of September 30, 2001, a balance of $50,000 plus accrued
    interest remained outstanding under the promissory note.  Under the terms of
    the settlement agreement, on or after December 1, 2002, the Firm has the
    right (a "put option") to cause Easyriders to purchase any or all of the
    Issued Shares then held by the Firm at a price of $1.00 per share.  As a
    result of the put option held by the Firm, the mandatory redemption value of
    $500,000 has been classified as redeemable common stock.  The fair market
    value of the 500,000 shares issued under this agreement approximated
    $155,000 on the settlement date, or $0.31 per share.

4.  STOCKHOLDERS' DEFICIT

    Related-Party Receivable from the sale of Stock - Shortly after the El Paso
    Transaction, and as a consequence thereof, the Board of Directors and the
    Company's Chairman, John Martin, began negotiating the terms and conditions
    of a transaction which has become known as the "Martin Unwind," pursuant to
    which Mr. Martin would resign as Chairman.  Such negotiations concluded on
    March 1, 2001, when the Company and Mr. Martin entered into a Settlement
    Agreement (the "Martin Settlement").  Concurrently, Mr. Martin and the
    Company's principal shareholder and a director, Joseph Teresi, entered into
    a separate agreement concerning the purchase by Mr. Teresi of certain assets
    of Mr. Martin (the "Martin Asset Purchase").

    These two transactions affected (a) Mr. Martin's employment agreement with
    the Company (the "Martin Employment Agreement"), (b) the Company's 1998
    Executive Incentive Compensation Plan (the "Compensation Plan"), (c) a
    limited-recourse promissory note in the principal amount of $5,000,000 owed
    by the Company to Mr. Teresi (the "Teresi Note"), which is secured by a
    full-recourse promissory note in the principal amount of $5,000,000 owed by
    Mr. Martin to the Company (the "Martin Mirror Note"), (d) a promissory note
    in the principal sum of $2,300,000 owed by Mr. Martin to the Company (the
    "Martin Note"), (e) 6,000,000 shares of the Company's common stock, of which
    2,395,823 were acquired by Martin through the issuance of the Martin Mirror
    Note and the Martin Note, and (f) a promissory note in the principal sum of
    $275,000 originally owed by the Company to Siena Capital Partners, LLC, (the
    "Siena Note"), which note was subsequently sold to Mr. Martin and Mr.
    Teresi, each as to a one-half interest.

    Pursuant to the Martin Settlement and the Martin Asset Purchase:

      .  Mr. Martin resigned as a director and Chairman of the Board, effective
         March 1, 2001. Concurrently, the other designated directors, William
         Prather, Wayne Knyal and Daniel Gallery, also resigned.

                                       9
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)
--------------------------------------------------------------------------------

      .  Mr. Martin agreed to offset all amounts due to him from the Company, to
         waive future entitlements to receive salary payments under the Martin
         Employment Agreement, and to waive the right to receive accrued and
         future bonus payments under the Compensation Plan.

      .   The Company canceled the Martin Mirror Note and reduced the balance
          due under the Martin Note to $1,200,000 (the "Adjusted Balance").
          During the year ended December 31, 2000, the Company wrote-off $5.1
          million of the Martin Mirror Note.

      .   Effective March 30, 2001, Mr. Martin paid the Adjusted Balance to the
          Company, through (a) the surrender to the Company, for cancellation
          and retirement, of 4.5 million shares of the Company's common stock
          held by him (valued at $0.20 per share, or $900,000), and payment of
          $300,000 in cash.

      .   Effective March 30, 2001, Mr. Teresi agreed to the cancellation of the
          Martin Mirror Note and as to the Teresi Note, Mr. Martin provided Mr.
          Teresi with a limited personal guarantee up to $3,000,000.

      .   Effective March 30, 2001, Mr. Teresi purchased from Mr. Martin, (a)
          1,500,000 shares of the Company's common stock held by Mr. Martin for
          cash in the amount of $300,000, and (b) Mr. Martin's one-half interest
          in the Siena Note, and all warrants vested thereunder, for cash in the
          amount of $137,500.

    Common Stock Issued for Services - On April 17, 2001, the Company issued
    30,000 shares of Easyriders, Inc. common stock to two members of the Board
    of Directors of the Company as compensation for serving as chairmen of board
    committees.  The fair value of the stock, $6,000, was recorded as
    compensation expense.

    Stock Issued to Settle Litigation - On July 3, 2001, the Company issued
    125,000 shares of Easyriders, Inc. common stock in settlement of a dispute
    with a former employee.  Settlement expense was recognized in an amount
    equal to $58,750, the fair market value of such shares on the date of
    issuance.

    Stock Option Grants - During the nine months ended September 30, 2001,
    pursuant to the formula grant provision under the Company's 1998 Executive
    Incentive Compensation Plan, the Company granted 45,000 options to non-
    employee directors of the Company.   SFAS No. 123, Accounting for Stock-
    Based Compensation, encourages but does not require the Company to record
    compensation cost for employee stock option grants.  The Company has chosen
    to continue to account for employee option grants using Accounting
    Principles Board Opinion No. 25.  No compensation expense has been
    recognized for employee stock option grants.

5.  LONG-TERM LICENSE AGREEMENT

    Wholesale Product Sales and License Agreement - Effective March 28, 2001,
    the Company, through its subsidiaries Paisano Publications, Inc. and
    Easyriders Licensing, Inc. entered into a long-term license agreement (the
    "Products Agreement") with Southern Steel Sportswear, Inc.

                                       10
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)
--------------------------------------------------------------------------------

   ("SSS"), an affiliate of Action Promotions, Inc., of Ormond Beach, Florida
   ("API"), in connection with the Company's wholesale products division.  The
   Company has previously reported that in March 2000, it entered into a long-
   term license agreement with API, in connection with the activities of its
   subsidiary, Easyriders Events (the "Events Transaction").  Pursuant to the
   Events Transaction, API acquired a merchandise purchase credit which as of
   March 28, 2001 amounted to $1,360,195 (the "API Credit").

   Under the Products Agreement, the Company has outsourced to SSS all
   activities pertaining to the design, manufacture, warehousing, shipping and
   fulfillment of orders in connection with the sale of Easyriders-branded
   apparel and related merchandise to its network of retail stores, each of
   which (an "Easyriders Store") conducts business as "Easyriders of _____"
   pursuant to a written license agreement, and through other retail motorcycle-
   oriented stores. (See "Information about Easyriders Licensing," herein.)  The
   Products Agreement is for a term of 10 years, with options to renew for two
   additional 10-year terms.  Pursuant to the Products Agreement, the Company
   retains control over all other channels of distribution, including direct
   sales via its Roadware catalog and Internet Web site, and licensing of
   product opportunities to independent third parties (the "Retail Channel").

    The Products Agreement provides for an initial product inventory purchase of
    $760,195, and the purchase of delivery and transition services, licensing
    rights, customer lists, promotional support and related goods and services,
    all valued at $600,000.  The total of these figures, $1,360,195 was paid by
    SSS via cancellation of the API Credit. During the quarter ended March 31,
    2001, the Company recognized approximately $585,000 of revenues from
    products sold and $500,000 from services rendered in relation to the
    delivery of products, transition support services, customer lists, and
    promotional support.  During the quarter ended June 30, 2001, the Company
    recognized an additional $175,000 of revenues from products shipped.  The
    remaining balance of $100,000, less accumulated amortization calculated
    using the straight-line method over the license period of 10 years, is
    included in deferred revenues on the accompanying consolidated balance
    sheet.

6.  BUSINESS SEGMENTS

    Information by Operating Segment - Operating segments are defined as
    components of an enterprise for which separate financial information is
    available that is evaluated regularly by the chief operating decision-maker,
    or decision-making group, in deciding how to allocate resources and in
    assessing performance.  The Easyriders, Inc. chief operating decision-making
    group is comprised of the chief executive officer and the officers who
    report to him directly.

    Easyriders Inc. has four reportable segments: publishing, goods and
    services, franchising/licensing, and other events and operations.  The
    publishing segment includes magazine and catalog publishing and other
    operations.  The trade goods and services segment distributes motorcycle
    apparel and other related goods to both intermediate and end-users and
    offers motorcycle repair and services through a formerly owned Company
    store.  The franchising/licensing segment includes the franchising/licensing
    of Easyriders motorcycle stores for distribution of equipment and apparel.
    The other events and operations segment includes the coordination and
    sponsorship of motorcycle related events and operations.

                                       11
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)
--------------------------------------------------------------------------------

    Easyriders, Inc. evaluates performance based on profit or loss from
    operations before income taxes, not including nonrecurring gains and losses
    and foreign exchange gains and losses.  (The Company utilizes the other
    events and operations segment as a venue for increased exposure for
    publication sales.)  The accounting policies of the operating segments are
    the same as those described in the summary of significant accounting
    policies.  The financial results from continuing operations for Easyriders,
    Inc.'s four operating segments have been prepared on a basis which is
    consistent with the manner in which Easyriders, Inc.'s management internally
    disaggregates financial information for the purposes of assisting in making
    internal operating decisions.  In this regard, certain common expenses have
    been allocated among segments less precisely than would be required for
    stand alone financial information prepared in accordance with generally
    accepted accounting principles.  Revenue attributed to geographic areas is
    based on customer location.

