UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2008
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
OF 1934
For the transition period from ________ to ________
Commission file number: 001-31715
Cycle Country Accessories Corp.
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(Exact name of small business issuer as specified in its charter)
Nevada 42-1523809
--------------------------------- -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1701 38th Ave W, Spencer, Iowa 51301
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(Address of principal executive offices)
(712) 262-4191
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(Issuer's telephone number)
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(Former name, former address and formal fiscal year, if changed since
last report)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during
the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The number of shares of the registrant's common stock, par value
$0.0001 per share, outstanding as of December 31, 2008 was 6,022,307
and there were 349 stockholders of record.
Transitional Small Business Disclosure Format (Check one): Yes [ ]
No [X]
Cycle Country Accessories Corp.
Index to Form 10-QSB
Part I Financial Information Page
----
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet - December 31, 2008.......2
Condensed Consolidated Statements of Income - Three Months
Ended December 31, 2008 and 2007...............................3
Condensed Consolidated Statements of Cash Flows -
three Months Ended December 31, 2008 and 2007..................5
Notes to Condensed Consolidated Financial Statements...........7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................13
Item 3. Controls and Procedures....................................25
Part II Other Information
Item 1. Legal Proceedings..........................................26
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds............................................26
Item 3. Defaults Upon Senior Securities............................26
Item 4. Submission of Matters to a Vote of Security Holders........26
Item 5. Other Information..........................................26
Item 6. Exhibits ..................................................26
Signatures..........................................................27
Part I Financial Information
Item 1. Financial Statements
Cycle Country Accessories Corp. and Subsidiaries
Condensed Consolidated Balance Sheet
December 31, 2008
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 206,510
Accounts receivable, net 2,524,378
Inventories 4,739,925
Income taxes receivable 20,741
Deferred income taxes 433,886
Prepaid expenses and other 106,679
--------------
Total current assets 8,032,119
--------------
Property, plant, and equipment, net 11,292,082
Intangible assets, net 201,999
Goodwill 4,890,146
Other assets 26,500
--------------
Total assets $ 24,442,846
==============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 180,030
Accrued interest payable 2,567
Accrued income tax payable 626,053
Accrued expenses 750,000
Current portion of bank notes payable 823,437
Current portion of deferred gain 166,524
--------------
Total current liabilities 2,548,611
--------------
Long-Term Liabilities:
Bank notes payable, less current portion 3,762,802
Deferred gain, less current portion 152,647
Deferred income taxes 2,558,002
--------------
Total liabilities 9,022,062
--------------
Stockholders' Equity:
Preferred stock, $.0001 par value; 20,000,000 shares
authorized; no shares issued or outstanding -
Common stock, $.0001 par value; 100,000,000 shares
authorized; 7,483,037 shares issued and
outstanding 748
Additional paid-in capital 14,767,833
Retained earnings 3,803,839
--------------
18,572,420
Treasury stock, at cost, 2,157,980 shares (3,151,636)
--------------
Total stockholders' equity 15,420,784
--------------
Total liabilities and stockholders' equity $ 24,442,846
==============
See accompanying notes to the condensed consolidated financial statements.
Page 2
Cycle Country Accessories Corp. and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended December 31,
2008 2007
-------------- --------------
(Unaudited) (Unaudited)
Revenues:
Net sales $ 4,309,053 $ 4,978,194
Freight income 24,561 23,364
-------------- --------------
Total revenues 4,333,614 5,001,558
-------------- --------------
Cost of goods sold (2,917,578) (2,986,229)
-------------- --------------
Gross profit 1,416,036 2,015,329
-------------- --------------
Selling, general, and administrative
expenses (883,982) (1,025,251)
-------------- --------------
Income from operations 532,054 990,078
-------------- --------------
Other Income (Expense):
Interest expense (85,560) (89,283)
Interest income 684 9,632
Gain on sale of assets 38,216 238,432
Miscellaneous (25) 1,791
-------------- --------------
Total other income (expense) (46,685) 160,572
-------------- --------------
Income before provision for
income taxes 485,369 1,150,650
-------------- --------------
Provision for income taxes (103,263) (416,092)
-------------- --------------
Net income 382,106 734,558
============== ==============
Weighted average shares of common
stock outstanding:
Basic 5,687,818 6,645,647
============== ==============
Diluted 5,687,818 6,645,647
============== ==============
Earnings per common share:
Basic $ 0.07 $ 0.11
============== ==============
Diluted $ 0.07 $ 0.11
============== ==============
See accompanying notes to the condensed consolidated financial statements.
Page 3
Cycle Country Accessories Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Three Months Ended December 31,
2008 2007
-------------- --------------
(Unaudited) (Unaudited)
Cash Flows from Operating Activities:
Net income $ 382,106 $ 734,558
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 205,234 192,416
Amortization 1,475 1,431
Inventory reserve 9,000 9,000
Share-based Compensation 16,000 -
Share-based Consulting 22,500 -
Provision for doubtful accounts - 5,000
Gain on sale of equipment (23,236) (238,431)
(Increase) decrease in assets:
Accounts receivable, net 411,270 348,143
Inventories 348,763 (304,121)
Taxes receivable (5,961) (29,533)
Prepaid expenses and other 116,241 74,111
Increase (decrease) in liabilities:
Accounts payable (397,249) 286,432
Deferred income taxes 109,224 -
Accrued expenses (95,154) 30,388
Income taxes payable - 416,092
Accrued interest payable (1,304) (153)
-------------- --------------
Net cash provided by
operating activities 1,098,909 1,525,333
-------------- --------------
Cash Flows from Investing Activities:
Purchase of equipment (59,343) (68,573)
Purchase of intangible assets (4,295) -
Proceeds from sale of equipment (7,000) 995
-------------- --------------
Net cash used in investing activities (70,638) (67,578)
-------------- --------------
Cash Flows from Financing Activities:
Payments on bank notes payable (196,338) (149,057)
Bank Line of Credit (250,000) -
Purchases of Treasury Stock (570,000) -
-------------- --------------
Net cash used in
financing activities (1,016,338) (149,057)
-------------- --------------
Net increase in cash and
cash equivalents 11,933 1,308,698
Cash and cash equivalents, beginning of
period 194,577 454,848
-------------- --------------
Cash and cash equivalents, end of
period $ 206,510 $ 1,763,546
============== ==============
See accompanying notes to the condensed consolidated financial statements.
