VIPER POWERSPORTS INC - FORM 10-K/A

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EXCEL - IDEA: XBRL DOCUMENT - VIPER POWERSPORTS INC	Financial_Report.xls
EX-31.2 - EXHIBIT 31.2 - VIPER POWERSPORTS INC	v307324_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - VIPER POWERSPORTS INC	v307324_ex31-1.htm
EX-32.1 - EXHIBIT 32.1 - VIPER POWERSPORTS INC	v307324_ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

x ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) of the Securities Exchange

Act of 1934 for the Year Ended December 31, 2010.

¨ TRANSITION PURSUANT TO SECTION 13 or 15(d) of the Securities Exchange

Act of 1934 for the transition period from ______ to ______.

VIPER POWERSPORTS, INC.

(Name of Registrant in its charter)

Nevada

41-1200215

(State or other jurisdiction of

Incorporation or organization)

(IRS Employer ID Number)

2458 West Tech Lane

Auburn, AL

36832

(Address of principal executive offices)

(Zip Code)

(334) 887 4445

(Issuer’s Telephone Number)

Securities registered under Section 12(b) of the Act: None

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

Common Stock, $0.001 par value (Title of class.)

Check whether the issuer (1) 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 if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes o No x

Check if disclosure of delinquent filers in response to Item 405 of Regulation S is not contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A. ¨

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Smaller reporting company Yes x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and ask price of such common equity, as of the last business day of the registrant most recently completed second fiscal quarter. $13,688,962 as of May 13, 2011.

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. 17,949,590 Common Shares as of May 13, 2011.

The Company is filing the Amended 10-K for the period ended December 31, 2010. The Amended 10-K addresses the following items:

Strategic Engine Development Joint Venture. (Item 1, Description of Business) – The Company elaborated its milestone requirement and consequences associated with the Ilmor contract.

Internal Control – (Item 9A, Controls and Procedures) – The Company added definitional references and further disclosures relating to:

Impact on financials because of ineffectiveness of internal control.

Impact of a weakness in internal control resulting in lack of separation of duties due to small size of the Company, which results in a material weakness.

Internal Control - – (Item 9A, Controls and Procedures) – The Company adjusted the language to reflect accounting principles generally accepted in the United States.

Inventories (Footnote 1, F-8) - The Company added comments relating to its definition of long term inventory.

Dealer floor planning (Footnote 1, F-9) - The Company removed all references to floor planning as the Company does not have a current floor planning program with its dealer network.

Going Concern – (Page 15) Added a risk factor related to the Company’s position on its Going Concern.

Derivative Liability – The Company reevaluated the classification of its warrant based on ASC 815-40-25-7 through 815-40-25-35 through a review with the Office of the Chief Accountant with the U.S. Securities & Exchange Commission. The Office did not object to the classification of the warrants as equity rather than a liability.

Accounts Payables restatement – In reviewing the beginning balances of Accounts Payable, the Company discovered that errors were recorded during the prior years. The Company is making a prior period adjustment to retained earnings to correct these entries. In addition, an adjustment to the ending Accounts Payable accrual is made to correct entries made during 2010.

TABLE OF CONTENTS

		Page

PART I

Item 1.	Description of Business	3

Item 2.	Description of Property	8

Item 3.	Legal Proceedings	8

Item 4.	Removed and Reserved	8

PART II

Item 5.	Market for Common Equity and Related Stockholder Matters	9

Item 6.	Selected Financial Date	12

Item 7.	Management’s Discussion and Analysis and Plan of Operation	12

Item 8.	Financial Statements	18

Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	18

Item 9A.	Controls and Procedures	18

Item 9B.	Other Information	19

PART III

Item 10.	Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act	20

Item 11.	Executive Compensation	22

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	23

Item 13.	Certain Relationships and Related Transactions	24

Item 14.	Principal Accountant Fees and Services	25

Item 15.	Exhibits	25

	Signature Page	26

	Index to Financial Statements	F-1

	Index to Exhibits	27

PART I

Item 1. Description of Business

Business Development Overview

Viper Powersports, Inc., formerly ECCO Capital Corporation (“ECCO”), was incorporated in Nevada in 1980 under a former name. ECCO ceased all active operations in 2001 and remained inactive until its stock exchange acquisition of Viper Motorcycle Company in early 2005, incident to which it changed its name to Viper Powersports, Inc.

Effective March 31, 2005, Viper Powersports, Inc. acquired all of the outstanding capital stock of Viper Motorcycle Company, a Minnesota corporation, resulting in Viper Motorcycle Company becoming a wholly-owned subsidiary of Viper Powersports, Inc. For accounting and operational purposes, this acquisition was a recapitalization conducted as a reverse acquisition of Viper Powersports, Inc. with Viper Motorcycle Company being regarded as the acquirer. Consistent with reverse acquisition accounting, all of the assets, liabilities and accumulated deficit of Viper Motorcycle Company are retained on our financial statements as the accounting acquirer. Since Viper Powersports, Inc. had no assets or liabilities at the time of this acquisition, its book value has been stated as zero on the recapitalized balance sheet. The stock exchange for this reverse acquisition was affected on a one-for-one basis, resulting in the stockholders of Viper Motorcycle Company exchanging all of their outstanding capital stock for an equal and like amount of capital stock of Viper Powersports, Inc. This resulted in the former shareholders of Viper Motorcycle Company acquiring approximately 94% of the resulting combined entity.

Viper Performance Inc. was incorporated by us in March 2005 as a wholly-owned Minnesota corporation. We organized and incorporated Viper Performance Inc. for the purpose of receiving and holding the engine development technology and related assets which we acquired from Thor Performance Inc.

As used herein, the terms “we”, “us”, “our”, and “the Company” refer to Viper Powersports, Inc. and its two wholly-owned subsidiaries, unless the context indicates otherwise.

Since our inception in late 2002, we have been in the business of designing, developing and commencing commercial marketing and production of premium custom V-Twin motorcycles popularly known as “cruisers.” Our motorcycles will be distributed and sold under our Viper brand through a nationwide network of independent motorcycle dealers. Marketing of our motorcycles is targeted toward the upscale market niche of motorcycle enthusiasts who prefer luxury products and are willing to pay a higher price for enhanced performance, innovative styling and a distinctive brand. We believe there is a consistently strong demand for upscale or luxury motorcycle products like our American-styled classic Viper cruisers and our premium V-Twin engines. For example, the prestigious upscale Robb Report magazine publishes a Robb Report Motorcycling magazine bi-monthly, which is targeted exclusively to luxury motorcycle products.

We have completed the development and extensive testing of proprietary V-Twin engines including actual performance testing of the engines on our various motorcycle models, and we have been very satisfied with their performance while powering our cruisers during all kinds of street and highway running conditions. Our proprietary V-Twin engines were designed and developed by Melling Consultancy Design (MCD), a leading professional engine design and development firm based in England.

After undergoing an extensive engine emissions testing program for an entire year conducted by a leading independent test laboratory in 2009, our proprietary V-Twin engines recently satisfactorily passed and complied with all noise and pollution emissions requirements of both the Environmental Protection Agency (EPA) and the more stringent emissions requirements of the California Air Resources Board (CARB). Satisfying these standards constitutes a touchstone achievement for the Company that we believe places us in a commanding competitive position in the upscale custom motorcycle market.

We commenced commercial marketing, very limited production and commercial shipment of Viper motorcycles in 2009, and we currently hold material orders from our Viper dealer base of fifteen first class motorcycle dealers. Our current firm orders from Viper dealers exceeded our remaining available production capacity for 2010.

Strategic Engine Development Joint Venture

In January 2010 the Company’s subsidiary, Viper Motorcycle Company, entered into a three-year Motorcycle Engine Manufacture and Supply Agreement with Ilmor Engineering Inc. (the “Ilmor/Viper Contract”). Ilmor Engineering Inc. (“Ilmor”) has been engaged for over 20 years in the design, development and manufacture of high-performance engines, and Ilmor’s extensive precision engineering and manufacturing facilities are located in suburban Detroit, Michigan. The Company is very pleased to have completed this strategic and valuable Ilmor/Viper Contract, since Ilmor is widely recognized as one of the most successful race-engine designers and manufacturers.

Under a previous written contract entered into by Ilmor and Viper in May 2009, Ilmor began assembling all V-Twin engines used by Viper, and since then Ilmor has conducted all of the Company’s engine product assembly. The initial 2009 contract also contained a product development segment whereby Ilmor evaluated our V-Twin engine to determine whether the parties should engage in a future joint venture to develop and produce an upgraded model of the Viper engine. Ilmor’s evaluation of our V-Twin engine through the initial contract was favorable, and accordingly resulted in the current Ilmor/Viper Contract, which provides for the exclusive manufacture and supply by Ilmor of a Viper engine designed by Ilmor.