<TABLE>
<CAPTION>
(in dollars)                                 Publishing     Goods and       Franchising/       Other        Discontinued      Totals
                                                            Services         Licensing      Operations       Operations
                                                                                                           (Food Service)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>           <C>              <C>            <C>            <C>              <C>
Sales external customers - Quarter ended
 September 30, 2001                           5,993,195         216,728              -       102,491                -     6,312,414
------------------------------------------------------------------------------------------------------------------------------------
Sales external customers - Quarter ended
 September 30, 2000                           5,664,871         659,390              -        23,203                -     6,347,464
------------------------------------------------------------------------------------------------------------------------------------
Sales external customers - Year-to-date
 September 30, 2001                          18,129,132       2,500,817              -       919,437                -    21,549,386
------------------------------------------------------------------------------------------------------------------------------------
Sales external customers - Year-to-date
 September 30, 2000                          17,115,389       3,275,103              -     1,641,564                -    22,032,056
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations - Quarter
 ended   September 30, 2001                     956,074        (122,122)          (31)       (25,136)               -       808,785
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations - Quarter
 ended   September 30, 2000                     285,309        (351,290)      (80,263)       (69,006)               -      (215,250)
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations -
 Year-to-date   September 30, 2001            3,130,175         781,237        30,047        112,980                -     4,054,439
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations -
 Year-to-date September 30, 2000              1,018,641        (838,621)     (390,075)       338,500                -       128,445
------------------------------------------------------------------------------------------------------------------------------------
Net Income (loss) from discontinued
 operations -   Quarter ended September
 30, 2001                                             -               -              -             -                -             -
------------------------------------------------------------------------------------------------------------------------------------
Net Income (loss) from discontinued
 operations-Quarter ended September 30,
 2000                                                 -               -              -             -          167,397       167,397
------------------------------------------------------------------------------------------------------------------------------------
Net Income (loss) from discontinued
 operations -   Year-to-date September 30,
 2001                                                 -               -              -             -                -             -
------------------------------------------------------------------------------------------------------------------------------------
Net Income (loss) from discontinued
 operations -   Year-to-date September 30,
 2000                                                 -               -              -             -       (1,811,537)   (1,811,537)
------------------------------------------------------------------------------------------------------------------------------------
Segment Assets at September 30, 2001          7,612,996               -              -       134,077                -     7,747,073
------------------------------------------------------------------------------------------------------------------------------------
Capital Expenditures YTD September 30, 2001     151,908               -              -             -                -       151,908
------------------------------------------------------------------------------------------------------------------------------------
Depreciation/Amortization - Quarter ended
 September 30, 2001                              79,516               -              -             -                -        79,516
------------------------------------------------------------------------------------------------------------------------------------
Depreciation/Amortization - Quarter ended
 September 30, 2000                              82,848               -         2,015         16,341                -       101,204
------------------------------------------------------------------------------------------------------------------------------------
Depreciation/Amortization - Year-to-date
 September 30, 2001                             238,725               -              -         5,606                -       244,331
------------------------------------------------------------------------------------------------------------------------------------
Depreciation/Amortization - Year-to-date
 September 30, 2000                             255,212          16,116         6,235         53,397                -       330,960
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

    A reconciliation of the totals reported for the operating segments to the
    applicable line items in the consolidated financial statements is as
    follows:

                                       12
<PAGE>

EASYRIDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                        Quarter Ended     Year-To Date
                                                                        ------------------------------
<S>                                                                     <C>                  <C>
September 30, 2001:
Income from operations in segment disclosure                            $ 808,785          $ 4,054,439
Unallocated, selling, general and administrative expenses                (678,510)          (1,207,142)
                                                                        ------------------------------
Income (loss) from operations                                           $ 130,275          $ 2,847,297
                                                                        ==============================

September 30, 2000:
Income from operations in segment disclosure                            $(215,250)         $   128,445
Unallocated, selling, general and administrative expenses                (730,142)          (3,509,852)
                                                                        ------------------------------
Income (loss) from operations                                           $(945,392)         $(3,381,407)
                                                                        ==============================


As at September 30, 2001:
Segment assets                                                                             $ 7,747,073
Cash and cash equivalents                                                                      524,525
Receivable from shareholder                                                                    265,518
Goodwill                                                                                    25,547,374
                                                                                           -----------
Total assets                                                                               $34,084,490
                                                                                           ===========

                                                                        Quarter Ended     Year-To-Date
                                                                        ------------------------------
September 30, 2001:
Depreciation and amortization included in segment disclosure            $  79,516          $   244,331
Amortization of goodwill                                                  236,550              709,650
                                                                        ------------------------------
Depreciation and amortization                                           $ 316,066          $   953,981
                                                                        ==============================

September 30, 2000:
Depreciation and amortization included in segment disclosure            $ 101,204          $   330,960
Amortization of goodwill                                                  460,392            2,263,226
                                                                        ------------------------------
Depreciation and amortization                                           $ 561,596          $ 2,594,186
                                                                        ==============================
</TABLE>



    Revenues concerning principal geographic areas are as follows based on
    customer location:

<TABLE>
<CAPTION>
                       USA          Canada        Germany         UK         Australia        Other         Total
                -----------------------------------------------------------------------------------------------------
<S>             <C>             <C>         <C>           <C>           <C>            <C>            <C>
 Q/E 9/30/01        $ 5,428,504     255,190       104,778       113,313         72,551        338,078     $ 6,312,414
 Q/E 9/30/00        $ 5,412,654     244,660        90,020       115,209        105,317        379,604     $ 6,347,464
 YTD 9/30/01        $19,178,968     834,156       301,230       342,652        256,482        635,898     $21,549,386
 YTD 9/30/00        $19,063,049     774,512       342,897       317,618        363,438      1,170,542     $22,032,056
</TABLE>


    The Company's foreign operations consist primarily of international
    newsstand sales and mail-order product sales. The Company does not have any
    identifiable assets attributable to these foreign activities and does not
    separately identify any expenses relating specifically to foreign
    activities. Therefore, income before taxes and net income associated with
    foreign activities is not presented.

                                       13
<PAGE>

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

     Management's discussion and analysis of the results of operations and
financial condition of the Company should be read in conjunction with the
Consolidated Financial Statements and related Notes thereto.

Overview

     Easyriders is a corporation established under the laws of the state of
Delaware on May 13, 1998.  Easyriders currently derives substantially all of its
revenues from Paisano Publications, having sold all of its interests in El Paso
in October 2000.

     On September 23, 1998, Easyriders consummated a series of transactions (the
"Reorganization") comprised of the following: (a) the acquisition by Easyriders
from Joseph Teresi of all of the outstanding common stock of Paisano
Publications and certain affiliated corporations (the "Paisano Companies"),
engaged at the time in (i) publishing special-interest magazines relating
primarily to American-made "V-Twin" motorcycles and tattoo art, (ii) selling
branded motorcycle apparel and accessories through a mail-order catalogue,
events and franchise stores, (iii) producing motorcycle and tattoo-related
events, and franchising retail stores to market its branded motorcycle apparel
and accessories; (b) the acquisition by Easyriders of all of the outstanding
membership interests of El Paso, which at the time was engaged in the operation
of four restaurants under the name "El Paso Bar-B-Que"; and (c) the merger (the
"Merger") of a subsidiary of Easyriders with and into Newriders, Inc., a Nevada
corporation ("Newriders").

     As a result of the Merger (i) each two shares of Newriders common stock,
par value $.01 per share (the "Newriders Common Stock") were exchanged for one
share of Easyriders common stock, par value $.001 per share ("Easyriders Common
Stock"), and the shareholders of Newriders immediately prior to the Merger
became stockholders of Easyriders, (ii) all of the outstanding options, warrants
and other convertible securities exercisable for or convertible into Newriders
Common Stock were exchanged for the right to purchase or convert into one-half
the number of shares of Easyriders Common Stock at an exercise price or
conversion ratio per share equal to two times the exercise price or conversion
ratio provided for in the stock option, warrant or other agreements evidencing
such options, warrants or other convertible securities, and (iii) Newriders, the
Paisano Companies and El Paso became wholly-owned subsidiaries of Easyriders.
The Merger was accounted for as a combination of entities under common control,
similar to a pooling of interest.  Therefore, the historical financial
statements represent the combined financial statements of the Company and
Newriders.  The acquisitions of the Paisano Companies and El Paso were accounted
for as a purchase.

     The acquisition of the Paisano Companies had, and will continue to have, a
material impact on the Company's financial statements; accordingly, current and
future financial statements may not be directly comparable to the Company's
historical financial statements.  In future periods, the amortization of
goodwill will significantly effect the Company's financial statements.

                                       14
<PAGE>

Use of EBITDA

     The following comparative discussion of the results of operations and
financial condition of the Company includes, among other factors, an analysis of
changes in the operating income of the business segments before interest
expense, taxes, depreciation and amortization ("EBITDA") in order to eliminate
the effect on the operating performance of the Paisano Companies of significant
amounts of amortization of intangible assets and interest expense recognized
through the Reorganization. Further, the Company has added back non-cash charges
consisting of stock issuance expenses to derive an adjusted EBITDA ("Adjusted
EBITDA").  Financial analysts generally consider EBITDA to be an important
measure of comparative operating performance for the businesses of the Company
and its subsidiaries, and when used in comparison to debt levels or the coverage
of interest expense as a measure of liquidity.  However, EBITDA should be
considered in addition to, not as a substitute for, operating income, net
income, cash flow and other measures of financial performance and liquidity
reported in accordance with accounting principles generally accepted in the
United States of America.  Also, EBITDA, as calculated by the Company, may not
be comparable to similarly titled measures used by other companies.

                                       15
<PAGE>

Results of Operations

The following table sets forth certain operating data for Easyriders for the
three months ended September 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                            Easyriders   Paisano Companies   Consolidated   Consolidated

                                                      For the Three Months Ended September 30,
                                          --------------------------------------------------------------
                                                  2001             2001           2001           2000
                                                                   (unaudited)
<S>                                          <C>               <C>            <C>           <C>
CONTINUING OPERATIONS:
SALES
Publishing                                     $        -       $5,993,195     $5,993,195    $ 5,664,871
Goods and services                                                 216,728        216,728        659,390
Franchising/Licensing                                                    -              -              -
Other operations                                                   102,491        102,491         23,203
                                          --------------------------------------------------------------
                                                        -        6,312,414      6,312,414      6,347,464

COST OF SALES
Publishing                                                       4,199,885      4,199,885      4,344,703
Goods and services                                                 308,216        308,216        911,385
Franchising/Licensing                                                    -              -              -
Other operations                                                   127,538        127,538         94,019
                                          --------------------------------------------------------------
                                                        -        4,635,639      4,635,639      5,350,107

GROSS MARGIN
Publishing                                                       1,793,310      1,793,310      1,320,168
Goods and services                                                 (91,488)       (91,488)      (251,995)
Franchising/Licensing                                                    -              -              -
Other operations                                                   (25,047)       (25,047)       (70,816)
                                          --------------------------------------------------------------
                                                        -        1,676,775      1,676,775        997,357

EXPENSES
Publishing                                                         837,236        837,236      1,034,859
Goods and services                                                  30,634         30,634         99,295
Franchising/Licensing                                                   31             31         80,263
Other operations                                                        89             89         (1,810)
Unallocated expenses                              572,691          105,819        678,510        730,142
                                          --------------------------------------------------------------
                                                  572,691          973,809      1,546,500      1,942,749

INCOME (LOSS) FROM OPERATIONS
Publishing                                                         956,074        956,074        285,309
Goods and services                                                (122,122)      (122,122)      (351,290)
Franchising/Licensing                                                  (31)           (31)       (80,263)
Other operations                                                   (25,136)       (25,136)       (69,006)
Unallocated                                      (572,691)        (105,819)      (678,510)      (730,142)
                                          --------------------------------------------------------------
                                               $ (572,691)      $  702,966     $  130,275    $  (945,392)
                                          ==============================================================