Page 4
Cycle Country Accessories Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Three Months Ended December 31,
2008 2007
-------------- --------------
(Unaudited) (Unaudited)
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 86,864 $ 89,436
============== ==============
Income taxes $ - $ 29,533
============== ==============
Supplemental schedule of non-cash investing
and financing activities:
Acquisition of common stock
from sale of property,
plant, and equipment $ - $ 2,581,636
============== ==============
Issuance of common stock for
payment of CEO bonus $ - $ 25,000
============== ==============
Issuance of stock and Options
for payment of CEO $ 16,500 $ -
============== ==============
Issuance of common stock for
payment of consultant fees $ 22,500 $ 91,500
============== ==============
Issuance of common stock for
payment of director fees $ - $ 11,000
============== ==============
See accompanying notes to the condensed consolidated financial statements.
Page 5
Cycle Country Accessories Corp. and Subsidiaries Notes to Condensed
Consolidated Financial Statements Three Months Ended December 31, 2008
and 2007
(Unaudited)
1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements
for the three months ended December 31, 2008 and 2007 have been
prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial information and
pursuant to the rules and regulations of the Securities and Exchange
Commission for Form 10-QSB. Accordingly, they do not include all the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial
statements. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments,
consisting only of normal recurring accruals, considered necessary for
a fair presentation of the Company's financial position, results of
operations, and cash flows for the periods presented.
The results of operations for the interim periods ended December 31,
2008 and 2007 are not necessarily indicative of the results to be
expected for the full year. These interim consolidated financial
statements should be read in conjunction with the September 30, 2008
consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-KSB for the year ended September
30, 2008.
2. Inventories:
Inventories are valued at the lower of cost or market. Cost is
determined using the weighted average method. The major components of
inventories at December 31, 2008 are summarized as follows:
Raw materials $ 2,284,037
Work in progress 213,823
Finished goods 2,242,065
--------------
Total inventories $ 4,739,925
==============
3. Goodwill:
Goodwill represents the excess of the purchase price over the fair
value of assets acquired. Goodwill arising from the Company's April
29, 2005 acquisition is not being amortized in accordance with
Statement of Financial Accounting Standards No. 142 (SFAS No. 142),
Goodwill and Other Intangible Assets.
SFAS No. 142 requires the use of a non-amortization approach to
account for purchased goodwill and certain intangibles. Under a non-
amortization approach, goodwill and certain intangibles would not be
amortized into results of operations, but instead would be reviewed
for impairment at least annually and written down and charged to
results of operations in the periods in which the recorded value of
goodwill and certain intangibles are determined to be greater than
their fair value.
4. Accrued Expenses:
The major components of accrued expenses at December 31, 2008 are
summarized as follows:
Distributor rebate payable $ 41,449
Accrued salaries and related benefits 317,291
Accrued warranty expense 50,000
Accrued real estate tax 153,229
Royalties payable 9,061
Accrued director fees 7,500
Other 47,523
--------------
Total accrued expenses $ 626,053
==============
5. Stock Redemption With Sale Of Property, Plant, and Equipment:
On November 14, 2007, the company closed the transaction with its
founder and his wife in which they purchased the company's
manufacturing plant located in Milford, Iowa. In return, the company
received all of the common equity owned by the founder and his wife,
1,410,730 shares. The acquired shares are being held as treasury
stock. The value of the property was determined based upon an
appraisal and discussions with two independent commercial realtors and
the stock was valued using the stock's closing price on November 13,
2007.
Additionally, on November 14, 2007, the company also entered into a
lease agreement with its founder and his wife providing that the
company will lease a majority of the Milford facility. The term of the
lease is three years and the company has the option to renew the lease
on the same terms and conditions for two additional terms of one year
each.
6. Sale-Leaseback Transaction - Operating Lease:
On November 14, 2007, the company entered into a sale-leaseback
arrangement. Under the arrangement, the company sold its Milford
facility land and buildings, along with certain other pieces of
equipment, to its founder and his wife for 1,410,730 shares of the
Company's common stock. The leaseback has been accounted for as an
operating lease with a three year term. $485,695 of the total gain of
$724,795 was initially deferred. As of December 31, 2008, $319,171 of
the gain is left to be amortized to income in proportion to lease
expense over the term of the lease. The required minimum lease
payments are $185,104 per year for three years from the inception of
the lease.
7. Stock Buyback Transaction:
The company acquired 747,250 shares of its own stock at an average
cost of $.72 per share price for a total cost of $570,000 in cash
during the quarter ending December 31, 2008.
8. Earnings Per Share:
Basic earnings per share ("EPS") is calculated by dividing net income
by the weighted-average number of common shares outstanding during the
period. Diluted EPS is computed in a manner consistent with that of
basic EPS while giving effect to the potential dilution that could
occur if warrants to issue common stock were exercised.