Under the Ilmor/Viper Contract, Ilmor has assumed all design, development, testing, quality control and manufacturing with respect to an upgraded Ilmor-designed Viper V-Twin engine. Ilmor has completed design and development operations and is now producing prototype models of this engine based on specifications jointly developed by Ilmor and Viper. Under a payment schedule extending through November 2012, the Company will pay Ilmor a total of $745,000 for the design, development and testing of this V-Twin engine. Ilmor was paid a portion of this amount due upon reaching certain milestones and successful testing. The remaining fees will be amortized over manufacturing milestones agreed upon by both parties. The Company is current on all payments to Ilmor under this contract.

The Company has approved and is well satisfied with the most recent prototype of the Ilmor-designed Viper engine, and accordingly has ordered considerable commercial Ilmor engines which are now being delivered. Ilmor agrees to manufacture and supply all V-Twin requirements of Viper and in turn Viper must purchase all its engines exclusively from Ilmor. Ilmor will bear the cost and expense of all tooling, parts and components to manufacture and supply Viper engines until finished engines are invoiced and shipped to the Company. So long as Viper satisfies certain minimum annual engine purchase requirements, Ilmor shall not develop, manufacture or sell a similar V-Twin engine for itself or any third party. The engine purchase requirement is developed annually between the parties and is current.

These Ilmor-designed Viper engines will be labeled with an Ilmor brand, for which the Company has been granted a non-exclusive paid-up license to use the Ilmor Mark in connection with sale and distribution of Viper engines. All intellectual property rights related to any Ilmor Marks, however, continue to be owned exclusively by Ilmor. Engine pricing to be paid to Ilmor by Viper will be determined annually based on the actual Bill of Materials for components, labor and assembly costs incurred by Ilmor, plus a reasonable mark-up percentage.

Restructuring

The Company, on September 3, 2009, declared a reverse 1-for-4 stock split whereby each currently outstanding four shares of common stock of the Company were converted into one post-split share of common stock of the Company having the same par value of $.001 per share, and the effective date of the reverse stock split was September 15, 2009. Pursuant to this reverse stock split the authorized common shares of the Company were concurrently reduced to twenty-five million (25,000,000) common shares. In 2011, the Company increased our authorized common shares to 100,000,000.

Corporate Contact Data

The address of the Company is 2458 West Tech Lane, Auburn, AL 36832; its telephone number is (334) 887-4445; and its website address is www.viperpowersports.com.

BUSINESS OF COMPANY

We develop and produce proprietary premium motorcycle products targeted to consumers who can afford to purchase upscale luxury products. Our current revenues are being generated from the sale of our Diamondback model cruisers. Additional anticipated sources of future revenues include our Mamba model almost completed, a touring “bagger” model and a three-wheeled “trike” model being designed, aftermarket sales of our proprietary V-Twin engines, and sales of ancillary Viper motorcycle products including aftermarket custom parts and accessories and Viper branded apparel and other merchandise.

Our revenue stream will be primarily affected by customer demand for our Viper motorcycle products, our ability to timely provide Viper products in response to dealer orders, recruitment and retention of effective Viper dealers who actively promote and sell our products, and acceptance by our dealers.

Our Market

Motorcycles are generally characterized in their industry by weight, primarily based on engine displacement size. Viper cruisers fall within the heavyweight motorcycle category which typically includes models with engine displacement of at least 651cc (cubic centimeters). There are generally four types of heavyweight motorcycles:

	·	Standard, which emphasize simplicity and low cost (e.g., Harley Davidson Sportster);
	·	Performance, which emphasize handling and speed (e.g., Ducati models);
	·	Touring, which emphasize rider comfort and distance travel (e.g., Honda Gold Wing); and
	·	Cruiser, designed to facilitate customization by owners (e.g., most Harley Davidson models)

Our Viper motorcycles are offered in the premium segment of the heavyweight cruiser market which is dominated by Harley Davidson. We believe that potential customers in this upscale market typically seek motorcycle models having a product and lifestyle appeal associated with the classic American V-Twin cruiser tradition. Our targeted customer base has expanded significantly for many years due to the growing popularity of motorcycling as well as the maturing of the population bulge from the post- World War II baby boom years. Many males of the baby boom generation now are in their peak income earning years, making them good prospects for luxury goods. Harley Davidson has reported that the typical consumer of its heavyweight motorcycles is a married man in his mid-forties having an income in excess of $80,000. We believe that premium heavy-weight motorcycles have become popular and well-accepted luxury recreational products.

Our Motorcycles

Viper Diamondback

The Viper Diamondback has been designed and developed with many styling and performance features and components distinguishing it from cruisers of our competitors. Our development efforts have focused substantially on providing enough signature styling and component features for the Diamondback to compare favorably to other premium cruisers.

Premium components and distinctive features of the Diamondback include:

	·	a powerful, billet-cut proprietary 152” V-Twin engine;
	·	our unique right-side drive train providing maximum rider balance;
	·	premium HID headlights and LED display functions;
	·	a 6-speed transmission;
	·	adjustable “on-the-fly” rear-end air suspension system and front-end adjustable Marzocchi forks;
	·	a proprietary handlebar vibration dampening system; and
	·	wide high-quality Metzeler tires and premium billet wheels.

The outward appearance of the Diamondback includes distinctive styling features such as:

	·	substantial use of billet-cut components including the V-Twin engine, primary drive, controls and wheels;
	·	a low, streamlined look;
	·	oil storage in the frame, enabling a sleeker and more naked appearance due to absence of an under-seat oil tank and
	·	a unique swingarm design.

Basic specifications of the Diamondback cruiser are as follows:

·	Wheelbase length and rake:	71 inches, 34 degrees, 5 degree trees
·	Weight:	610 pounds
·	Seat height::	24 inches, adjustable
·	Engine type:	45° V-Twin, air cooled
·	Engine displacement:	152 cubic inches
·	Fuel distribution:	Mikuni carburetion
·	Frame:	1 ½” tubular steel
·	Transmission/drive train:	6-speed, Viper right-side drive
·	Final drive:	Belt
·	Rear-end suspension:	Adjustable air-ride system
·	Front-end suspension:	Marzocchi inverted adjusted forks
·	Tires:	Metzeler – 120/70-21 front and 260/40-18 rear
·	Brakes:	4-piston caliper both front and rear
·	Power rating ranges:	144 ft lbs torque at 3,000 rpm

Viper Mamba

We have almost completed development of the Viper “Mamba,” a sleek and low-slung pro-street model with unique and aggressive styling features. We believe the Mamba will appeal to motorcyclists desiring an aggressive 21st century look. We anticipate commencing commercial production and marketing of our Mamba model during the second half of 2011.

Viper Proprietary Engines

We have completed development and commercial production of our innovative proprietary engine technology. All viper motorcycles feature this proprietary 152 cubic inch V-Twin engine. We believe that having our own proprietary engines will distinguish us clearly and favorably from other upscale custom V-Twin competitors. Our proprietary V-Twin engines feature an all-billet aluminum construction including cases, heads, cylinders, rocker boxes and covers, and oil pump components.

Sales and Marketing

We sell our motorcycles directly to our authorized Viper dealers. Our dealer network includes well-established, independent full-service dealers offering more than one motorcycle brand. We currently have ten (10) Viper dealers located nationwide, all of which are experienced in selling and servicing premium heavyweight V-Twin motorcycles. We will continue to recruit additional qualified Viper dealers to attain our goal of having a complete nationwide distribution network. Our near-term marketing focus will emphasize dealer recruitment in regions of the country where we lack dealer representation.

Our dealers must maintain full-service departments capable of providing quality V-Twin engine and drive train maintenance and repair. They also must be able to perform custom upgrade work on cruisers. Viper dealers are granted a designated, non-exclusive location to sell Viper motorcycle products. Dealers have the exclusive right to use and display our Viper brand in their respective locations in connection with the sale of our products. They must be responsible for warranty services and general repair and maintenance services, maintain adequate working capital, and conduct material efforts toward promoting and selling Viper products.

We will conduct substantial ongoing marketing activities to support our dealer network and promote Viper products and brands to our customer base and to the general public. Our marketing and promotional efforts will include advertising in selected trade publications and motorcycle magazines, production and publication of sales brochures, technical product documentation, and providing service and operational manuals for dealers and their customers. We also will participate in direct mail promotions to prospective customers, attend selected motorcycle trade shows, and appear at popular motorcycle rallies such as Daytona and Sturgis. We also intend to institute material public relations efforts directed toward obtaining publication of articles on our company and its products in industry magazines and in newspapers and other publications available to the general public.