NET INCOME (LOSS) FROM CONTINUING              $ (778,040)      $  153,529     $ (624,511)   $(1,989,825)
 OPERATIONS

NET INCOME FROM DISCONTINUED                            -                -              -        167,397
 OPERATIONS
                                          --------------------------------------------------------------
NET INCOME (LOSS)                              $ (778,040)      $  153,529     $ (624,511)   $(1,822,428)
                                          ==============================================================
</TABLE>

                                       16
<PAGE>

The following table sets forth certain operating data for Easyriders for the
nine months ended September 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                             Easyriders    Paisano Companies   Consolidated   Consolidated

                                                        For the Nine Months Ended September 30,
                                          ----------------------------------------------------------------
                                                2001                 2001           2001            2000
                                                                     (unaudited)
<S>                                         <C>                 <C>            <C>            <C>
CONTINUING OPERATIONS:
SALES
Publishing                                  $          -         $18,129,132    $18,129,132    $17,115,389
Goods and services                                                 2,500,817      2,500,817      3,275,103
Franchising/Licensing                                                      -              -              -
Other operations                                                     919,437        919,437      1,641,564
                                          ----------------------------------------------------------------
                                                       -          21,549,386     21,549,386     22,032,056

COST OF SALES
Publishing                                                        12,697,095     12,697,095     13,333,235
Goods and services                                                 1,574,445      1,574,445      3,543,199
Franchising/Licensing                                                      -              -              -
Other operations                                                     804,739        804,739      1,297,372
                                          ----------------------------------------------------------------
                                                       -          15,076,279     15,076,279     18,173,806

GROSS MARGIN
Publishing                                                         5,432,037      5,432,037      3,782,154
Goods and services                                                   926,372        926,372       (268,096)
Franchising/Licensing                                                      -              -              -
Other operations                                                     114,698        114,698        344,192
                                          ----------------------------------------------------------------
                                                       -           6,473,107      6,473,107      3,858,250

EXPENSES
Publishing                                                         2,301,862      2,301,862      2,763,513
Goods and services                                                   145,135        145,135        570,525
Franchising/Licensing                                                (30,047)       (30,047)       390,075
Other operations                                                       1,718          1,718          5,692
Unallocated expenses                           1,033,000             174,142      1,207,142      3,509,852
                                          ----------------------------------------------------------------
                                               1,033,000           2,592,810      3,625,810      7,239,657

INCOME (LOSS) FROM OPERATIONS
Publishing                                                         3,130,175      3,130,175      1,018,641
Goods and services                                                   781,237        781,237       (838,621)
Franchising/Licensing                                                 30,047         30,047       (390,075)
Other operations                                                     112,980        112,980        338,500
Unallocated                                   (1,033,000)           (174,142)    (1,207,142)    (3,509,852)
                                          ----------------------------------------------------------------
                                             $(1,033,000)        $ 3,880,297    $ 2,847,297    $(3,381,407)
                                          ================================================================

NET INCOME (LOSS) FROM CONTINUING
 OPERATIONS                                  $(1,697,532)        $ 2,089,249    $   391,717    $(6,875,841)

NET LOSS FROM DISCONTINUED OPERATIONS                  -                   -              -     (1,811,537)
                                          ----------------------------------------------------------------

NET INCOME (LOSS)                            $(1,697,532)        $ 2,089,249    $   391,717    $(8,687,378)
                                          ================================================================
</TABLE>

                                       17
<PAGE>

The following tables set forth the EBITDA calculations for Easyriders for the
three and nine month periods ended September 30, 2001 and 2000, respectively:

<TABLE>
<CAPTION>
                                         Easyriders              Paisano Companies            Consolidated          Consolidated
                                                                  For the Three Months Ended September 30,
                                         ---------------------------------------------------------------------------------------
                                            2001                       2001                      2001                  2000
<S>                                      <C>                     <C>                           <C>                  <C>
Continuing Operations:
Net income (loss)                         $(778,040)                $  153,529                 $(624,511)          $(1,989,825)
Interest expense                            195,449                    550,170                   745,619             1,157,092
Income tax expense                            9,900                          -                     9,900                 3,705
Depreciation/amortization expense                 -                    316,066                   316,066               561,596
                                         -------------------------------------------------------------------------------------
EBITDA - Continuing Operations            $(572,691)                $1,019,765                 $ 447,074           $  (267,432)
                                         =====================================================================================

Discontinued Operations:
Net income                                $       -                 $        -                 $       -           $   167,397
Interest expense                                  -                          -                         -               147,008
Income tax expense                                -                          -                         -                     -
Depreciation/amortization expense                 -                          -                         -               304,685
                                         -------------------------------------------------------------------------------------
EBITDA - Discontinued Operations          $       -                 $        -                 $       -           $   619,090
                                         =====================================================================================

EBITDA                                    $(572,691)                $1,019,765                 $ 447,074           $   351,658
Add back stock issuance expense                   -                          -                         -                 6,721
                                         -------------------------------------------------------------------------------------
Adjusted EBITDA                           $(572,691)                $1,019,765                 $ 447,074           $   358,379
                                         =====================================================================================

</TABLE>

<TABLE>
<CAPTION>
                                                                  For the Nine Months Ended September 30,
                                         --------------------------------------------------------------------------------------
                                            2001                       2001                      2001                  2000
<S>                                      <C>                     <C>                           <C>                  <C>
Continuing Operations:
Net income (loss)                         $(1,697,532)              $2,089,249                 $  391,717          $(6,875,841)
Interest expense                              674,664                1,858,317                  2,532,981            3,246,511
Income tax expense                             42,625                        -                     42,625               13,557
Depreciation/amortization expense               5,606                  948,375                    953,981            2,594,186
                                         --------------------------------------------------------------------------------------
EBITDA - Continuing Operations            $  (974,637)              $4,895,941                 $3,921,304         $(1,021,587)
                                         ======================================================================================

Discontinued Operations:
Net loss                                  $         -               $        -                 $        -         $(1,811,537)
Interest expense                                    -                        -                          -             388,659
Income tax expense                                  -                        -                          -                   -
Depreciation/amortization expense                   -                        -                          -             797,959
                                         --------------------------------------------------------------------------------------
EBITDA - Discontinued Operations          $         -               $        -                 $        -         $  (624,919)
                                         ======================================================================================

EBITDA                                    $  (974,637)              $4,895,941                 $3,921,304         $(1,646,506)
Add back stock issuance expense                     -                        -                          -             202,305
                                         --------------------------------------------------------------------------------------
Adjusted EBITDA                           $  (974,637)              $4,895,941                 $3,921,304         $(1,444,201)
                                         ======================================================================================
</TABLE>

                                       18
<PAGE>

Results of Operations of Easyriders Inc. and subsidiaries

     During the three months ended September 30, 2001, the Company generated a
net loss of $624,511, reflecting an improvement in results of $1,197,917, or
66%, when compared with the net loss of $1,822,428 for the three months ended
September 30, 2000.  The net income for the nine months ended September 30, 2001
was $391,717, reflecting an improvement of $9,079,095 when compared with the net
loss of $8,687,378 for the same period in the prior year.  The improvement for
the three month period can be attributed to an improvement in gross margin of
$679,418, a $396,249 reduction in operating expenses, and a $289,647 reduction
in interest and other expenses and income taxes, offset by a $167,397 decrease
in income from discontinued operations.  The improvement for the nine month
period can be attributed to an improvement in gross margin of $2,614,857, a
$3,613,847 reduction in operating expenses, a $1,038,854 decrease in interest
and other expenses and income taxes, and a $1,811,537 decrease in loss from
discontinued operations.  Net income from continuing operations improved
$1,365,314, or 69%, for the three month periods from a net loss of $1,989,825 in
2000 to a net loss of $624,511 in 2001, and $7,267,558 for the nine month
periods from a net loss of $6,875,841 in 2000 to net income of $391,717 in 2001.

     The operating results for both the three and nine month periods ended
September 30, 2001 are burdened by the substantial costs of the Chapter 11
filings.  Net of these expenses, which total $496,266 for both the three and
nine month periods, the net loss generated for the quarter is reduced to
$128,245, resulting in an improvement of $1,694,183, or 93%, when compared to
the same quarter in the previous year.  For the nine month period, net income
before bankruptcy expenses increased to $887,983, reflecting an improvement of
$9,575,361 when compared to the same period in the previous year.

     On October 5, 2000, the Company sold all of its interests in El Paso.  The
subsidiary is reflected as discontinued operations for both the three and nine
month periods ended September 30, 2000 in the accompanying financial statements
so that the periods presented are comparable.

     Net loss per share, both basic and diluted, improved $0.038 per share, or
59%, to $0.026 per share for the three months ended September 30, 2001, as
compared to the net loss per share of $0.064 for the three months ended
September 30, 2000.  Basic net income per share for the nine month periods
improved $0.342 per share from a net loss of $0.327 per share in 2000 to net
income of $0.015 per share in 2001.  Diluted net income per share for the nine
month periods improved $0.341 per share from a net loss of $0.327 per share in
2000 to net income of $0.014 per share in 2001. Basic and diluted net loss per
share from continuing operations improved $0.044 per share, or 63%, for the
three month periods.   Basic net income per share from continuing operations
improved $0.274 per share for the nine month periods, while diluted net income
per share from continuing operations improved $0.273 per share.  Based on the
results of operations net of bankruptcy expenses, basic net loss per share for
the three month period ended September 30, 2001 improved to $0.005 per share,
and basic net income per share for the nine month period then ended improved to
$0.035 per share.

     The Company experienced positive EBITDA in the amount of $447,074 and
$3,921,304 for the three and nine month periods ended September 30, 2001,
respectively, compared with EBITDA of $351,658 and negative EBITDA of $1,646,506
for the three and nine month periods ended September 30, 2000, reflecting an
improvement in EBITDA of $95,416, or 27%, for the three month periods, and an
improvement in EBITDA of $5,567,810 for the nine month periods.  Adjusted EBITDA
reflects the add-back of non-cash charges related to stock issuance expenses of
$6,721 and $202,305 for the three and nine month periods ended September 30,
2000, respectively. Stock issuance expense arise when shares are issued at a
discount from the market price.  There have been no stock issuance expenses in
2001.  As a result, for the three and nine month periods ended September 30,
2000, the Company had adjusted EBITDA of $358,379 and adjusted negative EBITDA
of $1,444,201, respectively, resulting in

                                       19
<PAGE>

improvements in adjusted EBITDA of $88,695, or 25%, for the three month periods,
and $5,365,505 for the nine month periods.  EBITDA from continuing operations
was $447,074 and $3,921,304 for the three and nine month periods ended September
30, 2001, respectively, compared with negative EBITDA from continuing operations
of $267,432 and $1,021,587 for the three and nine month periods ended September
30, 2000, reflecting an improvement in EBITDA from continuing operations of
$714,506 for the three month periods, and an improvement in EBITDA from
continuing operations of $4,942,891 for the nine month periods.