The following is a reconciliation of the numerators and denominators
of the basic and diluted EPS computations for the three months and
nine months ended December31, 2008 and 2007:
For the three months
ended December 31, 2008
-----------------------------
Income Shares Per-share
(numerator) (denominator) amount
-------------------------------
Basic EPS
Income available to common
stockholders $ 382,106 5,687,818 $ 0.07
Effect of Dilutive Securities
Warrants - -
Diluted EPS
Income available to common
stockholders $ 382,106 5,687,818 $ 0.07
========= ========= ========
For the three months
ended Dec 31, 2007
-----------------------------
Income Shares Per-share
(numerator) (denominator) amount
-------------------------------
Basic EPS
Income available to common
stockholders $ 734,558 6,645,647 $ 0.11
Effect of Dilutive Securities
Warrants - -
Diluted EPS
Income available to common
stockholders $ 734,558 6,645,647 $ 0.11
========= ========= ========
9. Segment Information:
Segment information has been presented on a basis consistent with how
business activities are reported internally to management. Management
solely evaluates operating profit by segment by direct costs of
manufacturing its products without an allocation of indirect costs. In
determining the total revenues by segment, freight income and sales
discounts are not allocated to each of the segments for internal
reporting purposes. The Company has four operating segments that
assemble, manufacture, and sell a variety of products: ATV
Accessories, Plastic Wheel Covers, Weekend Warrior, and Contract
Manufacturing. ATV Accessories is engaged in the design, assembly, and
sale of ATV accessories such as snowplow blades, lawnmowers,
spreaders, sprayers, tillage equipment, winch mounts, utility boxes,
and oil filters. Plastic Wheel Covers manufactures and sells
injection-molded plastic wheel covers for vehicles such as golf cars,
light-duty trailers, and lawn mowers. Weekend Warrior is engaged in
the design, assembly, and sale of ATV and utility vehicle accessories
that includes lawnmowers, spreaders, sprayers, tillage equipment, and
a newly patented universal plow system. Contract Manufacturing is
engaged in the design, manufacture and assembly of a wide array of
parts, components, and other products for non-competing Original
Equipment Manufacturers (OEM) and other businesses. The significant
accounting policies of the operating segments are the same as those
described in Note 1 to the Consolidated Financial Statements of the
Company's Annual Report on Form 10-KSB for the year ended September
30, 2008.
The following is a summary of certain financial information related to
the four segments during the three months December 31, 2008 and 2007:
ATV ACCESSORIES - Three Months Ended December 31, 2008 and 2007
Three Months Three Months Increase Increase
Ended Dec 31, Ended Dec 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Revenue $ 4,094,462 $ 4,224,679 $ (130,217) (3.08%)
Cost of goods sold $ 1,925,186 $ 1,751,875 $ 173,311 9.89%
Gross profit $ 2,169,276 $ 2,472,804 $ (303,527) (12.27%)
Gross profit % 53.0% 58.5% (5.5%)
PLASTIC WHEEL COVERS - Three Months Ended Dec 31, 2008 and 2007
Three Months Three Months Increase Increase
Ended Dec 31, Ended Dec 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Revenue $ 109,117 $ 420,687 $ (311,570) (74.0%)
Cost of goods sold $ 39,649 $ 169,192 $ (129,543) (76.5%)
Gross profit $ 69,468 $ 251,495 $ (182,027) (72.3%)
Gross profit % 63.7% 59.8% 3.9%
WEEKEND WARRIOR - Three Months Ended Dec 31, 2008 and 2007
Three Months Three Months Increase Increase
Ended Dec 31, Ended Dec 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Revenue $ 73,829 $ 80,068 $ (6,239) (7.79%)
Cost of goods sold $ 60,388 $ 41,797 $ 18,591 44.5%
Gross profit $ 13,441 $ 38,271 $ (24,830) (64.9%)
Gross profit % 18.2% 47.8% (29.6%)
CONTRACT MANUFACTURING - Three Months Ended Dec 31, 2008 and 2007
Three Months Three Months Increase Increase
Ended Dec 31, Ended Dec 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Revenue $ 296,599 $ 455,893 $(159,294) (34.9%)
Cost of goods sold $ 192,613 $ 192,980 $ (367) (.2%)
Gross profit $ 103,986 $ 262,913 $(158,927) (60.4%)
Gross profit % 35.1% 57.7% (22.6%)
The following is a summary of the Company's revenue in different
geographic areas during the three months ended December 31, 2008 and
2007:
GEOGRAPHIC REVENUE - Three Months Ended Dec 31, 2008 and 2007
Three Months Three Months Increase Increase
Ended Dec 31, Ended Dec 31, (Decrease) (Decrease)
Country 2008 2007 $ %
--------------------------------------------------------
United States $ 3,887,605 $ 4,540,560 $ (652,955) (14.3%)
All Other Countries $ 446,009 $ 460,998 $ ( 14,989) ( 3.2%)
As of December 31, 2008, all of the Company's long-lived assets are
located in the United States of America.
ATV Accessories sales to major customers which exceeded 10% of net
revenues, accounted for approximately 30.4% and 15.0% of net revenue
for three months ending December 31, 2008 and approximately 23.8% and
10.0% of revenue for three months ending December 31, 2007. Plastic
Wheel Covers, Weekend Warrior, and Contract Manufacturing did not have
sales to any individual customer greater than 10% of net revenues
during the three months ended December 31, 2008 or 2007
10. Stock Based Compensation:
During the quarter ended December 31, 2008, the Company adopted
Statement on Financial Accounting Standards ("SFAS") No. 123(R),
Share-Based Payment, which requires share-based payment transactions
to be accounted for using a fair value based method and the
recognition of the related expense in the results of operations. SFAS
No. 123(R) allows companies to choose one of two transition methods:
the modified prospective transition method or the modified
retrospective transition method.
The Company adopted SFAS No. 123(R) using the modified prospective
method of transition which requires compensation expense related to
share based payments to be recognized beginning on the adoption date
over the requisite service period, generally the vesting period, and
over the remaining service period for the unvested portion of awards
granted prior.
The June 2008 President's Executive Employment Agreement provides for
the grant of 50,000 shares of stock in the Company, vesting over a
three year period. At the end of the first and second full year of
employment, the President shall become vested in and receive 16,666
shares of stock each year. At the completion of the President's third
full year of employment, he shall become vested in and receive the
final 16,668 shares of stock. Total compensation expense recognized
during the three month period ended December 31, 2008 as $4,400 net of
income tax benefit in the amount of $2,200. As of December 31, 2008,
there was $61,875 of total unrecognized compensation cost related to
the non-vested share-based compensation arrangement under the plan.
The cost is expected to be recognized over a three year period.