Design and Development

We are committed to a substantial ongoing design and development program to:

introduce improved and enhanced Viper motorcycle models on an annual basis;

develop and produce or outsource production of ancillary Viper components and accessories for sale in the large custom cruiser aftermarket.

We believe our established design and development systems, our professional and motivated in-house and outsourced personnel, and other development equipment and capabilities will enable us to timely design and develop new Viper products as needed to satisfy the changing needs and tastes of the custom cruiser market. Our design and development operations are conducted both through our in-house development department located in our Hopkins, MN facility along with selected professional independent designers and developers.

Manufacturing and Suppliers

Our manufacturing operations consist of in-house production of certain components and parts, assembly and polishing components, and conducting quality control of in-process and finished motorcycles. Motorcycle body, engine and electrical components and parts are outsourced for production to our specifications to various experienced manufacturers of motorcycle components, including engine components, fenders, gas tanks and electrical harnesses and wiring. Other key components are purchased off-the-shelf from various independent manufacturers and distributors mostly located in the United States, including brake and suspension systems, handlebars, transmissions and clutches, drive belts, ignition starters, seats, tires and wheels, panel indicators, lights and batteries. Components manufactured by us in-house include motorcycle frames. Painting of our motorcycles is outsourced to local painting companies skilled in custom motorcycle painting.

We have designed our quality control procedures and standards to include inspection of incoming components and adherence to specific work-in-process standards during motorcycle assembly. Periodic quality control inspections are conducted at various stages of our assembly operations. Finished motorcycles are subjected to performance testing under running conditions and to final quality inspection, including starting and operating each motorcycle by a dedicated test foreman.

Warranty Policy

We provide a standard limited warranty for Viper products primarily covering parts and labor to repair or replace defective motorcycle components. Our warranty will cover 12,000 mile during an effective one-year term. Our dealers will conduct repairs on Viper products under warranty, for which we will reimburse dealers. Warranty repairs and replacements will be provided at no cost to the consumer.

Competition

The heavyweight motorcycle market is highly competitive, and most of our competitors have substantially greater financial, personnel, development, marketing and other resources than us, which puts us at a competitive disadvantage. Our major competitors have substantially larger sales volumes than we expect to ever realize and in most cases have greater business diversification. In our premium heavyweight motorcycle market, our main competitor is Harley-Davidson Inc. which dominates the market for V-Twin cruiser motorcycles. Other significant competitors include Polaris with its Victory motorcycle line. We also face particularly direct competition from a number of V-Twin custom cruiser manufacturers concentrating on the same upscale market niche where we are situated, including Big Dog and other numerous small companies and individuals throughout the country which build “one-off” custom cruisers from non-branded parts and components available from third parties. We also expect additional competitors to emerge from time to time in the future. We believe that the principal competitive factors in our industry are styling, performance, quality, product pricing, durability, consumer preferences, marketing and distribution, brand awareness and the availability of support services. We cannot assure anyone that we will be able to compete successfully against current or future competitors or that the competitive pressures faced by us will not materially harm our operations, business and financial condition.

Intellectual Property

We hold a registered trademark for our Viper logo and for the use of the term Viper in connection with motorcycles and motorcycle products.

We regard our development technology and proprietary know-how and assets as being very valuable to us, but we have no patent protection to date. We have filed certain patents relating to our V-Twin engines and certain other Viper motorcycle components with the U.S. Patent and Trademark Office. There is no assurance we will obtain any significant patent protection, however, and we intend to rely primarily upon a combination of trade secrets and confidentiality agreements to protect our intellectual property.

There is no assurance that any measures taken by us to protect our intellectual property will be sufficient or that such property will provide us with any competitive advantage. Competitors may be able to copy valuable features of our products or to obtain information we regard as a trade secret. We are currently not aware of any claims of patent infringement against us regarding our products.

Government Regulation

Motorcycles sold in the United States, European Union countries, Canada and other countries are subject to established environmental emissions regulations and safety standards. Viper motorcycles must be certified by the Environmental Protection Agency (EPA) for compliance with applicable emissions and noise standards and by the California Air Resources Board (CARB) with respect to California’s more stringent emissions regulations. Motorcycles sold in California also are subject to certain tailpipe and evaporative emission requirements unique to California.

Motorcycles sold in the United States are also subject to the National Traffic and Motor Vehicle Safety Act and its rules promulgated and enforced by the National Highway Traffic Safety Administration (NHTSA). This safety act prohibits sale of any new motorcycle failing to conform to NHTSA safety standards, and also provides for remedying safety defects through product recalls. We are also required to recall motorcycles voluntarily if we determine a safety defect exists regarding Viper motorcycles. If the NHTSA or we determine a defect exists requiring a recall, the costs to us of such an event could be very substantial.

We have submitted our Viper cruisers and their V-Twin engines to the various applicable governmental agencies and have satisfied their certification requirements and standards. For this purpose, we retained a leading certified motorcycle testing lab. We expect to incur ongoing costs to continue complying with motorcycle safety and emissions requirements. As new laws and regulations are adopted, we will assess their effects on current and future Viper motorcycle products. Effective December 2008, the Company received the Certificate of Conformity with the Clean Air Act of 1990 from the EPA.

Employees

We currently employ 8 persons including our management, development, marketing and administrative personnel. We expect to hire 3 to 6 assembly and administrative personnel during 2011 to support our anticipated commercial production and sales of Viper cruisers. Other than these additional anticipated personnel, we do not anticipate needing any additional personnel during the next twelve months. None of our employees belong to a labor union, and we consider our relationship with our employees to be good.

Item 2. Description of Property

The Company currently does not own any real estate. In 2010, all development, production, marketing and administrative operations of the Company were conducted from its Hopkins, MN leased facilities. During 2011, the Company moved its operations to Auburn, Alabama.

Hopkins Facility

In October 2008, we relocated all of our operations and administration functions from Big Lake, MN to Hopkins, MN, a suburb of Minneapolis. We lease our current Hopkins facility under a written 3 year lease at a monthly rental of $7,900 not including utilities. The facility occupies 9,000 square feet in a modern one-story light industrial building. We believe our Hopkins facility is adequate to support all our administrative, development, production assembly and warehousing needs.

The Company owns development and production equipment, computer and office equipment, and business vehicles, all of which have cost approximately $498,153 since its inception in November 2002.

Pending Move to Auburn, Alabama

The Company is in the process of relocating its entire headquarters and manufacturing operations from Hopkins, Minnesota to Auburn, Alabama. When this move is completed, which is anticipated during the summer of 2011, the Company will lease and occupy a modern state-of-the-art facility in Auburn which is currently being upgraded and customized to suit all of our motorcycle development, marketing, production and administrative functions. This Auburn facility includes 63,000 square feet with ample future expansion capability. The Company has already received material support for this upcoming relocation from the City of Auburn and the State of Alabama. Moreover, we are very pleased with the warm reception and material support we have received from Auburn officials and citizenry.

Item 3. Legal Proceedings

In January 2011, International Finance, LLC, as plaintiff, commenced a legal action against the Company, claiming that the Company owes the plaintiff approximately $98,000 in principal and accrued interest relating to a Promissory Note executed by the Company in 2007. The Company has answered this claim and denied any liability regarding this Promissory Note on the grounds primarily due to lack of consideration by the plaintiff. The Company will continue to defend and oppose this lawsuit.

Other than the foregoing legal action the Company is not a party to any material or administrative lawsuit, action or other legal proceeding, and the Company is not aware of any such threatened legal proceeding. Moreover, none of the property of the Company is subject to any pending or threatened legal proceeding. No director, officer, affiliate or shareholder of the Company is a party to any pending or threatened legal proceeding adverse to the Company, nor do any of these persons hold any material interest adverse to the Company.

Item 4. Removed and Reserved.

PART II

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

Market Information

The Company’s common stock is traded in the over-the-counter (OTC) market and is quoted on the OTC Bulletin Board under the symbol “VPWI.” The range of high and low bid prices of the Company’s common stock, as reported by the Bulletin Board quotation systems, are as follows. These quotations reflect inter-dealer prices without retail mark-up, mark-down or commission and may not represent actual transactions, and are adjusted to reflect the 1 for 4 reverse stock split of September 2009.

Period	High Price(Bid)		Low Price(Bid)
April – June, 2009	$	2.00	$	.60
July – September, 2009	$	1.90	$	.62
October – December, 2009	$	2.02	$	1.00
January – March , 2010	$	1.40	$	1.07
April – June, 2010	$	.85	$	.81
July – September 2010	$	.91	$	.83
October – December, 2010	$	.70	$	.60
January – March, 2011	$	.69	$	.30

The closing sales price of our common stock on May 4, 2011 was $.55 per share.