Results of Operations: Paisano Companies

     The operating results of the Company for both the three and nine month
periods ended September 30, 2001 and September 30, 2000 include the results for
the Paisano Companies.

     The Paisano Companies' publishing segment includes sales generated from
subscription sales, newsstand sales and advertising sales related to the
Companies' special interest magazines.  The related cost of sales includes
direct costs related to the sales, consisting primarily of printing, paper,
publication and distribution costs.  The goods and services segment includes
sales generated from the sale of apparel and other products through its mail-
order catalogs, one retail store, and franchise/license programs.  The related
cost of sales includes the costs of the apparel and other products.  The
franchising/licensing segment includes sales generated through fees charged to
the operating franchisees/licensees of the retail stores, which segment has no
material related cost of sales.  Through March 2000, the Paisano Companies'
other segment primarily included Easyriders Events, Inc. (Events), which
generated substantially all of its revenues from the sale of tickets to
motorcycle rodeos, motorcycle shows, and tattoo shows.  In March 2000, the
Company licensed its rights to produce and manage these events.  Since then,
such revenues have been generated through royalties and license fees paid
pursuant to this Events outsourcing transaction.  Cost of sales for the other
segment consists primarily of direct costs of promoting the events.

     The Paisano Companies' total sales decreased $35,050, or 1%, from
$6,347,464 for the three months ended September 30, 2000 to $6,312,414 for the
same three months in 2001.  Total sales for the nine month periods decreased
$482,670, or 2%, from $22,032,056 for the nine months ended September 30, 2000
to $21,549,386 for the same nine months in 2001.  The decrease for the nine
month periods can be substantially attributed to a combination of 1) reduced
revenues from Easyriders of Columbus of $874,025 as a result of  this store
being sold in April 2000, 2) reduced revenues from Easyriders Events of
$1,035,854 as a result of a restructuring in March 2000 under which a third
party licensed the rights to produce and manage events and to sell event-
specific merchandise, and 3) increased revenues from Paisano Publications of
$1,427,259 resulting primarily from the recognition of a $500,000 in revenues
from the products sold and services rendered under the terms of the licensing
arrangement with SSS and the sale of $584,966 of merchandise to SSS.

     The Paisano Companies' gross margin increased $679,418, or 68%, from
$997,357 for the three months ended September 30, 2000, to $1,676,775 for the
three months ended September 30, 2001.  For the nine month periods, gross margin
increased $2,614,858, or 68%, from $3,858,250 in 2000 to $6,473,107 in 2001.  As
a percentage of sales, gross margin for the Paisano Companies increased from 16%
to 27% for the three month periods, and from 18% to 30% for the nine month
periods.  The increase in gross margin for both the three and nine month periods
can be attributed to 1) an increase in gross margin in the publishing segment of
$473,142 and $1,649,884, respectively, primarily due to a combination of a)
higher cover prices, and b) cost savings from reduced personnel, space rental,
and travel, 2) an increase in gross margin of $160,507 and $1,194,468,
respectively, in the goods and services segment, of which $500,000 of the
increase for the nine month period is attributable to the SSS licensing
agreement, and the remainder is the result of increased sales and decreased
costs of personnel, space rent,

                                       20
<PAGE>

and travel, and 3) an increase in gross margin from the other operations segment
of $45,769 for the three month periods substantially attributable to the
reduction in licensing expenses incurred in the quarter ended September 2000
under a product licensing contract with an outside firm, and a decrease in gross
margin in this segment of $229,494 for the nine month periods, primarily
resulting from the outsourcing of our events division in March 2000.

     The Paisano Companies' income from operations improved $923,665, or 419%,
from a loss of $220,699 for the three months ended September 30, 2000, to income
of $702,966 for the three months ended September 30, 2001.  The Paisano
Companies' income from operations improved $4,676,908, or 587%, from a loss of
$796,612 for the nine months ended September 30, 2000, to income of $3,880,297
for the nine months ended September 30, 2001.  The improvement for the three
month periods can be attributed to an improvement in gross margin of $679,418
combined with a decrease in operating expenses of $244,247. The improvement for
the nine month periods can be attributed to an increase in gross margin of
$2,614,858 combined with a decrease in operating expenses of $2,062,050.  The
decrease in operating expenses for both the three and nine month periods can be
substantially attributed to the combination of 1) reduced goodwill amortization
expense of $223,842 and $1,553,576, respectively, resulting from the combination
of a) an $866,470 accelerated amortization of goodwill arising from the sale of
Columbus in April 2000, and b) the impact of the $25M write-off of goodwill
effected December 2000, 2) reduced expenses of $80,232 and $420,122,
respectively, resulting from the closure of Franchising, 3) reduced expenses of
$273,722 for the nine month period resulting from the closure of Columbus, 4)
reduction in stock issuance expenses of $6,721 and $202,305, respectively, and
5) increased professional fees of $105,819 incurred during the three month
period as a result of the Chapter 11 filings in July 2001.

     Expenses of the Paisano Companies not allocated to any segment amount to
$105,819 and $174,142 for the three and nine months ended September 30, 2001,
and $5,449 and $925,057 for the three and nine months ended September 30, 2000.
The allocated expenses include payroll, promotion, and other general and
administrative expenses specifically attributable to the business segments.  The
unallocated expenses represent legal and professional fees, expenses arising
from the bankruptcy filings and other expenses which are not specifically
attributable to a particular business segment.

     Payroll and related benefits for the Paisano Companies increased $31,269,
or 11%, from $278,156 for the quarter ended September 30, 2000 to $309,425 for
the same quarter in 2001, and decreased $31,339, or 4%, from  $905,716 for the
nine months ended September 30, 2000 to $874,377 for the same nine months in
2001.  The increase for the three month periods can be primarily attributed to
the hiring of inside counsel in December 2000.  The decrease for the nine month
periods is substantially attributable to efforts to reduce costs by decreasing
staff size.  Depreciation and amortization for the Paisano Companies for the
quarters ended September 30, 2001 and 2000 totaled $316,066 and $545,255,
respectively, and for the nine month periods ended September 30, 2001 and 2000
totaled $948,375 and $2,545,163, respectively, of which $236,550 and $709,650
for the three and nine months ended September 30, 2001, respectively, and
$460,392 and $2,263,226 for the three and nine months ended in the prior year,
respectively, relates to the amortization of the goodwill created out of the
Paisano Companies' acquisition by the Company.  The decrease in the amortization
of goodwill, and in turn in the depreciation and amortization in total, can be
substantially attributed to the recording of a $25 million reduction of the
balance in goodwill as a result of impairment as of December 31, 2000.  In
addition, the amortization for the nine month period ended September 30, 2000
includes $866,470 of accelerated amortization of the goodwill attributed to
Easyriders of Columbus, as such store was sold effective April 30, 2000.

     Interest expense for the Paisano Companies decreased $235,535, or 30%, from
$785,705 for the quarter ended September 30, 2000 to $550,170 for the quarter
ended September 30, 2001.  For the nine

                                       21
<PAGE>

month periods ended September 30, 2000 and 2001, interest expense decreased
$345,613, or 16%, from $2,195,552 to $1,849,939, respectively. These decreases
are primarily attributable to decreases in the prime rate, which declined from
an average of 9.1% for the nine month period ended September 30, 2000, to an
average of 7.7% for the nine month period ended September 30, 2001.

     The net income for the Paisano Companies improved $1,153,672, or 115%, from
a loss of $1,000,143 for the three months ended September 30, 2000 to income of
$153,529 for the three months ended September 30, 2001.  The net income for the
nine month periods improved $5,895,769, or 155%, from a loss of $3,806,520 to
income of $2,089,249. The improvement in net income for both the three and nine
month periods can be primarily attributed to the results of operations for
Paisano Publications, Inc. which improved by $1,077,629, or 117%, from a net
loss of $923,987 to net income of $153,642 for the quarters ended September 30,
2000 and 2001, respectively, and improved results by $6,392,518, or 148%, from a
net loss of $4,323,248 to net income of $2,069,270 for the nine month periods
then ended.  EBITDA for the three month periods improved by $688,472, from
$331,293 for the three months ended September 30, 2000 to $1,019,765 for the
three months ended September 30, 2001.  EBITDA for the nine month periods
improved by $3,955,470 from $940,471 for the nine months ended September 30,
2000 to $4,895,941 for the nine months ended September 30, 2001.

     The principal raw material used in the publishing operations of the Paisano
Companies is paper. Paper costs represented approximately 17% and 18% of Paisano
Publications' production, selling and other direct costs for the three months
ended September 30, 2001 and 2000, respectively, and approximately 18% for both
nine month periods then ended. Certain commodity grades of paper have shown
considerable price volatility over the last decade.  There can be no assurance
that future fluctuations in paper prices will not have a material adverse effect
on the Paisano Companies' results of operations or financial condition.

     The profitability of the Paisano Companies' publishing segment is also
affected by the cost of postage and could be materially adversely affected if
there is an increase in postal rates. No assurance can be given that the
publishing segment can recoup paper or postal cost increases by passing them
through to its advertisers and readers. In addition, future fluctuations in
paper prices and/or postal rates could have a material effect on the results of
operations and financial condition of the publishing segments.

Liquidity and Capital Resources

     The Company's primary cash requirements are to fund the Company's operating
costs (primarily paper, payroll and related expenses) and working capital needs
(primarily accounts receivable, inventory, prepaid expenses and debt service).
On September 30, 2001, the Company had positive working capital of $1.5 million.

     Cash provided by operating activities from continuing operations during the
nine month period ended September 30, 2001 totaled approximately $0.6 million.
The operating net income of $0.4 million was increased by several non-cash
charges including $1.0 million for depreciation and amortization, $0.1 million
for expenses settled with common stock, $0.1 million for non-cash interest
expenses, and $0.2 million of amortization of debt issuance costs, and offset by
$0.1 million of gains from the Martin Unwind transaction and the sale of fixed
assets.  Cash of $1.1 million was used for changes in operating accounts.