The President is further offered stock options to acquire an
additional 500,000 shares of stock in the Corporation at the closing
price on the date employment comenced, $1.68 per share, which option
shall run for a period of 3 years. This option may be exercised by the
President paying to the Corporation the exercise price multiplied by
the number of shares he wishes to exercise at that time. At any time
during the first 3 years of employment, this option may be exercised
in full or in part. Any portion of this option which has not been
exercised on the third anniversary of the commencement date of the
Executive Employment Agreement will lapse and no longer be an
obligation of the Corporation. Stock shall be restricted and contain
the appropriate legend noting its restriction.
Under the provisions of SFAS No. 123(R), stock-based compensation cost
is estimated at the grant date based on the fair value of the award
and compensation cost is recognized as an expense over the requisite
service period of the award. The fair value of non-vested stock awards
was determined by reference to the fair market value of the Company's
common stock on the date of the grant. Consistent with the valuation
method the Company used for disclosure-only purposes under the
provisions of SFAS No. 123(R), Accounting for Stock-Based
Compensation, the Company uses the lattice valuation model to estimate
the fair value of option awards. Determining the appropriate fair
value model and related assumptions requires judgment, including
estimating stock price volatility, forfeiture rates and expected
terms.
The following assumptions were utilized to estimate the fair value of
the Company's stock option awards during the three-month periods ended
December 31, 2008 and 2007:
Three months ended December 31,
2008 2007
--------------- --------------
Expected stock price volatility 40% -
Risk-free interest rate 3% -
Expected life of options 3 yrs -
Expected annual dividends 0% -
The expected volatility rate was based on the historical volatility,
for the last 3 years, of the Company's common stock. The expected life
represents the average time options that vest are expected to be
outstanding based on the vesting provisions and the Company's
historical exercise, cancellation and expiration patterns.
The risk-free rate was based on U.S. Treasury zero-coupon issues with
a maturity approximating the expected life as of the week of the grant
date. There was no annual dividend rate assumed as a cash dividend is
not expected to be declared and paid in the foreseeable future. The
Company updates these assumptions at least on an annual basis and on
an interim basis if significant changes to the assumptions are
warranted.
With the adoption of SFAS No. 123(R), the Company recorded stock-based
employee compensation expense related to stock options of
approximately $6,200, net of a tax benefit in the amount of $2,900,
and net of estimated forfeitures, for the three-month period ended
December 31, 2008. The Company recognized the full amount of the
stock- based employee compensation expense of its equity incentive
plans in the consolidated statements of operations for the three-month
period ended December 31, 2008 and did not capitalize any such costs
in the condensed consolidated balance sheets other than in the general
overhead pool for inventory costs. The weighted-average grant-date
fair value per share of options granted during the three-month period
ended December 31, 2008 was $0.219 per share. No options were granted
for the three month period ended December 31, 2007.
The following table lists stock option activity for the three-month
period ended December 31, 2008:
Outstanding at September 30, 2008 - $ - $ -
Granted 500,000 $ 1.68 $ 840,000 $ -
Exercised $ - $ - -
Canceled - $ - $ - -
Outstanding at December 31, 2008
500,000 $ 1.68 $ 840,000 $ -
Options vested
and exercisable at Dec. 31, 2008
500,000 $ 1.68 $ 840,000 $ -
As of December 31, 2008, there was $47,125 of total compensation cost
related to this stock option arrangement granted under the plan. The
cost is expected to be recognized over a three year period.
Prior to the adoption of SFAS No. 123(R), the company maintained an
employment agreement with their former CEO which provides for $100,000
in restricted Company common stock with 25% issued upon the first day
of employment and 25% issued each anniversary date for the next three
years as an employment bonus. The value of the entire restricted stock
award was determined by the closing price, $2 per share, on the
Presidents first day of employment. As of December 31, 2008, there
were no remaining compensation costs to be recognized under the plan
due to his leaving the company. There is however 12,500 shares to be
issued on September 18, 2009.
Stock-based compensation expense related to stock options and
restricted shares recorded in the Company's condensed consolidated
statements of operations was allocated as follows:
Three months ended December 31,
2008 2007
----------------------------
Cost of Sales $ - $ -
Selling, General and
Administrative Expense $ 16,000 $ -
Research and Development
Expense $ - $ -
- ----------- ----------- ---------- ------
Stock-Based Compensation
Expense before Income Tax $ 16,000 $ -
Less: Income Tax Benefit $ 5,760 $ -
----------- ------------
Net Stock-Based
Compensation Expense
after Income Tax $ 10,240 $ -
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
This discussion relates to Cycle Country Accessories Corp. and its
consolidated subsidiaries (the "Company") and should be read in
conjunction with our consolidated financial statements as of September
30, 2008, and the year then ended, and Management's Discussion and
Analysis of Financial Condition and Results of Operations, both
contained in our Annual Report on Form 10-KSB for the year ended
September 30, 2008.
We intend for this discussion to provide the reader with information
that will assist in understanding our financial statements, the
changes in certain key items in those financial statements from period
to period, and the primary factors that accounted for those changes,
as well as how certain accounting principles affect our financial
statements. The discussion also provides information about the
financial results of the various segments of our business to provide a
better understanding of how those segments and their results affect
the financial condition and results of operations of the Company as a
whole. To the extent that our analysis contains statements that are
not of a historical nature, these statements are forward-looking
statements, which involve risks and uncertainties. See "Special Note
Regarding Forward-Looking Statements" included elsewhere in this
filing.
Critical Accounting Policies and Estimates
The Company's discussion and analysis of its financial condition and
results of operations are based upon its Consolidated Financial
Statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The
preparation of these financial statements requires the Company to make
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, the Company
evaluates the estimates including those related to bad debts and
inventories. The Company bases its estimates on historical
experiences and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
The Company believes the following critical accounting policies affect
the more significant judgments and estimates used in the preparation
of the Consolidated Financial Statements:
Accounts Receivable - Trade credit is generally extended to customers
on a short-term basis. These receivables do not bear interest,
although a finance charge may be applied to balances more than 30 days
past due. Trade accounts receivable are carried on the books at their
estimated collectible value. Individual trade accounts receivable are
periodically evaluated for collectability based on past credit history
and their current financial condition. Trade accounts receivable are
charged against the allowance for doubtful accounts when such
receivables are deemed to be uncollectible.