Reverse Stock Split

In September 2009, the Company affected a 1-for-4 reverse stock split whereby one post-split common share was issued for each four shares of common stock outstanding prior to the reverse split. All common share references in this annual report have been adjusted to reflect this reverse stock split.

Shareholders

As of May 13, 2011, there were 434 shareholders of record holding common stock of the Company.

Dividends

The Company has never declared or paid any cash dividends on its common stock, and does not anticipate paying any cash dividends in the foreseeable future.

Securities Authorized for Issuance Under Equity Compensation Plans

The Company has no established equity compensation plans for the issuance of common stock as payment for employees, consultants or other parties. The Company has utilized its common stock for equity compensation from time to time on a transactional basis. In the future, the Company may establish some type of an equity compensation plan to provide incentive to current or future employees and others material to the Company’s business.

There were no issuer repurchases by the Company during the fiscal year ended December 31, 2010.

Equity Securities Sold by the Company

Following are all equity security transactions during the year ended December 31, 2010 involving sales not registered under the Securities Act of 1933:

Loan Transactions

The Company entered into seven 90-day loan agreements bearing interest at 12% per annum during the year ended December 31, 2010. These loans were not initially convertible. Each agreement also required the Company to issue warrants for purchasing the applicable number of shares of common stock at prices as described below. The Company valued the warrants issued, using the Black-Scholes model. The relative fair value method was used to allocate the proceeds between the warrants and the loans, resulting in some debt discount, which are then accreted over the life of the loans. Under a separate debt conversion agreement dated November 30, 2010, the loans were converted at $.75 per share and additional warrants were granted in which the note holder received 1 warrant for every 2 shares of stock issued upon conversion. These loans and accrued interest were converted on November 30, 2010 into common stock. Any remaining unamortized debt discount at the time of conversion has been accreted to financing cost.

						Exercise					Call
Date	Term	Proceeds		Warrants		Price		Interest			Value
1/21/2010	90 days	$	100,000		50,000	$	0.50		12.00	%	$	1.30
1/27/2010	90 days	$	25,000		12,500	$	0.50		12.00	%	$	1.15
1/28/2010	90 days	$	25,000		12,500	$	0.50		12.00	%	$	1.15
1/31/2010	90 days	$	100,000		50,000	$	0.50		12.00	%	$	1.10
2/4/2010	90 days	$	100,000		50,000	$	0.50		12.00	%	$	1.10
6/16/2010	90 days	$	100,000		50,000	$	1.00		12.00	%	$	0.85
6/16/2010	90 days	$	100,000		50,000	$	1.00		12.00	%	$	0.85
		$	550,000		275,000

Another note holder had a $100,000 90-day note that existed at December 31, 2009. The loan was also converted on November 30, 2010, and the note-holder received the same inducement warrants to convert as the above mentioned agreements.

The Company also entered into a 90-day loan agreement and a 365-day loan agreement during the year ended December 31, 2010. These loans were convertible into common shares at $.75 and $.50; respectively, and carry a 12.0% interest rate. The Company also issued warrants to holders for the applicable number of shares of common stock at $1.00 per share. The Company valued the warrants issued, using the Black-Scholes model. The relative fair value method was used to allocate the proceeds between the warrants and the loans, resulting in some debt discount, which are then accreted over the life of the loans. With the convertibility of these loans, a beneficial conversion feature was created. The effective conversion price is subtracted from the stock market price to determine the beneficial conversion feature (BCF) per share. This is then multiplied by the number of warrants issued. This BCF value was then expensed immediately, since the loan could be immediately converted. The 90-day loan and accrued interest was converted on November 30, 2010. The 365-day loan was converted on December 30, 2010.

Date	Term	Proceeds		Warrants		Exercise Price		Interest			Call Value
3/23/2010	365 days	$	500,000		250,000	$	1.00		12.00	%	$	1.14
7/2/2010	90 days	$	200,000		100,000	$	1.00		12.00	%	$	0.83
		$	700,000		350,000

Common Stock Transactions

During the twelve months ended December 31, 2010, the Company issued 1,905,200 shares of common stock and 1,392,500 warrants under private placements for $1,495,200 in cash, and the Company performed Black-Scholes valuation for each transaction. The warrant allocation is the amount of the proceeds applied to the warrants. The difference between the warrant allocation and total proceeds was allocated to the shares of common stock issued.

									Call
Date	Shares		Proceeds		Warrants		Exercise Price		Value
1/12/2010		100,000	$	100,000		50,000	$	0.50	$	1.39
1/14/2010		200	$	200
2/23/2010		100,000	$	100,000		50,000	$	0.50	$	1.09
2/23/2010		25,000	$	25,000		12,500	$	0.50	$	1.09
5/5/2010		50,000	$	50,000		50,000	$	2.00	$	1.05
7/1/2010		30,000	$	30,000		15,000	$	1.00	$	0.84
7/9/2010		250,000	$	250,000		125,000	$	1.00	$	0.99
7/20/2010		100,000	$	100,000		50,000	$	1.00	$	1.03
8/25/2010		25,000	$	25,000		12,500	$	1.00	$	1.00
9/2/2010		50,000	$	50,000		25,000	$	1.00	$	0.89
9/23/2010		25,000	$	25,000		12,500	$	1.00	$	0.94
9/29/2010		100,000	$	100,000		50,000	$	1.00	$	0.89
10/1/2010		25,000	$	25,000		12,500	$	1.00	$	0.93
10/1/2010		25,000	$	25,000		12,500	$	1.00	$	0.93
10/13/2010		30,000	$	30,000		15,000	$	1.00	$	0.96
10/13/2010		40,000	$	40,000		20,000	$	1.00	$	0.96
10/18/2010		100,000	$	100,000		50,000	$	1.00	$	0.96
11/24/2010		50,000	$	25,000		50,000	$	1.00	$	0.69
12/2/2010		100,000	$	50,000		100,000	$	1.00	$	0.74
12/3/2010		10,000	$	10,000		10,000	$	1.00	$	0.74
12/6/2010		50,000	$	25,000		50,000	$	1.00	$	0.74
12/7/2010		25,000	$	12,500		25,000	$	1.00	$	0.74
12/7/2010		25,000	$	12,500		25,000	$	1.00	$	0.74
12/7/2010		10,000	$	5,000		10,000	$	1.00	$	0.74
12/14/2010		98,000	$	49,000		98,000	$	1.00	$	0.68
12/14/2010		200,000	$	100,000		200,000	$	1.00	$	0.68
12/20/2010		2,000	$	1,000		2,000	$	1.00	$	0.71
12/20/2010		30,000	$	15,000		30,000	$	1.00	$	0.71
12/20/2010		200,000	$	100,000		200,000	$	1.00	$	0.71
12/27/2010		30,000	$	15,000		30,000	$	1.00	$	0.64

		1,905,200	$	1,495,200		1,392,500

Also during the year ended December 31, 2010, the Company issued 80,000 shares of common stock for services totaling $90,500.

Based on the manner of offering and sale of all the foregoing equity security transactions, they were considered private placements and not in the nature of a public offering, and the Company believes they were exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. All of the persons receiving securities of the Company in the foregoing transactions received legended certificates for such securities which clearly stated the securities could not be resold, transferred or otherwise disposed of unless registered under applicable securities laws or exempt from registration under a satisfactory securities exemption.

Item 6. Selected Financial Data.

The Company is a smaller reporting company and is not required to provide this information.

Item 7. Management’s Discussion and Analysis and Plan of Operation.

Forward-Looking Statements

This Annual Report on Form 10-K/A contains “forward-looking statements”. Forward-looking statements sometimes include the words “may,” “will,” “estimate,” “intend,” “continue,” “expect,” “anticipate” or other similar words. Statements expressing expectations regarding our future and projections we make relating to products, sales, revenues and earnings are typical of such statements.

All forward-looking statements are subject to the risks and uncertainties inherent in attempting to predict the future. Our actual results may differ materially from those projected, stated or implied in our forward-looking statements as a result of many factors, including, but not limited to, our overall industry environment, customer and dealer acceptance of our products, effectiveness of our dealer network, failure to develop or commercialize new products, delay in the introduction of products, regulatory certification matters, production and/or quality control problems, warranty and/or product liability matters, competitive pressures, inability to raise sufficient working capital, general economic conditions and our financial condition.

Our forward-looking statements speak only as of the date they are made by us. We undertake no obligation to update or revise any such statements to reflect new circumstances or unanticipated events as they occur, and you are urged to review and consider all disclosures we make in this and other reports that discuss risk factors germane to our business.

The following discussion should be read in conjunction with our audited consolidated financial statements and related notes included in this Annual Report. These financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (US GAAP).