     Upon its acquisition by the Company, Paisano Publications obtained an
aggregate of $22,000,000 in Nomura Indebtedness.  This financing was comprised
of a $17,000,000 senior term loan (the "Term

                                       22
<PAGE>

Loan") and a $5,000,000 revolving loan (the "Revolving Loan"). The proceeds from
the Term Loan plus $3,500,000 of the Revolving Loan were used to repay certain
promissory notes issued to the shareholder of the Paisano Companies in
conjunction with the Paisano Acquisition and to pay certain acquisition
expenses. At September 30, 2001, there were no available borrowings under the
Revolving Loan.

     The Nomura Indebtedness is guaranteed (the "Guarantees") by the Company and
the Paisano Companies, other than Paisano Publications (the "Guarantors").  The
Nomura Indebtedness bears interest at an annual rate equal to the prime rate of
the Lender from time to time plus 1.85%, payable monthly.  The Nomura
Indebtedness and the Guarantees are secured by a first priority security
interest in substantially all of the tangible and intangible assets (owned or
hereafter acquired) of the Company and the Paisano Companies, including all of
the capital stock or equity interests of the Paisano Companies and Newriders.
The Nomura Indebtedness and the Guarantees constitute the primary secured
indebtedness of Paisano Publications and Guarantors.

     The Nomura Indebtedness, approximately $21.0 million, became due and
payable on September 23, 2001.  In view of the Company's anticipated inability
to repay the entire principal on such date, and Nomura's unwillingness to accept
a lesser amount, or to extend the maturity date, in or about May, 2001,
management began discussing with Nomura the possibility of filing for Chapter 11
relief, which led to protracted negotiations concerning a Cash Collateral
Stipulation (the "First CCS").  The First CCS was based upon a detailed budget
which Nomura reviewed and ultimately approved, subject to reserving all of its
rights under the Nomura Credit Agreement (the "First CCS Budget").

     Easyriders, Inc. and Paisano Publications filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code on July 17, 2001, and the First
CCS was formally approved by the Bankruptcy Court on an interim basis at an
interim hearing held on July 20, 2001, pending a final hearing to be held on
August 21, 2001.  Between the time of the interim hearing and the final hearing,
an Official Committee of Unsecured Creditors (the "OCC") was formed to represent
the interests of the unsecured creditors.  Prior to the final hearing,
Easyriders, Inc., Paisano Publications, the OCC and Nomura entered into a cash
collateral stipulation (the "Second CCS") which modified the terms of the First
CCS and which provided for the Company to continue to pay expenses in accordance
with an agreed upon budget (the "Second CCS Budget") through October 31, 2001.
In accordance with the First CCS, the First CCS Budget, the Second CCS and the
Second CCS Budget, the Company thereafter made payments to Nomura (with no
agreement as to the application of such payments) computed in an amount equal to
Nomura's pre-Chapter 11 interest (the "Computed Payments"), in the full amount
thereof, for the months of May, June, July, August and September, 2001.

     The First CCS remained in effect until August 31, 2001.  Pursuant to the
terms of the First CCS, in addition to the payments set forth immediately above,
the Company made an "excess cash flow payment" in the amount of $23,699 to
Nomura for the month of July, 2001.  Pursuant to the terms of the Second CCS,
the Company is required to deposit all of their "Net Income" (as defined in the
Second CCS) after payment of the amounts to Nomura set forth above into a
segregated bank account (the "Blocked Account").  At a hearing held on October
24, 2001, the Bankruptcy Court granted the Company's motion for authority to
continue using cash collateral (the "CCM") through February 28, 2002 to pay
expenses in accordance with the budget attached to the CCM.   At the hearing
held on October 24, 2001, the Bankruptcy Court also ordered the Company to stop
making any further payments to Nomura and to deposit the payments that the
Company would otherwise have made to Nomura into the Blocked Account.

     Prior to its filing for Chapter 11 relief on July 17, 2001, the Company
made regular monthly interest payments to Nomura in respect of the Nomura
Indebtedness. After its bankruptcy filing, in accordance with orders of the
Bankruptcy Court, the Company continued to make such payments to

                                       23
<PAGE>

Nomura through October 31, 2001 (the "Post-Petition Payments"). No agreement was
made between the parties and no order of the Bankruptcy Court was issued as to
the application of any of the Post-Petition Payments made by the Debtors to
Nomura. Under the Bankruptcy Code, if the value of Nomura's collateral is less
than the amount of Nomura's "allowed claim," Nomura is not entitled to any post-
bankruptcy interest and Nomura's allowed claim is bifurcated into an allowed
secured claim equal to the value of Nomura's collateral and an allowed unsecured
claim equal to the balance of Nomura's allowed claim. The Company believes that
the funds used to make the Post-Petition Payments to Nomura was not part of
Nomura's collateral and therefore should reduce the amount of Nomura's allowed
secured claim on a dollar-for-dollar basis. No determination has been made by
the Bankruptcy Court and no agreement has been reached between the parties in
this regard. The Company has filed a motion with the Bankruptcy Court to
determine the value of Nomura's allowed secured claim. A status conference on
that motion is scheduled to be held on November 21, 2001. The Company
anticipates that the Bankruptcy Court will provide the parties with a trial date
to litigate this issue at the November 21, 2001 status conference. The Company
is also in the process of preparing a complaint to file in the Bankruptcy Court
to determine to what extent, if any, the Company's cash constitutes part of
Nomura's collateral. Until the value of Nomura's allowed secured claim and the
extent to which, if any, the Company's cash constitutes part of Nomura's
collateral is determined by the Bankruptcy Court, the Company will continue to
report all Post-Petition Payments made to Nomura as interest, and if a
determination is made at some later date that such Post-Petition Payments to
Nomura do not constitute interest to Nomura, the Company will show such
adjustment in its financial reports.

     Pursuant to the terms of the First CCS, the Company engaged the Westlake
Village, CA-based investment banking firm of Murphy Noell Capital ("MNC") to
provide financial advisory and investment banking services to the Company.  At a
hearing held on September 25, 2001, the Bankruptcy Court approved the Company's
employment of MNC for such purposes effective as of the date of the Company'
bankruptcy filings and continuing through October 30, 2001, without prejudice to
the Company's right to seek a further order of the Bankruptcy Court to extend
the term of the Company's employment of MNC beyond October 30, 2001.  Pursuant
to the terms of its engagement, MNC prepared a presentation book on the Company,
solicited prospective replacement lenders, prospective buyers of the Company's
assets, and financial backers of a plan of reorganization, and MNC provided
financial advisory services to the Company in connection with the pending
Chapter 11 bankruptcy cases.  At a hearing held on October 30, 2001, the Company
requested the Bankruptcy Court to approve the Company's continued employment of
MNC beyond October 30, 2001.  However, both Nomura and the OCC opposed any
further employment by the Company of MNC, and the Bankruptcy Court denied the
Company's motion to continue the Company's employment of MNC beyond October 30,
2001.

     During the pendency of the Chapter 11 cases, Nomura is prevented from
foreclosing on its collateral pursuant to the automatic stay provisions of the
Bankruptcy Code absent a Bankruptcy Court order to the contrary.

     November 14, 2001 was both the last day of the Company's exclusive period
to file a Plan of Reorganization and the Bankruptcy Court imposed deadline for
the Company to file a Plan of Reorganization.  The Company recently filed a
motion with the Bankruptcy Court seeking to extend both of these deadlines.  A
hearing on that motion was held on November 7, 2001 at which time the Bankruptcy
Court denied the Company's motion to extend its exclusive period to file a Plan
of Reorganization, terminated the Company's exclusivity periods, and extended
the Bankruptcy Court imposed deadline for the Company to file a Plan of
Reorganization from November 14, 2001 to January 18, 2002.  By reason of the
Court's ruling on November 7, 2001, other parties in interest are permitted to
file a competing Plan of Reorganization.

                                       24
<PAGE>

     The Nomura Credit Agreement sets forth (a) requirements for payments to
Nomura out of Excess Cash Flow, and (b) conditions under which dividends can be
paid and advances made by Paisano Publications to the Company out of Excess Cash
Flow.  These provisions have been superseded by the CCS and subsequent
Bankruptcy Court orders, pursuant to which all expenses of the Company and
Paisano Publications, on a consolidated basis, are being paid pursant to the a
court-approved Budget.

     The Nomura Credit Agreement contains numerous operating and financial
covenants, including, but not limited to, payment of dividends, limitations on
indebtedness and the maintenance of minimum net worth, minimum working capital,
interest coverage ratios and the achievement of cash flow measures. As of
September 30, 2001, the Company was not in compliance with any of such financial
covenants.  In addition, as of March 1, 2001, the Company was not in compliance
with certain technical compliance provisions of the Nomura Credit Agreement.  In
connection with the Company's bankruptcy filing, the Bankruptcy Court order of
October 24, 2001 presently governs the Company's payment and performance
obligations to Nomura.

     In connection with the Paisano Acquisition, the Company issued Subordinated
Seller Notes in the aggregate amount of $13,000,000 to Joseph Teresi, the sole
shareholder of the Paisano Companies prior to the Paisano Acquisition. The
Subordinated Seller Notes consisted of a subordinated promissory note in the
amount of $5,000,000, a limited recourse subordinated promissory note in the
amount of $5,000,000 secured by the Martin Mirror Note (as defined in the
applicable instruments) and a short-term subordinated promissory note in the
amount of $3,000,000.  The first two notes (the "Subordinated Notes") bear
interest at an annual rate that escalates from 6% to 10% and may be extended for
an additional five years.  The remaining $3,000,000 (the "Short Term Note") was
initially issued as a 90 day note that bears interest at an annual rate of 10%.
On April 3, 2000, the then remaining principal and interest balance on the
$5,000,000 subordinated promissory note was exchanged for 3,356,710 shares of
Easyriders, Inc. Common Stock issued to Mr. Teresi.  Mr. Teresi has agreed to
defer collection of current interest on the remaining $8,000,000 of the
Subordinated Seller Notes until after March 2002.

    In October 1999, Paisano Publications issued a $275,000 increasing rate
secured promissory note to an investment partnership, Siena Capital Partners,
L.P.  This loan (the "Siena Loan") is subordinate to the Nomura Indebtedness.
The loan bears interest at a rate of 20% per annum (increasing by 1% monthly
beginning April 14, 2000), and is due and payable with accrued interest on
October 14, 2000. Warrants to purchase 100,000 shares of the Common Stock of the
Company  were issued with an exercise price of $0.01 per share. If the Siena
Loan has been paid off in its entirety by April 13, 2000, the warrants become
null and void. In addition, if the balance is not paid in full by July 13, 2000,
the Company must issue warrants to purchase an additional 300,000 shares of the
Common Stock of the Company, and if the balance is not paid in full by October
13, 2000, the Company must issue warrants to purchase an additional 100,000
shares of the Common Stock of the Company.  Thereafter, until the loan is paid
off in full, the Company must issue warrants to purchase 150,000 shares of the
Common Stock of the Company on the 13th day of each month.