Allowance for Doubtful Accounts - The Company maintains an allowance
for doubtful accounts for estimated losses resulting from the
inability of its customers to make required payments. If the
financial condition of the Company's customers were to deteriorate,
resulting in an impairment of their ability to make payments,
additional allowance may be required.
Inventories - The Company values its inventory at the lower of cost or
market. Cost is determined using the weighted average cost method.
Reserve for Inventory - The Company records valuation reserves on its
inventory for estimated excess and obsolete inventory equal to the
difference between the cost of inventory and the estimated market
value based upon assumptions about future product demand and market
conditions. If future product demand or market conditions are less
favorable than those projected by management, additional inventory
reserves may be required.
Depreciation of Long-Lived Assets - The Company assigns useful lives
for long-lived assets based on periodic studies of actual asset lives
and the intended use for those assets. Any change in those assets
lives would be reported in the statement of operations as soon as any
change in estimate is determined.
Goodwill and Other Intangibles - Goodwill represents the excess of the
purchase price over the fair value of the assets acquired. The
Company accounts for goodwill in accordance with Statement of
Financial Accounting Standard (SFAS) no. 142, "Goodwill and Other
Intangible Assets". SFAS No. 142 requires the use of a non-
amortization approach to account for purchased goodwill and certain
intangibles. Under the non-amortization approach, goodwill and
certain intangibles are not amortized into results of operations, but
instead are reviewed for impairment at least annually and written down
and charged to results of operations in the periods in which the
recorded value is determined to be greater than the fair value. The
Company has reviewed the goodwill recorded at September 30, 2008 and
found no impairment.
Accrued Warranty Costs - The Company records a liability for the
expected cost of warranty-related claims as its products are sold.
The Company provides a one-year warranty on all of its products except
the snowplow blade, which has a limited lifetime warranty. The amount
of the warranty liability accrued reflects the Company's estimate of
the expected future costs of honoring its obligations under the
warranty plan. The estimate is based on historical experiences and
known current events. If future estimates of expected costs were to
be less favorable, an increase in the amount of the warranty liability
accrued may be required.
Accounting for Income Taxes - The Company is required to estimate
income taxes in each of the jurisdictions in which it operates. This
process involves estimating actual current tax exposure for the
Company together with assessing temporary differences resulting from
differing treatment of items, such as property, plant and equipment
depreciation, for tax and accounting purposes. Actual income taxes
could vary from these estimates due to future changes in income tax
law or results from final tax exam reviews. At December 31, 2008, the
Company assessed the need for a valuation allowance on its deferred
tax assets. A valuation allowance is provided when it is more likely
than not that some portion or all of the deferred tax assets will not
be realized. Based upon the historical operating profits and the near
certainty regarding sufficient near term taxable income, management
believes that there is no need to establish a valuation allowance.
Should the Company determine that it would not be able to realize all
or part of its net deferred tax assets in the future, a valuation
allowance may be required.
In July 2006, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statement No. 109." FIN 48
prescribes a comprehensive model for how companies should recognize,
measure, present and disclose in their financial statements uncertain
tax positions taken or expected to be taken on a tax return. Under FIN
48, tax positions are recognized in the Company's financial statements
as the largest amount of tax benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with tax
authorities assuming full knowledge of the position and all relevant
facts. These amounts are subsequently reevaluated and changes are
recognized as adjustments to current period tax expense. FIN 48 also
revised disclosure requirements to include an annual tabular roll
forward of unrecognized tax benefits.
The Company adopted the provisions of FIN 48 on October 1, 2007. At
December 31, 2008, no uncertain positions were identified. To the
extent interest and penalties would be assessed by taxing authorities
on any underpayment of income taxes, such amounts would be accrued and
classified as a component of income tax expense on the condensed
consolidated statement
of income.
OVERALL RESULTS OF OPERATIONS - Three Months Ended December 31, 2008
and 2007
Three Months Three Months Increase Increase
Ended Dec. 31, Ended Dec. 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Revenue $ 4,333,614 $ 5,001,559 $ -667,945 (13.4%)
Cost of goods sold $ 2,917,578 $ 2,986,229 $ 68,651 2.3%
Gross profit $ 1,416,036 $ 2,015329 $ 599,293 (29.7%)
Gross profit % 32.7% 40.3% (7.6%)
The decrease in revenues for the three months ended December 31, 2008
was mainly attributable to our ATV accessories business segment, which
had a decrease in sales of approximately 13% this quarter compared to
the same quarter last year, as well as a decline in our Plastic Wheel
Cover segment. The decrease in gross profit as a percentage of
revenue was mainly attributable to an increase in raw material costs.
The company experienced significant increases in the costs of raw
steel and metal purchased parts. While the company implemented a
significant price increase of its own, the full increase was not able
to be realized within our two business segments that utilize steel as
a raw material, ATV accessories and Contract Manufacturing. To remain
competitive and maintain, or grow market share, the company was not
able to pass on the full price increase to its distributors and
customers. As the company continues to implement its business plan,
Cycle Country is starting to become known for more than just snowplow
blades. Our business plan places major emphasis on aggressively
developing new products, new markets, and product innovations to
vigorously grow revenues and reduce our seasonality.
Three Months Three Months Increase Increase
Ended Dec. 31, Ended Dec. 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Selling, general
and administrative
expenses $ 883,982 $ 1,025,251 $ (141,269) (13.8%)
As a percentage of revenue, selling, general, and administrative
expenses were 20.4% for the three months ended December 31, 2008
compared to 20.5% for the three months ended December 31, 2007. The
significant changes in operating expenses for the first quarter of
fiscal 2009 as compared to the first quarter of fiscal 2008 were;
Increase Increase
(Decrease) (Decrease)
$ %
Salaries $ (11,264) (4%)
Advertising $ (84,480) (84.2%)
Commissions $ (27,249) (66.2%)
Warranty $ (3,874) (17.9%)
Other professional fees $ 22,308 265.9%
Lease expense $ 21,239 88%
Salaries decreased for the three months ended December 31, 2008, as
compared to the three months ended December 31, 2007. The decrease in
commission expense was a result of the decrease in revenues during the
first quarter of fiscal 2009 in the ATV Accessories business segment.