Results of Operations for the Fiscal Year Ended December 31, 2010 Compared to the Fiscal Year Ended December 31, 2009.

Revenues. We reported revenue of $35,768 in 2010 compared to revenue of $342,282 in 2009 represented by the sale of motorcycles and motorcycle parts. There were fewer motorcycles sold in 2010 as the Company re-engineered its engine with Ilmor.

Gross Profit. Gross profit in 2010 was $728 representing the sale of one motorcycle and costs associated with low volumes of production. The gross profit for 2009 was a negative $89,587 representing increased cost with low volumes of production. The difference between 2009 and 2010 relates to labor associated with more bikes being produced and the additional costs related to the older engines in those older motorcycles, as well as discounts given to move order bikes out of inventory.

Research and Development. Research and development costs were $758,107 in 2010 compared to $353,449 in 2009. The increased R&D costs in 2010 were due primarily to re-engineering expenses related to our contract with Ilmor Engineering to improve our V-Twin engine.

Selling, General and Administrative Expenses. Selling, general and administrative costs decreased $194,512 to $1,710,174 in 2010 from $1,904,686 in 2009, due primarily to decreased professional fees, lower marketing cost and slightly decreased administrative expenses as we entered into increased production.

Loss from Impairment of Assets. The Company did experience impairment losses of $209,628 of long-term inventory during 2010 due to the transition from a pre-production to a manufacturing company. There were no impairment losses in 2009.

Loss from Operations. Operational losses were $2,677,181 in 2010 compared to $2,347,722, for 2009. This increase in 2010 of $329,459 was due primarily to increased R&D expenditures related to our engine development joint venture with Ilmor Engineering as well as recognizing the impairment losses associated with the transition to a manufacturing company.

Interest Expense. Interest expense increased by $169,684 to $268,775 in 2010 compared to $99,091 in 2009. The increase was due to interest incurred as a result of increased borrowing and not being able to convert the loans until late November.

Plan of Operation

Our long-term business strategy or goal is to become a leading developer and supplier of premium V-Twin heavyweight motorcycles, V-Twin engines, and ancillary motorcycle aftermarket products. In implementing this strategy, we intend to execute the following matters during the next twelve months:

Continue commercializing the Diamondback & Mamba – Our primary focus during 2010 was to complete implementing and improving production operations for our motorcycle products to be manufactured by us effectively on a commercial scale. We have completed a production assembly line including shelving, railings and individual station equipment necessary for efficient factory production operations. We also have obtained all vendors, suppliers or subcontract third parties needed for obtaining components, parts and raw materials for our motorcycles and having them painted after assembly, and we will continue to identify and obtain alternate sources for material components.

Continue Design and Development – We will complete development and testing of our Mamba model and a Viper three-wheeled “trike” in order to offer the Mamba commercially as soon as possible in 2011 and the “trike” soon thereafter.

Expansion of Distribution Network – We will continue to identify and recruit qualified independent motorcycle dealers to become Viper dealers until we achieve our goal of having a nationwide network of Viper dealers. We will only select full-service dealers which we determine possess a successful V-Twin motorcycle sales history, a solid financial condition, a good reputation in the industry, and a definite desire to sell and promote Viper products. We also intend to commence initial efforts to enter overseas foreign markets including identifying effective overseas motorcycle distributors and attracting them to our products and Viper brand.

Expansion of Sales and Marketing Activities – We will continue and expand upon our marketing activities which are primarily focused toward supporting our dealer network and building Viper brand awareness. We will participate in leading consumer and dealer trade shows, rallies and other motorcycle events. We also will engage in ongoing advertising and promotional activities to develop and enhance the visibility of our Viper brand image.

Market and Sell Ancillary Viper Products – In 2010, we intend to commence marketing and sales of a variety of ancillary products under our Viper brand, particularly in the large custom cruiser aftermarket. We expect our primary aftermarket sales will be our line of powerful Viper V-Twin engines, and during 2011 we anticipate obtaining substantial revenues from Viper engine sales in this active aftermarket. We also will outsource production of ancillary Viper items from third-party suppliers including various motorcycle parts and accessories, apparel, and other Viper branded merchandise. For example, we have obtained a source to provide us with a line of Viper branded apparel. Our ancillary Viper products will be sold through multiple marketing channels including Viper dealers, independent aftermarket catalogs and our website.

Relocation of Manufacturing operations - Viper Motorcycle Company has announced in a press release dated August 10, 2010 that it has plans to begin manufacturing motorcycles in Auburn, Alabama. The Company will move its operations from Hopkins, Minnesota to Auburn, Alabama as soon as possible with full production beginning in mid-2011. A brand new facility in the Auburn Technology Park West will become the new headquarters and production facility for Viper Motorcycle Company and we have entered into a lease to occupy these facilities when ready.

Liquidity and Capital Resources

Since our inception, we have financed our development, capital expenditures and working capital needs primarily through the sale and issuance of our capital stock or through loans from our principal shareholders. Financing through issuance of our common or preferred stock has included private placements for cash, common stock issued to satisfy accounts payable, and common and preferred stock issued to convert outstanding loans and other liabilities into capital stock of our company. We have raised a total of approximately $13.5 million through the sale of our common stock in private placements, and at least $6.4 million in loans from our management or principal shareholders.

We have also relied on satisfying substantial employee compensation, consulting fees, product development, marketing, administrative expenses and shareholder notes directly through issuance of our common stock. From inception through the end of 2010, we paid a total of approximately $8.6 million for such expenses with our capital stock.

Future Liquidity

Based on our current cash position, private placement subscriptions and anticipated revenues from product sales, we believe we will be able to fund our ongoing operations until at least the summer of 2011. To provide working capital and funding for increased motorcycle engine and component inventories to support anticipated growth thereafter, however, we will need to obtain substantial additional financing through loans and/or sales of our equity securities. Although we believe such additional financing will be available to us as needed, there is no assurance we will raise any such additional funds on terms acceptable to us, or at all, or that any future financing transactions will not be dilutive to our stockholders.

If we are unable to raise additional funds as needed, we will be required to curtail significantly, or may even cease, our ongoing and planned operations. Our future liquidity and capital requirements will be influenced materially by various factors including the extent and duration of our future operating losses, the level and timing of future sales and expenses, market acceptance of our motorcycle products, regulatory and market developments in our industry, and general economic conditions.

The report of our independent registered accounting firm for our audited financial statements included in this Form 10-K/A filing states that there is substantial doubt about the ability of our business to continue as a going concern.

Critical Accounting Policies

The preparation of our financial statements requires us to make estimates and judgments affecting our reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an ongoing basis, we will evaluate these estimates and judgments, which are based on historical experience, observance of industry trends, information from dealers and motorcycle enthusiasts, and certain assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Our management believes the following accounting policies affect its more significant judgments and estimates used in the preparation of our financial statements.

Revenue Recognition – Our sales since inception have all been to dealers. We recognize revenue for sales to dealers when the following has occurred:

	•	motorcycle products are delivered, which is upon shipment;

	•	title to products passes to the dealer, also upon shipment;

	•	collection is reasonably assured; and

	•	the sales price is fixed or determinable.

We also account for expenses of shipping costs, rebates and sales incentive costs when our products are shipped, resulting in our revenue recognition being net of such expenses.

Product Warranties – We account for estimated warranty costs at the time of product shipments based on our best estimate using historical data and trends, and we have established a warranty liability reserve account for our estimated warranty costs. We will make subsequent adjustments to our warranty estimates as actual claims become known or the amounts are determinable. Our warranty obligation is affected by various factors such as product failure rates, service costs incurred to correct product failures and defects, and any recalls of our motorcycles. Current estimates of warranty costs could differ materially from what will actually transpire in the future.

Valuation and Control of Inventory – Our inventory is valued at the lower of cost, determined on a first-in, first-out basis (FIFO), or market. We analyze the cost and market value of inventory items on a quarterly basis in order to maintain and update our inventory valuation reserve for obsolete, discontinued or excess inventory. Our inventory reserve will be based on historical experience and current product demand, and will be increased as necessary to reflect any slow moving, discontinued or obsolete inventory. We do not believe our inventories will be subject to rapid obsolescence.

Inventories of motorcycle engines and components represent a large percentage of our tangible assets, and we expect this percentage to increase substantially in the future. We employ an inventory control manager dedicated to and responsible for safeguarding, monitoring and recording our inventory assets.

Stock-Based Compensation – We expense stock-based compensation issued to our employees, contractors, consultants or others providing goods and services to us. The fair value of our securities issued for goods or services are expensed over the period in which we receive the related goods or services. Equity instruments which have been issued by us for goods and services have been for common shares or common stock purchase warrants. These securities are fully vested, non-forfeitable, and fully paid or exercisable at the date of grant. Regarding our option and warrant grants, their fair values have been determined by us using the Black-Scholes model of valuation.