    As of April 13, 2000, the Company did not possess the resources to pay off
the Siena Loan.  However, John Martin and Joseph Teresi were granted a right of
first refusal in connection with any assignment of the Siena Loan.  Based on
this right, the Company pursued negotiations with Mr. Teresi and Mr. Martin
concerning their assumption of the Siena Loan upon terms more favorable to the
Company.  These negotiations were successful and on April 13, 2000, Mr. Martin
and Mr. Teresi each paid to Siena the sum of $137,500 and assumed the position
of Siena with respect to the Siena Loan.  Concurrently, the first 100,000
warrants vested, and Mr. Martin and Mr. Teresi agreed to make the following
modifications to the Siena Loan terms:

                                       25
<PAGE>

  .  The interest rate was reduced from 20% per annum to 13% per annum.

  .  Provided the Siena Loan is paid off by December 31, 2000, twenty percent
     (20%) of all warrants vested by and through such date will be surrendered.

     As of December 31, 2000, the Company did not possess the resources to pay
off the Siena Loan.  As a result, as provided under the modified terms, an
additional 350,000 warrants vested to each of Mr. Martin and Mr. Teresi.  In
addition, as of March 13, 2001, the Company still did not possess the resources
to pay off the Siena Loan and, as a result, an additional 225,000 warrants
vested to each of Mr. Martin and Mr. Teresi.  As of March 30, 2001, Mr. Teresi
aquired all of Mr. Martin's interest in the Siena Loan, and all warrants vested
up to such date.  Concurrently, in an amendment to the terms of the loan,  Mr.
Teresi relinquished the right to receive additional warrants.

     On October 5, 2000, the Company sold all interests in El Paso Bar-B-Que
Company to a newly formed subsidiary of Culinary Holdings, Inc. for a
combination of cash in the amount of $4,000,000 and the assumption of
liabilities in the amount of approximately $6,700,000.  In accordance with the
terms of the sale transaction, the Company forgave a net intercompany receivable
of $782,753. In addition, Culinary Holdings assumed $1,000,000 of convertible
debentures held by a director of the Company, who thereupon released the Company
from any obligation in connection therewith.

     The Company, as it is currently configured, is presently able to meet its
liquidity obligations, by reason of the protections afforded by Chapter 11 and
the Bankruptcy Court order of October 24, 2001 concerning continued use of cash
collateral.  If management is successful in formulating a Plan of Reorganization
which is confirmed by the Bankruptcy Court, it is anticipated that upon emerging
from Chapter 11 the Company will continue to be able to meet its liquidity
obligations, based on a restructured balance sheet.  A sale of the Company's
assets is also a possible outcome of the Company's Chapter 11 case.  In any
event, the Company cannot now predict the outcome of the Chapter 11 cases.

Forward-Looking Information and Certain Factors

     Certain statements in this Form 10-Q and in future filings by the Company
with the Securities and Exchange Commission, in the Company's press releases,
and in oral statements made by or with the approval of an authorized executive
officer constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act").  The
forward-looking statements are subject to numerous risks and uncertainties that
could cause actual results to differ materially from those set forth in such
forward-looking statements.  Such risks and uncertainties include, without
limitation, risks associated with future capital needs, management of growth,
availability of adequate financing, integration of business operations,
concentration of stock ownership, restrictions imposed on the Company by the
Lender, the magazine publishing and restaurant business, paper, and other raw
material prices and other factors discussed herein, in the Company's
Prospectus/Proxy Statement on Form S-4 dated September 8, 1998 and other filings
submitted to the Securities and Exchange Commission.

Recent Accounting Pronouncements

     Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting
for Derivative Instruments and Hedging Activities, was issued in June 1998 and
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities.  SFAS No.
133 was initially effective for all fiscal quarters of fiscal years beginning
after June 15, 1999.  In July 1999, SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of

                                       26
<PAGE>

FASB Statement No. 133, was issued which delays the effective date of SFAS No.
133 to fiscal years beginning after June 15, 2000. The Company does not believe
that the adoption of this new standard will have a material impact on its
financial position or results of operations.

     In December 1999, the SEC staff issued Staff Accounting Bulletin (SAB) No.
101, Revenue Recognition in Financial Statements, which became effective
December 2000.  SAB No. 101 summarizes the SEC staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements.  The application of this SAB did not have a material effect on the
Company's revenue recognition policies.

     In March 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44 of Accounting Principles Board Opinion No. 25 Accounting
for Certain Transactions Involving Stock Compensation, which, among other
things, addressed accounting consequences of a modification that reduces the
exercise price of a fixed stock option award (otherwise known as repricing). If
the exercise price of a fixed stock option award is reduced, the award must be
accounted for as variable stock option plan from the date of the modification to
the date the award is exercised, is forfeited, or expires unexercised. The
exercise price of an option award has been reduced if the fair value of the
consideration required to be paid by the grantee upon exercise is less than or
potentially less than the fair value of the consideration that was required to
be paid pursuant to the award's original terms. The requirements about
modifications to fixed stock option awards that directly or indirectly reduce
the exercise price of an award apply to modifications made after December 15,
1998, and will be applied prospectively as of July 1, 2000.  The adoption of
this interpretation did not impact the Company's financial statements.

     In January 2001, the Financial Accounting Standards Board Emerging Issues
Task Force issued EITF 00-27 effective for convertible debt instruments issued
after November 16, 2000. This pronouncement requires the use of the intrinsic
value method for recognition of the detachable and imbedded equity features
included with indebtedness, and requires amortization of the amount associated
with the convertibility feature over the life of the debt instrument rather than
the period for which the instrument first becomes convertible.  Inasmuch as all
debt instruments that were entered into prior to November 16, 2000 and all of
the debt discount relating to the beneficial conversion feature was previously
recognized as expense in accordance with EITF 98-5, there is no impact on these
financial statements.  This EITF 00-27, could impact future financial
statements, should the Company enter into such agreements.

     In July 2001, the FASB issued SFAS No. 141 "Business Combinations."  SFAS
No. 141 supersedes Accounting Principles Board ("APB") No. 16 and requires that
any business combinations initiated after June 30, 2001 be accounted for as a
purchase; therefore, eliminating the pooling-of-interest method defined in APB
16.  The statement is effective for any business combination initiated after
June 30, 2001 and shall apply to all business combinations accounted for by the
purchase method for which the date of acquisition is July 1, 2001 or later.  The
Company does not expect the adoption to have a material impact to the Company's
financial position or results of operations since the Company has not
participated in such activities covered under this pronouncement.

     In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangibles."  SFAS No. 142 addresses the initial recognition, measurement and
amortization of intangible assets acquired individually or with a group of other
assets (but not those acquired in a business combination) and addresses the
amortization provisions for excess cost over fair value of net assets acquired
or intangibles acquired in a business combination. The statement is effective
for fiscal years beginning after December 15, 2001, and is effective July 1,
2001 for any intangibles acquired in a business combination initiated after June
30, 2001.  The Company is evaluating any accounting effect, if any, arising from
the recently issued SFAS No. 142, "Goodwill and Other Intangibles" on the
Company's financial position or results of operations.

                                       27
<PAGE>

     In October 2001, the FASB recently issued SFAS No. 143, "Accounting for
Asset Retirement Obligations," which requires companies to record the fair value
of a liability for asset retirement obligations in the period in which they are
incurred.  The statement applies to a company's legal obligations associated
with the retirement of a tangible long-lived asset that results from the
acquisition, construction, and development or through the normal operation of a
long-lived asset.  When a liability is initially recorded, the company would
capitalize the cost, thereby increasing the carrying amount of the related
asset.  The capitalized asset retirement cost is depreciated over the life of
the respective asset while the liability is accreted to its present value.  Upon
settlement of the liability, the obligation is settled at its recorded amount or
the company incurs a gain or loss. The statement is effective for fiscal years
beginning after June 30, 2002.  The Company does not expect the adoption to have
a material impact to the Company's financial position or results of operations.

     In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets".  Statement 144 addresses the
accounting and reporting for the impairment or disposal of long-lived assets.
The statement provides a single accounting model for long-lived assets to be
disposed of.  New criteria must be met to classify the asset as an asset held-
for-sale. This statement also focuses on reporting the effects of a disposal of
a segment of a business.  This statement is effective for fiscal years beginning
after December 15, 2001.  The Company does not expect the adoption to have a
material impact to the Company's financial position or results of operations.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

     The Company is exposed to a variety of risks, including paper price
volatility, postal rate increases and changes in interest rates affecting the
cost of its debt.

Paper Price Volatility

     A primary component of the Company's cost of sales in the magazine
publishing segment is the cost of paper. Consequently, increases in paper prices
can adversely impact the Company results of operations.

Interest Rates

     The Company is subject to certain interest rate risk related to the Senior
Loans. The Senior Loans matured on September 23, 2001 and bear interest at an
annual rate equal to the prime rate of the Lender plus 1.85% payable monthly.
Excluding any effect from the Default Rate of interest asserted by Nomura, the
interest rate on the balance of $20,968,002 outstanding on September 30, 2001
was 7.85 %. An increase in interest rates of 1% would result in an increase in
interest expense of approximately $210,000.

     The Company's remaining long-term debt has fixed interest rates and
therefore the Company does not believe an increase in interest rates would have
a material impact on the Company's consolidated financial statements.

     Notwithstanding the foregoing, as noted above under Part I, Item 1,
Footnote 1 under "Basis of Presentation," post-petition payments to Nomura may
not ultimately be deemed to be "interest."

                                       28
<PAGE>

PART II -- OTHER INFORMATION
----------------------------

Item 1.  Legal Proceedings.

         The Hatcher Litigation

         On April 28, 2000, an action was filed in the U.S District court for
the Central District of California (Los Angeles) by Leon Hatcher, Richard
Stafford and entities controlled by them, naming as defendants the Company,
Newriders, Paisano Publications, El Paso, Easyriders Franchising, Easyriders
Licensing, Easyriders of Ohio, and the following current or former officers
and/or directors of the Company (the "Non-Debtor Defendants"): John Martin,
William Prather, Joseph Teresi, J. Robert Fabregas, William Nordstrom, Robert
Davis, Ellen Meagher, Joseph Jacobs, Daniel Gallery, Wayne Knyal, and Grady
Pfeiffer (the "Hatcher Action"). The complaint also named as a defendant James
E. Salven, Trustee in Bankruptcy in connection with the Pierce Action,
previously disclosed by the Company.