Warranty expense increased for the three months ended December 31,
2008, as compared to the three months ended December 31, 2007. Other
professional fees increased for the three months ended December 31,
2008, as compared to the three months ended December 31, 2007, due to
additional consulting work related to the Company's Sarbanes-Oxley Act
compliance initiatives. The increase in lease expense was due to the
sale and subsequent leasing back of the Company's Milford facility, as
described elsewhere in this filing.
Three Months Three Months Increase Increase
Ended Dec. 31, Ended Dec. 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Interest and
miscellaneous
income $ 684 $ 11,423 $ (10,793) (94.0%)
Gain on sale of assets $ 38,216 $ 238,432 $ (200,216) (83.9%)
Interest expense $ 85,560 $ 89,283 $ (3,723) (4.2%)
The decrease in interest and miscellaneous income was primarily due to
a decrease in interest income of approximately $8,900. The gain on
sale of assets decrease of approximately $200,000 for the three months
ended December 31, 2008 as compared to the three months ended December
31, 2007 was due to the Company having sold its Milford facility and
certain other assets in the prior year. Interest expense decreased as
the principal balance on the bank notes continues to decrease.
Interest expense will decrease in the second quarter of fiscal 2009 as
the principal balances continue to decrease under fixed rate notes
going forward.
Looking ahead to the second quarter of fiscal 2009, we project growth
in revenues as new products, new markets, and effective marketing
initiatives continue to be the focus of management and the entire
Company. The company anticipates gross profits will be within the
range of 25% to 30% of revenue as profitability will continue to be
impacted by raw steel and other metal parts. Management has, and
will, continue to seek out and implement production efficiencies and
cost reduction initiatives wherever possible and will pass as much of
the net input costs increases on to its customers as possible.
Remaining competitive in the markets we are in and maintaining our
strong market shares within those markets may hinder management's
ability to pass on the full amount of our net input costs increases.
We project selling, general and administrative expenses during the
remainder of fiscal 2009 to be 20-25% of total revenue as we continue
our focus on cost reduction initiatives, launching new products and
maximizing the efficiencies the recently implemented new accounting
and manufacturing software provides us, all while maintaining a
consistent level of administrative support.
BUSINESS SEGMENTS
As more fully described in Note 9 to the Condensed Consolidated
Financial Statements included elsewhere in this filing, the Company
operates four reportable business segments: ATV Accessories, Plastic
Wheel Covers, Weekend Warrior, and Contract Manufacturing. ATV
accessories is vertically integrated and utilizes a two-step
distribution method, we are vertically integrated in our Plastic Wheel
Cover segment and utilize both direct and two-step distribution
methods, Weekend Warrior utilizes a single-step distribution method,
and our Contract Manufacturing segment deals directly with other OE
manufacturers and businesses in various industries.
ATV ACCESSORIES - Three Months Ended December 31, 2008 and 2007
Three Months Three Months Increase Increase
Ended Dec 31, Ended Dec 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Revenue $ 4,094,462 $ 4,224,679 $ (130,217) (3.08%)
Cost of goods sold $ 1,925,186 $ 1,751,875 $ 173,311 9.89%
Gross profit $ 2,169,276 $ 2,472,804 $ (303,527) (12.27%)
Gross profit % 53.0% 58.5% (5.5%)
The decrease in ATV Accessories revenue for the first quarter of
fiscal 2009 reflects the continued growth of our blade sales but with
some decline in sales of our parts categories compared to the prior
year. There was a minor decrease in gross profit as a percentage of
revenue, which was mainly attributable to an increase in raw material
costs. The company experienced significant increases in the costs of
raw steel and metal purchased parts. While the company implemented a
significant price increase of its own, the full increase was not able
to be realized within this business segment due to existing market
conditions. To remain competitive and to maintain, or grow market
share, the company was not able to pass on the full price increase to
its distributors. Management has, and will, continue to seek out and
implement production efficiencies and cost reduction initiatives
wherever possible and will pass as much of the net input costs
increases on to its customers as possible going forward. Remaining
competitive in the ATV Accessory market and maintaining our strong
market share within this market may hinder management's ability to
pass on the full amount of our net input costs increases.
PLASTIC WHEEL COVERS - Three Months Ended Dec 31, 2008 and 2007
Three Months Three Months Increase Increase
Ended Dec 31, Ended Dec 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Revenue $ 109,117 $ 420,687 $ (311,570) (74.0%)
Cost of goods sold $ 39,649 $ 169,192 $ (129,543) (76.5%)
Gross profit $ 69,468 $ 251,495 $ (182,027) (72.3%)
Gross profit % 63.7% 59.8% 3.9%
The decrease in Wheel Cover revenues can be attributed to a decrease
in sales to OEMs. Management is also pursuing and evaluating new
markets that our plastics division can produce parts for to further
broaden and grow this business segments revenue.
WEEKEND WARRIOR - Three Months Ended Dec 31, 2008 and 2007
Three Months Three Months Increase
Increase
Ended Dec 31, Ended Dec 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Revenue $ 73,829 $ 80,068 $ (6,239) (7.79%)
Cost of goods sold $ 60,388 $ 41,797 $ 18,591 44.5%
Gross profit $ 13,441 $ 38,271 $ (24,830) (64.9%)
Gross profit % 18.2% 47.8% (29.6%)
The decrease in revenues was attributable to a decrease in sales to
national retail customers. The decrease in gross profit is due to
manufacturing variances generated by increased input costs and
inventory adjustments. Management, under the direction of the new
President, has totally revamped and revised the Weekend Warrior
business model. Looking forward, management anticipates revenue to
once again grow quarter over quarter as the revised business model is
implemented during the next few fiscal quarters.