Offering prices with respect to our private placements have been based on various factors including arms’ length negotiations with unaffiliated representatives of private investors or independent placement agents and our valuation beliefs based on the development of our company and motorcycle products at the respective times of the private placements.

Impairment – Soon after the end of each fiscal year and each interim quarter, we conduct a thorough impairment evaluation of our engine development technology and any other material intangible assets. If the results of any such impairment analysis indicate our recorded values for any such assets have declined a material amount, we will adjust our recorded valuations on a discounted cash flow basis to reflect any such decline in value in all our financial statements.

Off-Balance Sheet Arrangements

Other than a guarantee of our bank credit facility by one of our directors, we have no off-balance sheet arrangements.

Risk Factors

Our business and any related investment in our common stock or other securities involves many significant risks. Any person evaluating our company and its business should carefully consider the following risks and uncertainties in addition to other information in this Annual Report. Our business, operating results and financial condition could be seriously harmed due to one or more of the following risks.

Because of our early stage commercial status and the nature of our business, our securities are highly speculative.

Our securities are speculative and involve a high degree of risk and there is no assurance we will ever generate any material commercial revenues from our operations. Moreover, we do not expect to realize any material profits from our operations in the short term. Any profitability in the future from our business will be dependent upon realizing production and sales of our motorcycle products in material commercial quantities, which there is no assurance will ever happen.

Our auditors have raised doubts about our ability to continue as a going concern.

The report of our independent registered public accounting firm on our financial statements at December 31, 2010 raises doubts about our ability to continue as a going concern based on losses since inception. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. As described above, we believe our current capital is insufficient to sustain our current operations for the next 12 months and we will need to raise additional financing in order to continue to implement our business model. If such funds are not available to us as needed, we may be forced to curtail our growth plans and our ability to grow our company will be in jeopardy. In such event, we may not be able to continue as a going concern.

We have a limited operating history primarily involved in product development, and we have only generated limited commercial revenues to date.

From our inception in late 2002 through December 31, 2010, we have experienced cumulative losses of approximately $37.0 million, and we will continue to incur losses until we produce and sell our motorcycle products in sufficient volume to attain profitability, which there is no assurance will ever happen. Our operations are particularly subject to the many risks inherent in the early stages of a business enterprise and the uncertainties arising from only a limited commercial operating history. There can be no assurance that our business plan will prove successful.

Our business plan will encounter serious delays or even result in failure if we are unable to obtain significant additional financing when needed, since we are required to make significant and continuing expenditures to satisfy our future business plan.

Our ability to become commercially successful will depend largely on our being able to continue raising significant additional financing. If we are unable to obtain additional financing through equity or debt sources as needed, we would not be able to succeed in our commercial operations which eventually would result in a failure of our business.

Our ability to generate future revenues will depend upon a number of factors, some of which are beyond our control.

These factors include the rate of acceptance of our motorcycle products, competitive pressures in our industry, effectiveness of our independent dealer network, adapting to changes in the motorcycle industry, and general economic trends. We cannot forecast accurately what our revenues will be in future periods.

We have very limited experience in commercial production or sales of our products.

Our operations have been limited primarily to designing and developing our products, testing them after development, establishing our initial distribution network of independent dealers, obtaining suppliers for our components, outsourcing future production of certain components, and reorganizing our company. These past activities only provide a limited basis to assess our ability to commercialize our motorcycle products successfully.

We have limited experience in manufacturing motorcycle products.

Our motorcycles must be designed and manufactured to meet high quality standards in a cost-effective manner. Because of our lack of experience in manufacturing operations, we may have difficulty in timely producing or outsourcing motorcycle products in a volume sufficient to cover orders from our dealers. Any material manufacturing delays could frustrate dealers and their customers and lead to a negative perception of Viper products or our company. If we are unable to manufacture effectively in terms of quality, timing and cost, our ability to generate revenues and profits will be impaired.

We depend upon a limited number of outside suppliers for our key motorcycle parts and components.

Our heavy reliance upon outside vendors and suppliers for our components involves risk factors such as limited control over prices, timely delivery and quality control. We have no written agreements to ensure continued supply of parts and components. Although alternate suppliers are available for our key components, any material changes in our suppliers could cause material delays in production and increase production costs. We are unable to determine whether our suppliers will be able to timely supply us with commercial production needs. There is no assurance that any of our vendors or suppliers will be able to meet our future commercial production demands as to volume, quality or timeliness.

We will be highly dependent upon our Viper distribution network of independent motorcycle dealers.

We depend upon our Viper dealers to sell our products and promote our brand image. If our dealers are unable to sell and promote our products effectively, our business will be harmed seriously. We currently have agreements with ten dealers. We must continue to recruit and expand our dealer base to satisfy our projected revenues. If we fail to timely obtain new dealers or maintain our relationship with existing dealers effectively, we could be unable to achieve sufficient sales to support our operations.

Our dealers are not required to sell our products on an exclusive basis and also are not required to purchase any minimum quantity of Viper products. The failure of dealers to generate sales of our products effectively would impair our operations seriously and could cause our business to fail.

We also depend upon our dealers to service Viper motorcycles. Any failure of our dealers to provide satisfactory repair services to purchasers of Viper products could lead to a negative perception of the quality and reliability of our products.

We will face significant challenges in obtaining market acceptance of Viper products and establishing our Viper brand.

Our success depends primarily on the acceptance of our products and the Viper brand by motorcycle purchasers and enthusiasts. Virtually all potential customers are not familiar with or have not seen or driven Viper motorcycles. Acceptance of our products by motorcyclists will depend on many factors including price, reliability, styling, performance, uniqueness, service accessibility, and our ability to overcome existing loyalties to competing products.

Our business model of selling Viper motorcycles to upscale purchasers at premium prices may not be successful.

Sales of our premium motorcycle products are targeted toward a limited number of upscale purchasers willing to pay a higher price for Viper products. Suggested retail prices of our motorcycles will be considerably higher than most premium models of our competitors. If we are unable to attract and obtain sufficient motorcyclists willing to pay the higher prices of our products, our business model would not succeed and our business would likely fail.

We may experience significant returns or warranty claims.

Since we have a minimal history of commercial sales of our products, we have no material data regarding the performance or maintenance requirements of Viper products. Accordingly, we have no basis on which we can currently predict warranty costs. If we experience significant warranty service requirements or product recalls, potential customers may not purchase our products. Any significant warranty service requirements or product recalls would increase our costs substantially and likely reduce the value of our brand.

Our exposure to product liability claims could harm us seriously.

Given the nature of motorcycle products, we expect to encounter product liability claims against us from time to time for personal injury or property damage. If such claims become substantial, our brand and reputation would be harmed seriously. These claims also could require us to pay substantial damage awards.

Although we intend to obtain adequate product liability insurance, we may be unable to obtain coverage at a reasonable cost or in a sufficient amount to cover future losses from product liability claims. Any successful claim against us for uninsured liabilities or in excess of insured liabilities would most likely harm our business seriously.

Our success will be substantially dependent upon our current key employees and our ability to attract, recruit and retain additional key employees.

Our success depends upon the efforts of our current executive officers and other key employees, and the loss of the services of one or more of them could impair our growth materially. If we are unable to retain current key employees, or to hire and retain additional qualified key personnel when needed, our business and operations would be adversely affected substantially. We do not have "key person" insurance covering any of our employees, and we have no written employment agreement with a key employee.

Our success depends substantially on our ability to protect our intellectual property rights, and any failure to protect these rights would be harmful to us.

The future growth and success of our business will depend materially on our ability to protect our trademarks, trade names and any future patent rights, and to preserve our trade secrets. We hold trademark rights for our logo design and our brand, Viper Motorcycle Company.

We have applied for various patents covering unique features of both our motorcycles and our V-Twin engines, but we do not expect to obtain any significant patent protection. We will rely mainly upon trade secrets, proprietary know-how, and continuing technological innovation to compete in our market. There is no assurance that our competitors will not independently develop technologies equal to or similar to ours, or otherwise obtain access to our technology or trade secrets. Our competitors also could obtain patent rights that could prevent, limit or interfere with our ability to manufacture and market our products. Third parties also may assert infringement claims against us, which could cause us to incur costly litigation to protect and defend our intellectual property rights. Moreover, if we are judged to have infringed rights of others, we may have to pay substantial damages and discontinue use of the infringing product or process unless they are re-designed to avoid the infringement. Any claim of infringement against us would involve substantial expenditures and divert the time and effort of our management materially.

We will face intense competition from existing motorcycle manufacturers already well-established and having much greater customer loyalty and financial, marketing, manufacturing and personnel resources than us.