         The Hatcher Action alleged wrongful conduct on the part of the named
defendants in connection with Mr. Hatcher's past and current relationship with
Easyriders and Newriders, including:  (a) his role and ownership position in
Newriders prior to the Reorganization, (b) his role and participation in the
Reorganization, (c) his acquisition of shares of Easyriders as a consequence of
the Reorganization, (d) transactions involving the shares held by Mr. Hatcher in
Newriders and Easyriders, (e) the Company's Events business and his role
therein, (f) the Company's event merchandise business and Mr. Hatcher's role
therein, (g) the use and possession by Mr. Hatcher of property and vehicles used
in connection with the Events and event merchandise business of the Company, (h)
the acquisition by Mr. Hatcher and Mr. Stafford of franchises to operate retail
stores under the "Easyriders" name pursuant to various written agreements, and
(i) the termination of such franchise agreements by the Company in April, 2000.

         The complaint asserted wrongful conduct by defendants in connection
with the foregoing under a wide range of legal theories, including violations of
the Securities Act of 1933, the Securities Exchange Act of 1934, the California
Corporations Code, Federal Trade Commission Disclosure Rules, the California
Franchise Investment Law Laws and the Federal RICO statute (18 U.S.C. sections
1961-1968); breach of fiduciary responsibilities; fraud, negligent
misrepresentation, breach of contract, infliction of emotional distress,
interference with contracts and business relations, unfair competition and
defamation. Certain of the causes of action were presented as derivative claims,
brought on behalf of Easyriders and/or Newriders against one or more individual
defendants. The action sought general and compensatory damages in amounts to be
proven at the time of trial, contract damages of $450,000, punitive damages,
injunctive and declaratory relief, and the appointment of a receiver.

         On July 31, 2000, the U.S. District Court in Los Angeles issued an
order dismissing the Hatcher Action in its entirety, based on a motion brought
by defendants challenging the complaint as being in violation of applicable
rules requiring that complaints in Federal court set forth a "short and plain"
statement of the basis for relief, and that allegations of fraud be specific as
to all details. The order granted plaintiffs 30 days to file a new complaint,
stating that any amended complaint "must be a short, plain statement which is
concise, simple and direct in compliance with Rule 8 (a). Furthermore,
allegations of fraud, misrepresentation and securities fraud must be alleged
with particularity in compliance with Rule 9." Subsequently, Plaintiff has filed
two amended complaints which the Company has challenged for similar reasons. On
January 29, 2001, the court heard the Company's motion to dismiss the
plaintiffs' Second Amended Complaint (the "SAC"). On July 23, 2001, the court
issued a lengthy, detailed ruling in which it specified substantially all of the
pleading defects affecting the SAC, and granted defendants' motion in the
entirety. Except for certain securities law claims dismissed with

                                       29
<PAGE>

prejudice, the ruling granted plaintiffs 30 days, until August 24, 2001 to make
"one final attempt" to file a Third Amended Complaint ("TAC"), indicating that
the court will dismiss the plaintiffs' claims with prejudice if their TAC
          ----                                --------------
suffers from any of same deficiencies cited herein."

     On August 13 and August 15, Hatcher's counsel filed ex parte applications
seeking additional time to file the TAC, both of which failed to meet court
guidelines and were rejected.  As to the latter, Hatcher's counsel also failed
to give notice of the application to the Company's counsel.  On August 31, 2001,
Hatcher's counsel filed yet another ex parte application seeking 90 additional
days to file the TAC.  Hatcher's counsel failed to give notice of this
application, and failed even to serve a copy on counsel for the Company.  On
September 25, 2001, the court granted this application and ordered that Hatcher
could have an additional 90 days from the date of such ruling within which to
file the TAC, or December 24, 2001.  Lacking knowledge of the last two ex parte
applications by Hatcher, the Company served notice of its intent to dismiss the
action with prejudice on August 25, 2001 (as required by court rules), and on
September 25, 2001 filed such motion to dismiss.  The hearing date on this
motion was later vacated in light of the court's order granting Hatcher
additional time.  The Company still believes it is entitled to a dismissal of
the Hatcher Action with prejudice.  Accordingly, and because of Hatcher's
failure to give notice of the application which the court granted, the Company
intends to pursue its motion to dismiss with prejudice via appropriate action to
be taken shortly.

     If the Hatcher Action is not dismissed, the Company believes it has
substantial defenses to any amended complaint plaintiff's may pursue or file in
this action. In any event, in light of the Company's Chapter 11 filing,
prosecution of the case against the Company is presently stayed pursuant to the
automatic stay provisions of section 362 of the Bankruptcy Code.  Technically,
this stay does not apply to the individual defendants, although prosecution of
the case against them may require plaintiffs to obtain certain procedural relief
such as bifurcation of the cases against the Company and the Non-Debtor
Defendants.

     Based on the current pleadings, the Company and its officers and directors
are insured under a policy providing indemnification for damages arising from
securities claims and the misconduct of its management, and have received
confirmation from their insurance carrier ("D&O Carrier") that the Hatcher
Action claims are covered by such policy.  It is possible, however, that claims
could still be asserted which are not covered by insurance.

     As to the Company, the outcome of this action will depend significantly on
how the Company's Chapter 11 case proceeds.  If plaintiffs pursue the case
through a TAC which is not subsequently dismissed, the surviving claims against
the Company would become part of the pool of general pre-petition unsecured
debt.  Unless the surviving claims are resolved through a negotiated settlement,
they would be adjudicated through an adversary proceeding in the Bankruptcy
Court or litigation in the existing forum.  Regardless, in light of all of the
foregoing considerations, the outcome of the Hatcher Action is not expected to
be materially adverse to the Company.

     The Pierce Litigation

     The Company has previously reported on the legal action involving Rick
Pierce, a former shareholder of Newriders, including (a) Mr. Pierce's Chapter 7
bankruptcy proceeding pending in the United States Bankruptcy Court, Eastern
District of California, Fresno Division, Case No. 98-19101-A-11, which was
commenced as an involuntary proceeding and then converted to a Chapter 11 case
with the debtor, Rick Pierce, in possession, and (b) the Company's adversary
proceeding against the Pierce Bankruptcy Estate and other parties who claim an
interest in shares of the Company acquired through various transactions with Mr.
Pierce.  This action involves claims and counterclaims arising out of the

                                       30
<PAGE>

1998 Reorganization in which Mr. Pierce sought damages of at least $20 million.

     As a consequence of the previously-reported (a) settlement conference in
September, 1999 before Judge Montali, (b) the arrest and indictment of Mr.
Pierce on 29 counts of conspiracy, mail fraud and money laundering (c)
conversion of the bankruptcy proceeding from Chapter 11 to Chapter 7, (d)
dissolution of the creditor's committee and (e) appointment of a trustee to
administer the bankruptcy estate (the "Trustee"), as well as the subsequent
criminal conviction of Mr. Pierce on multiple felony counts, the Pierce Action
has been relatively dormant for the past 14 months.  During this period, the
company pursued settlement discussions with the Trustee, James Salven, through
his counsel, Bill Lee. In December 2000, the Trustee approved a settlement
providing for dismissal of the Pierce Action in exchange for payment to the
Pierce bankruptcy estate of 350,000 shares of the Company's common stock,
representing the exact amount of shares due Mr. Pierce in accordance with his
obligations in the Reorganization, plus an additional 20,000 shares. In this
regard, a definitive settlement agreement was prepared and circulated, but just
as negotiations to finalize the Settlement Agreement were coming to a close,
Bill Lee was appointed to the bench, forcing James Salven to retain new counsel.
For this purpose he selected Bruce Leichty, a Fresno attorney who previously had
represented the Creditors Committee during the period that Pierce was a Chapter
11 Debtor-in-Possession.   Mr. Leichty subsequently took the position that he
would not sign it without substantial, substantive revision, including the
payment of several hundred thousand dollars to the Piece bankruptcy estate.

     The District Court which has jurisdiction over this case has established a
schedule for discovery and progress towards trial.  However, in light of the
Company's Chapter 11 filing, prosecution of the case against the Company was
initially stayed pursuant to the automatic stay provisions of section 362 of the
Bankruptcy Code.  Technically, this stay does not apply to the individual
defendants, although prosecution of the case against them may require plaintiffs
to obtain certain procedural relief such as bifurcation the cases against the
Company and the individual defendants in this action.  On October 11, 2001, upon
motion of Mr. Salven, the Bankruptcy Court granted Pierce relief from the
automatic stay.  Once such ruling becomes final, the litigation of the Pierce
Action against all of the defendants, including the Company, is expected to
resume in District Court.

     While the Company believes the Pierce Action is without merit, the exact
outcome will depend significantly on how the Company's Chapter 11 case proceeds.
The  claims against the Company are part of the pool of general pre-petition
unsecured debt.  Unless these claims are resolved through a negotiated
settlement, they would be adjudicated through an adversary proceeding in the
Bankruptcy Court or litigation in the existing forum.  Regardless, in light of
all of the foregoing considerations, the outcome of the Pierce Action is not
expected to be materially adverse to the Company.

     The Kaye, Scholer Litigation

     On April 19, 2000, the Company filed an action in Los Angeles County
Superior Court against the law firm of Kaye, Scholer, Fierman, Hays & Handler,
LLP, now known as Kaye Scholer LLP ("Kaye Scholer"), which represented
Newriders, Inc. in the Reorganization of 1998 (the "Kaye Scholer Action").  The
Kaye Scholer Action alleges that defendant, and the responsible attorneys
individually, committed legal malpractice, rendered negligent advice and
breached attorney-client fiduciary duties by failing to protect the Company's
interests in connection with the indemnification agreement entered into by and
between Newriders, as Buyer, and Paisano Publications, Inc., as Seller, in the
Reorganization.  The complaint alleges that as a consequence of such
malpractice, the Company incurred costs in excess of $2.5 million in connection
with the previously reported Steel Horses Arbitration, and seeks recovery of
such sums, and other damages.  In the action, Kaye Scholer has filed a cross-
complaint seeking recovery of unpaid legal fees in the amount of approximately
$100,000.  Discovery in this action is now substantially complete, and the
parties remain too far apart in their positions for meaningful settlement

                                       31
<PAGE>

discussions to take place at this time.