CONTRACT MANUFACTURING - Three Months Ended Dec 31, 2008 and 2007
Three Months Three Months Increase Increase
Ended Dec 31, Ended Dec 31, (Decrease) (Decrease)
2008 2007 $ %
--------------------------------------------------------
Revenue $ 296,599 $ 455,893 $(159,294) (34.9%)
Cost of goods sold $ 192,613 $ 192,980 $ (367) (.2%)
Gross profit $ 103,986 $ 262,913 $(158,927) (60.4%)
Gross profit % 35.1% 57.7% (22.6%)
The decrease in revenue was due to a decrease in business with current
customers. With ample production capacity and unique fabrication and
painting capabilities, management believes that increasing the
fabrication of parts and the manufacture of products to other OE
manufacturers and businesses will provide the company with a
significant source of revenue in quarters traditionally slow for our
main ATV Accessories business segment. Gross margin decreased as a
percentage of revenue as significant increases in the costs of raw
steel impacted the cost of materials for the quarter ended December
31, 2008. Management chose to honor the prices quoted to its
customers in the early part of the fiscal quarter and then moved to
repricing parts as raw steel costs failed to plateau or fall.
Adjusting pricing to pass on the steel cost increases will take time
as management's long standing procedures provide for repricing parts
to customers on 90 day cycles. During the second quarter, much of the
repricing should occur to allow the company to improve the gross
margins for this business segment. However, just as is the case for
the ATV Accessories business segment, market conditions for the
Contract Manufacturing segment may not allow the company to pass on
the full input costs increases to its customers as maintaining market
share and remaining competitive within the geographic region the
company competes for work in is key to the long term success of this
business segment.
GEOGRAPHIC REVENUE - Three Months Ended Dec 31, 2008 and 2007
Three Months Three Months Increase Increase
Ended Dec 31, Ended Dec 31, (Decrease) (Decrease)
Country 2008 2007 $ %
--------------------------------------------------------
United States $ 3,887,605 $ 4,540,560 $ (652,955) (14.3%)
All Other Countries $ 446,009 $ 460,998 $ ( 14,989) ( 3.2%)
For the three months ended December 31, 2008, the Company experienced
decreased revenue in both the U.S. markets, as well as
internationally. The decrease in revenue in the U.S. was discussed
above, and the decrease during in other countries was due to a
decrease of sales in Europe.
Liquidity and Capital Resources
Overview
Cash flows provided by operating activities of continuing operations,
built-up cash balances, and borrowings under our bank line of credit
provided us with a significant source of liquidity during the first
three months of Fiscal 2009.
Cash and cash equivalents were $206,510 as of December 31, 2008,
compared to $194,577 as of September 30, 2008. Until required for
operations, our policy is to invest any excess cash reserves in bank
deposits, money market funds, and certificates of deposit after first
repaying any built up balance on our bank line of credit.
In the three months ended December 31, 2008, we made approximately
$59,343 in capital expenditures, received approximately $7,000 from
the sale of capital equipment, and paid approximately $196,000 of
long-term debt principal. By the end of fiscal 2009 management
expects total capital expenditures to approximate $200,000.
Working Capital
Net working capital was $5,483,508 at December 31, 2008, compared to
$5,531,103 at September 30, 2008. The decrease in working capital was
primarily due to the net change in sales and gross margins.
Liquidity and Capital Resources
Balance Balance Increase/ Percent
Dec 31, 2008 Sep. 30, 2008 (Decrease) Change
- -----------------------------------------------------------------------------
Cash and cash
equivalents $ 206,510 $ 194,576 $ 11,934 6.1%
Accounts
receivable $ 2,524,378 $ 2,935,647 $ (411,269) (14.0%)
Inventories $ 4,739,925 $ 5,110,499 $ (370,574) (7.3%)
Prepaid expenses $ 106,679 $ 209,617 $ (102,938) (19.1%)
Deferred income tax $ 433,886 $ 345,920 $ 87,966 25.4%
Accounts payable $ 180,030 $ 577,278 $ (397,249) (68.8%)
Accrued expenses $ 626,053 $ 725,082 $ (99,029) (13.7%)
Bank line of credit $ 750,000 $ 1,000,000 $ (250,000) (25.0%)
Current portion of
Bank notes payable $ 823,437 $ 811,053 $ 12,384 1.5%
Current portion of
deferred gain $ 166,524 $ 166,524 $ - 0.0%
Long-Term Debt
On May 13, 2008, the Company and its commercial lender modified
the original secured credit agreement dated August 21, 2001. Under
the terms of the modification agreement to the secured credit
agreement, Note One and Note Two were modified to change their fixed
interest rates from 7.375% per annum to 6.125% per annum. Under the
terms of the new amendment to the secured credit agreement, Note One
and Note Two were amended. The Notes, going forward, are payable in
monthly installments from August 2008 until April 2017, for Note One
and until April 2011, for Note Two, which include principal and
interest (6.125% as of December 31, 2008, and 7.375% as of December
31, 2007) for Note One and principal and interest (6.125% as of
December 31, 2008, and 7.375% as of December 31, 2007) for Note Two,
with a final payment upon maturity on April 25, 2017, for Note One and
April 25, 2011 for Note Two. The interest rate is fixed for Note Two
and is fixed for Note One until April 2011, after which the interest
rate will be reset to prime + 0.50% every 60 months. However, the
interest rate for Note One can never exceed 10.5% or be lower than
5.5%. The monthly payment is $33,449 and $42,049 for Note One and
Note Two, respectively. At December 31, 2008 and 2007, $2,833,679 and
$3,050,952, respectively, were outstanding for Note One and $1,089,800
and $1,517,447, respectively, were outstanding for Note Two.
Additionally, any proceeds from the sale of stock received from the
exercise of warrants are to be applied to any outstanding balance on
the Notes or the Line of Credit described below.
On May 13, 2008, the Company and its commercial lender entered
into a note payable agreement. Under the terms of the Note, the Note
is payable in monthly installments from May 2008 until April 2013,
which includes principal and interest (6.125% as of December 31,
2008), with a final payment upon maturity on April 25, 2013. The
interest rate is fixed for the term of the Note. The monthly payment
is $14,567. At December 31, 2008, $662,761 was outstanding. The Note
is collateralized by the company's new 4000 watt laser cutting system
asset.