In our premium heavyweight motorcycle market, our main competitor is Harley-Davidson Inc. which dominates the market for V-Twin cruiser motorcycles. Other significant competitors include Polaris with its Victory motorcycle line. We also face particularly direct competition from a number of V-Twin custom cruiser manufacturers concentrating on the same upscale market niche where we are situated, including Big Dog and other numerous small companies and individuals throughout the country which build "one-off" custom cruisers from non-branded parts and components available from third parties. We also expect additional competitors to emerge from time to time in the future. There is no assurance that we will be able to compete successfully against current and future competitors.

Introduction of new models of motorcycles by our competitors could materially reduce demand for our products.

Products offered in our industry often change significantly due to product design and performance advances, safety and environmental factors, or changing tastes of motorcyclists. Our future success will depend materially on our ability to anticipate and respond to these changes. If we cannot introduce acceptable new models on a regular basis or if our new models fail to compete effectively with those of our competitors, our ability to generate revenues or achieve profitability would be impaired substantially.

Purchase of recreational motorcycles is discretionary for consumers, and market demand for them is influenced by factors beyond our control.

Viper motorcycles represent luxury consumer products and accordingly market demand for them depends on a number of economic factors affecting discretionary consumer income. These factors are beyond our control and include employment levels, interest rates, taxation rates, consumer confidence levels, and general economic conditions. Adverse changes in one or more of these factors may restrict discretionary consumer spending for our products and thus harm our growth and profitability.

Viper motorcycles also must compete with other powersport and recreational products for the discretionary spending of consumers.

Our business is subject to seasonality which may cause our quarterly operating results to fluctuate materially.

Motorcycle sales generally are seasonal in nature since consumer demand is substantially lower during colder seasons in North America. We may endure periods of reduced revenues and cash flows during off-season periods, requiring us to lay off or terminate employees from time to time. Seasonal fluctuations in our business could cause material volatility in the public market price of our common stock.

When we sell our products in international markets, we will encounter additional factors which could increase our cost of selling our products and impair our ability to achieve profitability from foreign business.

Our marketing strategy includes future sales of Viper products internationally, which will subject our business to additional regulations and other factors varying from country to country. These matters include export requirement regulations, foreign environmental and safety requirements, marketing and distribution factors, and the effect of currency fluctuations. We also will be affected by local economic condition in international markets as well as the difficulties related to managing operations from long distances. There is no assurance we will be able to successfully market and sell Viper products in foreign countries.

We must comply with numerous environmental and safety regulations.

Our business is governed by numerous federal and state regulations governing environmental and safety matters with respect to motorcycle products and their use. These many regulations generally relate to air, water and noise pollution and to motorcycle safety matters. Compliance with these regulations could increase our production costs, delay introduction of our products and substantially impair our ability to generate revenues and achieve profitability.

Use of motorcycles in the United States is subject to rigorous regulation by the Environmental Protection Agency (EPA), and by state pollution control agencies. Any failure by us to comply with applicable environmental requirements of the EPA or relevant state agencies could subject us to administratively or judicially imposed sanctions including civil penalties, criminal prosecution, injunctions, product recalls or suspension of production.

Motorcycles and their use are also subject to safety standards and rules promulgated by the National Highway Traffic Safety Administration (NHTSA). We could suffer harmful recalls of our motorcycles if they fail to satisfy applicable safety standards administered by the NHTSA.

We do not intend to pay any cash dividends on our common stock.

We have never declared or paid any cash dividends on our common stock and we do not anticipate paying any cash dividends in the foreseeable future.

The price of our common stock may be volatile and fluctuate significantly in our over-the-counter trading market, and an investor’s shares could decline in value.

Our common stock trades in the over-the-counter (OTC) market, and has not experienced a very active trading market. There is no assurance a more active trading market for our common stock will ever develop, or be sustained if it emerges. Unless an active trading market is developed for our common stock, it will be difficult for shareholders to sell our common stock at any particular price or when they wish to make such sales.

The market price of our common stock may fluctuate significantly, making it difficult for any investor to resell our common stock at an attractive price or on reasonable terms. Market prices for securities of early stage companies such as us have historically been highly volatile due to many factors not affecting more established companies. Moreover, any failure by us to meet estimates of financial analysts is likely to cause a decline in the market price of our common stock.

Our current management and principal shareholders control our company, and they may make material decisions with which other shareholders disagree.

Our executive officers and directors and principal shareholders affiliated with them own a majority of our outstanding capital stock. As a result, these persons acting as a group have the ability to control transactions requiring stockholder approval, including the election or removal of directors, significant mergers or other business combinations, changes in control of our company, and any significant acquisitions or dispositions of assets.

Additional shares of our authorized capital stock which are issued in the future will decrease the percentage equity ownership of existing shareholders, could also be dilutive to existing shareholders, and could also have the effect of delaying or preventing a change of control of our company.

Under our Articles of Incorporation we are authorized to issue up to 25,000,000 shares of common stock and 20,000,000 shares of preferred stock. Our board of directors has the sole authority to issue remaining authorized capital stock without further shareholder approval. To the extent that additional authorized preferred or common shares are issued in the future, they will decrease existing shareholders’ percentage equity ownership and, depending upon the prices at which they are issued, could be dilutive to existing shareholders.

Issuance of additional authorized shares of our capital stock also could have the effect of delaying or preventing a change of control of our company without requiring any action by our shareholders, particularly if such shares are used to dilute the stock ownership or voting rights of a person seeking control of our company.

Item 8. Financial Statements.

Financial statements are included following the Signature page and commencing on page F-1.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures.

We maintain "disclosure controls and procedures" as such term is defined in Rule 13a-15(e) under the Exchange Act. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our Principal Executive Officer and Chief Financial Officer concluded, as of the Evaluation Date, that our disclosure controls and procedures are not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Principal Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. During the preparation of our 2010 Form 10-K/A, management was made aware of certain disclosures in 2010 that while made, were not made timely enough to be in compliance with the Exchange Act. To remediate this material weakness in disclosure controls and procedures, the Company will establish enhanced practices to ensure that all transactions that may potentially fall under the disclosure rules are reported in a timely fashion.

Management’s Annual Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework. Based on this evaluation, our management concluded that, as of December 31, 2010, our internal control over financial reporting was not effective based on those criteria. The following material weaknesses were identified from our evaluation:

Due to the small size and limited financial resources, the Company’s Chief Financial Officer and Principal Executive Officer are the only individuals involved in the accounting and financial reporting. As a result, there is no segregation of duties within the accounting function, leaving all aspects of financial reporting and physical control of cash in the hands of the same individual, our Chief Financial Officer. Usually, this lack of segregation of duties represents a material weakness; however, to remedy the matter, the Company may hire additional in-house accounting personnel in Alabama as sales have reached levels where it has become necessary. This will allow our Chief Financial Officer to spend more time performing high end accounting duties and make better use of his time. The Principal Executive Officer and Chief Financial Officer examine and approve all cash transactions. We will continue to periodically review our disclosure controls and procedures and internal control over financial reporting and make modifications from time to time considered necessary or desirable.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Item 9B. Other Information

The Company did not have any information to report in this section.

PART III

Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.

The directors of the Company serve until their successors are elected and shall qualify. Executive officers are elected by the Board of Directors and serve at the discretion of the directors. There are no family relationships among our directors and executive officers.

Name	Age	Position
John R. Silseth II	47	Chief Executive Officer and Director
Robert O. Knutson	74	Director and Secretary
Jerome Posey	62	Chief Financial Officer and Treasurer
Terry L. Nesbitt	61	Director and President of Viper Motorcycle Company
Robert Van Den Berg	76	Director
Duane Peterson	61	Director

JOHN R. SILSETH II has been a director of the Company since 2009 and is also Chief Executive Officer of the Company. Through his wholly-owned company, Racing Partners Management Inc., Mr. Silseth has provided consulting and financing services to the Company since its 2002 inception, and he also is a principal shareholder of the Company. Through Racing Partners Management Inc., Mr. Silseth also has provided consulting services to various early-stage or start-up businesses during the past ten years.

ROBERT O. KNUTSON has been a director of the Company since February 2005, and he has been Secretary of the Company since its 2002 inception. Mr. Knutson has practiced law in the Minneapolis metropolitan area as a sole practitioner since 1971, and prior thereto he was an associate attorney with the Minneapolis law firm of Dorsey & Whitney.

JEROME POSEY has been the Chief Financial Officer of the Company since November 2005. From December 2001 until October 2005, Mr. Posey was Vice President/ Finance & Chief Financial Officer of Intravantage Inc., which manufactured a drug delivery device for the dental industry. From 1997 to November 2001, he was the Chief Financial Officer and Shareholder of Robin Lee’s, Inc., a retailer of collectibles, home decor and greeting cards.