     Kaye Scholer's claim for unpaid legal fees has been stayed pursuant to the
Company's filing for Chapter 11 relief, and this claim is now part of the
Company's pool of pre-petition unsecured debt. The Company's claims against Kaye
Scholer are an asset of the Chapter 11 estate, and have been pursued by the
Company.

     On October 29, 2001 the Superior Court conducted a hearing on motions for
summary judgment filed by Kaye Scholer.  As a consequence of the Court's
comments at the hearing, the parties stipulated to continue the hearing on such
motions to and until January 3, 2002, and in the interim to pursue mediation of
the action.  The outcome of this action is presently uncertain.

     The Richard Dillon Litigation

     On May 9, 2000, a complaint was filed by Richard Dillon ("Dillon") against
Easyriders in the Superior Court of Maricopa County, Arizona (the "Dillon
Action").  Dillon is a former employee of El Paso.  The Action alleges that
Dillon is entitled to damages for breach of contract and as a Wage Claim under
Arizona law, arising out of an alleged promise on the part of Easyriders to
deliver shares of stock of Easyriders to Dillon. The Dillon Action seeks
contract damages of approximately $162,000, treble damages under Arizona law of
not less than $500,000 and the recovery of attorney's fees.  The contract in
question arises out of the former employment of Dillon with M&B. Easyriders is
the sole named defendant in the Dillon Action, and disputes the claims of Dillon
therein.

     In light of the Company's Chapter 11 filing, prosecution of the case
against the Company is presently stayed pursuant to the automatic stay
provisions of section 362 of the Bankruptcy Code.While the Company believes it
has substantial defenses to the Dillon Action, the exact outcome will depend
significantly on how the Company's Chapter 11 case proceeds.  The  claims
against the Company are part of the pool of general pre-petition unsecured debt.
Unless these claims are resolved through a negotiated settlement, they would be
adjudicated through an adversary proceeding in the Bankruptcy Court or
litigation in the existing forum.  Regardless, in light of all of the foregoing
considerations, the outcome of the Dillon Action is not expected to be
materially adverse to the Company.

     The Greg King Litigation

     On August 2, 1999, Greg King ("King") filed an action against the Company
and its subsidiary, Newriders, in of certain officers of Newriders. On December
23, 1999, an amended complaint was filed naming as additional defendants, Leon
Hatcher, Michael Purcell and Bill Doyle, each a former officer and/or director
of Newriders Los Angeles County Superior Court (the "King Action"), seeking
damages of (a) not less than $500,000 for the alleged breach of an oral
agreement to deliver certain shares of Newriders, Inc. in 1998, and (b)
approximately $100,000 for breach of an alleged oral agreement to reimburse King
for certain advances made by Mr. King on behalf of Newriders in 1998.  The King
Action also seeks these damages on the basis of alleged fraud on the part.

     The allegations of Mr. King arise out of his employment with Newriders in
Fresno, California, and his associations with Leon Hatcher and Rick Pierce,
identified above.  After extensive pre-trial investigation, the Company
determined it had substantial defenses to the King Action, but could not be
assured of a favorable outcome.  The Company tendered the King Action to its D&O
Carrier, which indicated a willingness to contribute towards settlement of this
action. This matter was scheduled for trial on April 30, 2001, but as the result
of negotiations between King, the Company, and the D&O Carrier, this action was
settled as of April 25, 2001.  Under the terms thereof, which were reduced to a
written settlement agreement (the "Settlement Agreement"), the D&O Carrier
agreed to pay King $75,000, the

                                       32
<PAGE>

Company agreed to issue to King and his attorneys a total of 125,000 shares of
common stock of the Company, and the Company agreed to issue to King a
promissory note for $15,000. Prior to the Company's filing its petition for
Chapter 11 relief on July 17, 2001 the cash proceeds were delivered to King and
the note and share certificates were delivered to the Company's counsel.
Subsequently the Company received the signed settlement agreement, and released
the share certificates. Accordingly, the King Action has been settled with
finality.

     Estate of Henry Wise v. Easyriders, Inc. et al

     On April 12, 2001 a complaint was filed in the Horry County (South
Carolina) Court of Common Pleas by Genevieve Beach, as Personal Representative
of the Estate of Henry F. Wise, II, deceased, naming as defendants the Company
and the Myrtle Beach Speedway (the "Wise Action").  The Wise Action arises out
of the death of Mr. Wise while participating in a motorcycle stunt event at the
Myrtle Beach Speedway in May of 1999 and seeks unspecified damages as the result
of alleged negligence on the part of defendants with respect to safety
precautions in connection with the event.  The event was part of a series of
motorcycle stunt events produced by Kevin Ruic, whose company, FASCAR North, had
previously sold the rights thereto to the Company.  The Company believes it has
meritorious defenses to the Wise Action, and potential cross-actions, but at
this point has not completed its investigation into the facts concerning this
matter. Preliminarily, the Company does not believe there is insurance coverage
for this action.  If there is no insurance coverage, it is possible that the
Company could be forced to incur substantial litigation costs, and that if
Plaintiff were to prevail, the amount of any adverse judgment could be
significant.

     However, the exact outcome will depend significantly on how the Company's
Chapter 11 case proceeds.  The claims against the Company are part of the pool
of general pre-petition unsecured debt.  Unless these claims are resolved
through a negotiated settlement, they would be adjudicated through an adversary
proceeding in the Bankruptcy Court or litigation in the existing forum.
Regardless, in light of all of the foregoing considerations, the outcome of the
Wise Action is not expected to be materially adverse to the Company.

     Other Litigation and Claims

     The Company is named as a defendant in other legal actions arising from its
normal operations, and from time-to-time is presented with claims for damages
arising out of its actions.  The Company anticipates that any damages or
expenses it may incur in connection with these actions, individually and
collectively, will not have a material adverse effect on the Company.  Any
claims existing prior to July 17, 2001 are subject to the automatic stay
provisions of section 362 of the Bankruptcy Code, and are subject to resolution
as part of the Company's pool of unsecured, pre-petition obligations.

Item 2.  Changes in Securities and Use of Proceeds.

     During July 2001, the Company issued 125,000 shares of Easyriders, Inc.
stock to a former employee of Newriders in settlement of litigation. The shares
were valued at their market price, market price being determined as the closing
price of the Common Stock on the American Stock Exchange on the date of
issuance.  This transaction was exempt from the registration requirements of the
Securities Act of 1933, as amended, pursuant to Section 4(2) thereof.

Item 3.  Defaults Upon Senior Securities

     The Nomura Credit Agreement sets forth two types of obligations on the
part of the Company:

                                       33
<PAGE>

     .  Payment-Related Obligations: Payments in respect of interest, principal
        ---------------------------
reduction and pay-off at maturity.

     .  Covenant-Related Obligations: Obligations to maintain certain
        ----------------------------
financial ratios, and to do or not do certain things, which obligations are
designed to avoid impairment of Nomura's credit position and the value of its
collateral.

     In November of 2000, Nomura asserted that the Company was in default with
respect to numerous Covenant-Related Obligations.  Management took issue with
each of these charges, and in good faith believed that no events of default had
occurred.  As of March 31, 2001, the Company reported that it was in default as
to certain Covenant-Related Obligations.

     The Nomura Indebtedness, approximately $21.0 million, became due and
payable on September 23, 2001.  In view of the Company's anticipated inability
to repay the entire principal on such date, and Nomura's unwillingness to accept
a lesser amount, or to extend the maturity date, in or about May, 2001,
management began discussing with Nomura the possibility of filing for Chapter 11
relief, which led to protracted negotiations concerning a Cash Collateral
Stipulation (the "First CCS").  The First CCS was based upon a detailed budget
(the "First CCS Budget") which Nomura reviewed and ultimately approved, subject
to reserving all of its rights under the Nomura Credit Agreement.  Easyriders,
Inc. and Paisano Publications filed voluntary petitions for relief under Chapter
11 of the Bankruptcy Code on July 17, 2001, and the First CCS was formally
approved by the Bankruptcy Court on an interim basis at an interim hearing held
on July 20, 2001, pending a final hearing to be held on August 21, 2001.
Between the time of the interim hearing and the final hearing, an Official
Committee of Unsecured Creditors (the "OCC") was formed to represent the
interests of the unsecured creditors.  Prior to the final hearing, Easyriders,
Inc., Paisano Publications, the OCC and Nomura entered into a cash collateral
stipulation (the "Second CCS") which modified the terms of the First CCS and
which provided for the Company to continue to pay expenses in accordance with an
agreed upon budget (the "Second CCS Budget") through October 31, 2001.  In
accordance with the First CCS, the First CCS Budget, the Second CCS and the
Second CCS Budget, the Company thereafter made payments to Nomura (with no
agreement as to the application of such payments) computed in an amount equal to
Nomura's pre-Chapter 11 interest, in the full amount thereof, for the months of
May, June, July, August and September, 2001.

     The First CCS remained in effect until August 31, 2001.  Pursuant to the
terms of the First CCS, in addition to the payments set forth immediately above,
the Company made an "excess cash flow payment" in the amount of $23,699 to
Nomura for the month of July, 2001.  Pursuant to the terms of the Second CCS,
the Company is required to deposit all of their "Net Income" (as defined in the
Second CCS) after payment of the amounts to Nomura set forth above into a
segregated bank account (the "Blocked Account").  At a hearing held on October
24, 2001, the Bankruptcy Court granted the Company's motion for authority to
continue using cash collateral (the "CCM") through February 28, 2002 to pay
expenses in accordance with the budget attached to the CCM.   At the hearing
held on October 24, 2001, the Bankruptcy Court also ordered the Company to stop
making any further payments to Nomura and to deposit the payments that the
Company would otherwise have made to Nomura into the Blocked Account.

     During the pendency of the Chapter 11 case, Nomura is prevented from
foreclosing on its collateral under the automatic stay provisions of the
Bankruptcy Code.  Under such circumstances, Nomura would have to seek and obtain
relief from the automatic stay imposed by section 362 of the Bankruptcy Code in
order to effect such foreclosure.

                                       34
<PAGE>

Item 4.  Submission of matters to a vote of security holders

         None.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits:

             None

         (b) Reports on Form 8-K:

             Current Report of the Company on Form 8K, as filed on July 26,
2001.





SIGNATURES


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




                                             EASYRIDERS, INC.
                                             ----------------
                                             (Registrant)

Dated: November 19, 2001                     /s/ J. Robert Fabregas
                                             -----------------------------------
                                             J. Robert Fabregas
                                             Chief Executive Officer and
                                             Chief Financial Officer

                                       35