Line of Credit
On April 28, 2006, the Company and its commercial lender
amended the original secured credit agreement dated August 21, 2001.
Under the terms of the amended secured credit agreement, the Company
has a Line of Credit for the lesser of $1,000,000 or 80% of eligible
accounts receivable and 35% of eligible inventory. The Line of Credit
bears interest at prime plus 0.50% (5.5% at December 31, 2008) and is
collateralized by all of the Company's assets. The variable interest
rate can never exceed 10.5% or be lower than 5.5%. The Line of Credit
matures on December 31, 2008. At December 31, 2008, $750,000 was
outstanding on the Line of Credit and there was no balance outstanding
on the Line of Credit as of December 31, 2007. The line was extended
by agreement between the Company and the bank for a period of 60 days.
The secured credit agreement contains conditions and covenants
that prevent or restrict the Company from engaging in certain
transactions without the consent of the commercial lender and require
the Company to maintain certain financial ratios, including term debt
coverage and maximum leverage. In addition, the Company is required
to maintain a minimum working capital and shall not declare or pay any
dividends or any other distributions.
Warrants
The Company has 40,000 previously issued warrants outstanding
to purchase one share of the Company's common stock per warrant at
$4.00 per share which do not expire until June 9, 2010. For the three
months ended December 31, 2008, none of the 40,000 warrants were
exercised. The proceeds, if exercised, are to be applied to the
outstanding balance on the Notes.
Capital Resources
Consistent with normal practice, management believes that the
Company's operations are not expected to require significant capital
expenditures during fiscal year 2009. Management believes that
existing cash balances, cash flow to be generated from operating
activities and available borrowing capacity under its line of credit
agreement will be sufficient to fund normal operations and capital
expenditure requirements, non-inclusive of any major capital
investment that may be considered, for at least the next six months.
At this time management is not aware of any factors that would have a
materially adverse impact on cash flow during this period.
Item 3. Controls and Procedures
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the
Company's Securities Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the SEC's
rules and forms, and that such information is accumulated and
communicated to the Company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. In designing
and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily
was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
During the 90 day period prior to the date of this report, an
evaluation was performed under the supervision and with the
participation of our Company's management, including the Chief
Executive Officer and the Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based upon that evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective.
Subsequent to the date of this evaluation, there have been no
significant changes in the Company's internal controls or in other
factors that could significantly affect these controls, and no
corrective actions taken with regard to significant deficiencies or
material weaknesses in such controls.
Special Note Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 (the "Reform
Act") provides a safe harbor for forward-looking statements made by or
on behalf of the Company. The Company and its representatives may,
from time to time, make written or verbal forward-looking statements,
including statements contained in the Company's filings with the
Securities and Exchange Commission and in its reports to stockholders.
Generally, the inclusion of the words "believe", "expect", "intend",
"estimate", "anticipate", "will", and similar expressions identify
statements that constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934 and that are intended to come
within the safe harbor protection provided by those sections.
All statements addressing operating performance, events, or
developments that the Company expects or anticipates will occur in the
future, including statements relating to sales growth, earnings or
earnings per share growth, and market share, as well as statements
expressing optimism or pessimism about future operating results (in
particular, statements under Part I, Item 2, Management's Discussion
and Analysis of Financial Condition and Results of Operations),
contain forward-looking statements within the meaning of the Reform
Act. The forward-looking statements are and will be based upon
management's then-current views and assumptions regarding future
events and operating performance, and are applicable only as of the
dates of such statements but there can be no assurance that the
statement of expectation or belief will result or be achieved or
accomplished. In addition, the Company undertakes no obligation to
update or revise any forward-looking statements, whether as a result
of new information, future events, or otherwise.
By their nature, all forward-looking statements involve risk and
uncertainties. Actual results may differ materially from those
contemplated by the forward-looking statements for a number of
reasons, including but not limited: competitive prices pressures at
both the wholesale and retail levels, changes in market demand,
changing interest rates, adverse weather conditions that reduce sales
at distributors, the risk of assembly and manufacturing plant
shutdowns due to storms or other factors, the impact of marketing and
cost-management programs, and general economic, financial and business
conditions.
Part II - Other Information
Item 1. Legal Proceedings
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits
(18) Letter on Change in Accounting Principle
(Incorporated by reference to the original
document filed with the Form 10-QSB for the
three and six months ended March 31, 2008,
filed on May 15, 2008.)
(31.1) Certification of Principal Executive Officer pursuant to
Rule 13a-14 or 15d-14 of the Securities Exchange Act
of 1934, as adopted pursuant to section
302 of the Sarbanes-Oxley act of 2002.
(31.2) Certification of Chief Financial Officer pursuant to
Rule 13a-14 or 15d-14 of the Securities Exchange Act
of 1934, as adopted pursuant to section
302 of the Sarbanes-Oxley act of 2002.
(32.1) Certification of Principal Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
(32.2) Certification of Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
Page 26
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on February 17, 2009.
CYCLE COUNTRY ACCESSORIES CORP.
By: /s/ Jeffrey M. Tetzlaff
---------------------------------
Jeffrey M. Tetzlaff
Principal Executive Officer,
President, and Director
In accordance with the requirements of the Exchange Act, this
report has been signed by the following persons on behalf of the
registrant and in the capacities indicated on February 17, 2009.
By: /s/ Jeffrey M Tetzlaff Principal Executive Officer, President
----------------------------
Jeffrey M. Tetzlaff and Director
By: /s/ Robert Davis Principal Financial Officer and
----------------------------
Robert Davis Principal Accounting Officer
By: /s/ F.L. Miller Director
----------------------------
F.L. Miller
By: /s/ L.G. Hancher Jr. Director
----------------------------
L.G. Hancher Jr.
By: /s/ Rod Simonson Director
----------------------------
Rod Simonson
By: /s/ Alan Bailey Director
----------------------------
Alan Bailey
Page 27