TERRY L. NESBITT has been a director of the Company since February 2005, and he recently became President of Viper Motorcycle Company, our subsidiary. Until January 2007, Mr. Nesbitt was our Executive Vice President of Sales and Marketing of the Company, since our inception in 2002. During 2001 and most of 2002, Mr. Nesbitt was an independent consultant in the motorcycle industry. Prior to 2001, he served in several key sales management positions over a fifteen-year period with Polaris Industries Inc., including national sales manager for Polaris’ line of Victory V-Twin cruiser motorcycles.

ROBERT VAN DEN BERG has been a director of the Company since January 2007. Since 1969 he was the principal owner and Chief Executive Officer of Comstrand Inc. until its sale in 2006 when it had attained annual sales of $50 million. Mr. Van Den Berg also has owned and sold several other successful companies over the past years, and he currently is engaged in certain real estate development activities.

DUANE PETERSON has been a director of the Company since January 2007. He is a founder of Peterson, Beyenhof & Zahler, Ltd. and has been a principal CPA with this accounting firm since 1978. Mr. Peterson has extensive experience in business and financial consulting, complex tax accounting, and tax and financial planning for many corporate and individual clients.

Audit Committee

We do not have a separately designated audit committee, but rather our entire Board of Directors serves as our audit committee.

Section 16(a) Beneficial Ownership Reporting Compliance

Based upon a review of copies of reports furnished to us during our fiscal year ended December 31, 2010, which are required to be filed under Section 16(a) of the Securities Exchange Act of 1934, we know of no director, officer, or beneficial owner of more than 10% of our common stock who failed to file on a timely basis any report required by Section 16(a).

Code of Ethics

We have adopted a Code of Ethics that applies to our principal executive officer, our principal financial and accounting officer, or persons performing similar functions. We will provide any person without charge who requests, a copy of our Code of Ethics. Any copy requests may be directed to Viper Powersports, Inc., 2458 West Tech Lane, Auburn, AL 36832, in care of John Silseth.

Item 11. Executive Compensation

The following table sets forth the executive compensation of the executive officers of the Company during the two fiscal years ended December 31, 2009 and 2010.

SUMMARY COMPENSATION TABLE

Name and Position	Year		Salary ($)		Stock Awards (#)

John Silseth Chief Executive Officer		2010	$	102,000
		2009	$	102,000
Terry Nesbitt, President - Viper Motorcycle Co.		2010	$	86,000
		2009	$	72,000		75,000
Jerome Posey		2010		75,000
CFO		2009		75,000

Options/SAR Grants

The Company did not issue any stock options or SAR grants in fiscal 2010. None of the stock options issued by the Company since its inception have been exercised. The following tables contain certain information relating to unexercised options.

Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values

Number of Securities Underlying
Unexercised Options/SARs at FY-End
(#)

Value of Unexercised In-the-Money
Options/SARs at FY-End ($)

Name

Shares Acquired

Value Realized
($)

Exercisable/Unexercisable

Terry Nesbitt

-0-

31,250/0

0/0

Compensation of Directors

No compensation was paid by the Company to its directors for their services as a director during 2010.

Employment Contracts and Change-in-Control Arrangements

The Company currently has no written employment contracts with its management or other employees. The Company also does not have any change-in-control arrangements with any person. The Company also does not have any plans, arrangements or understandings to pay any accrued earnings in the future.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stock Matters.

The following table sets forth as of December 31, 2010 certain information regarding beneficial ownership of the common stock of the Company by (a) each person or group known by the Company to be the beneficial owner of more than 5% of the outstanding common stock of the Company, (b) each director and executive officer of the Company, and (c) all directors and executive officers of the Company as a group. Each shareholder named in the below table has sole voting and investment power with respect to shares of common stock shown in the table. Shares underlying any options or warrants included in the table are all currently exercisable. Unless otherwise indicated, the address of each listed shareholder is 10895 Excelsior Blvd., Suite 203, Hopkins, MN 55343.

Shareholder	Shares Owned Beneficially		Percent of Class

Title of Class – Common Stock

Terry L. Nesbitt 1		182,500		1.5	%
Robert O. Knutson		122,356		.7	%
John R. Silseth II		1,113,257		6.3	%
Robert Van Den Berg		133,843		.8	%
Duane Peterson		12,500		.1	%
Jerome L. Posey		6,250		-

Brent Henderson		841,667		5.1	%
All directors and officers		1,388,206		8.4	%
as a group (5 persons)

1 Includes 31,250 share of underlying options

Item 13. Certain Relationships and Related Transactions.

Following are certain material transactions during the past two years between the Company and any of its directors, executive officers, and principal shareholders:

In connection with certain private placements of our common stock, Robert Van Den Berg, a director of the Company, participated on the same terms as unrelated parties, including purchasing: 2,500 shares at $1.00 per share in 2008 and 6,250 shares at $.40 per share in 2009.

In 2009, we satisfied substantial outstanding liabilities through the issuance of restricted common stock based on $.40 per share, which included issuance of 50,000 shares to Robert O. Knutson, 37,500 shares to Terry L. Nesbitt, 25,000 shares to Robert Van Den Berg, 12,500 shares to Duane Peterson, and 687,500 shares to a wholly-owned corporation of John Silseth.

In 2009, James G. Kelly, then director of the Company, purchased a total of 46,875 shares of restricted common stock of the Company at $.40 per share in private placements in which he participated on the same terms as unrelated parties.

We also have issued warrants to David Palmlund III for providing us with financing services, which warrants have granted him the right to purchase a total of 56,250 of our common shares exercisable at $.625 per share for a five-year term expiring in 2012.

Robert Van Den Berg, a director of the Company, guaranteed a $250,000 credit facility we obtained from a banking institution, which was established in order to purchase inventory parts and components for upcoming commercial production of Viper motorcycles. In consideration for Mr. Van Den Berg providing this guaranty, we issued him 25,000 shares of our common stock. This line has been completely paid off in early January of 2011.

Item 14. Principal Accountant Fees and Services.

Pre-Approval of Audit Fees

Our Board of Directors is responsible for pre-approving all audits and permitted non-audited services to be performed for us by our independent registered public accounting firm or any other auditing or accounting firm.

Auditor Fees

Child, Van Wagoner & Bradshaw, PLLC acted as our independent accounting firm for the fiscal years ended December 31, 2010 and 2009, including performing our audits for these two fiscal years and reviews of our quarterly financial statements for this two-year period. The aggregate fees billed by Child, Van Wagner & Bradshaw, PLLC for such services are as follows:

	Fiscal 2010		Fiscal 2009
Audit and review fees	$	44,417	$	39,592
Tax fees	$	0	$	0
All other fees	$	0	$	0

Item 15. Exhibits.

See the “Exhibit Index” following the financial statements of this Form 10-K for a listing and description of the documents that are incorporated by reference or filed as exhibits to this Annual Report.

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VIPER POWERSPORTS, INC. (Registrant)

	By:	/s/ John Silseth
		John Silseth - CEO

	Date:	March 1. 2012

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	By:	/s/ John R. Silseth
		John R. Silseth – Director

	Date:	March 1. 2012


	By:	/s/ Robert Van Den Berg
		Robert Van Den Berg – Director

	Date:	March 1. 2012

	By:	/s/ Robert O. Knutson
		Robert O. Knutson – Director

	Date:	March 1. 2012

	By:	/s/ Timothy C. Kling
		Timothy C. Kling – CFO

	Date:	March 1. 2012

Viper Powersports, Inc.

(A Development Stage Company)

Consolidated Financial Statements

For the Years Ended December 31, 2010

and 2009

Viper Powersports, Inc.

(A Development Stage Company)

Index to Consolidated Financial Statements

		PAGE

Report of Independent Registered Public Accounting Firm		F-2

Consolidated Balance Sheets		F-3

Consolidated Statements of Operations		F-4

Consolidated Statements of Stockholders’ Equity (Deficit)		F-5

Consolidated Statements of Cash Flows		F-6

Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors

Viper Powersports, Inc.

Hopkins, Minnesota

We have audited the accompanying consolidated balance sheets of Viper Powersports, Inc. (the Company) and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the period from November 18, 2002 (inception) to December 31, 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Viper Powersports, Inc. and subsidiaries as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended, and for the period of November 18, 2002 (inception) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses and net cash outflows from operations since inception. These factors raise substantial doubt that the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Since our previous report dated May 12, 2011, as described in Note 9, the Company discovered material errors in its presentation of its consolidated financial statements. However, the Company has restated the consolidated financial statements to reflect the corrections of these errors.

/s/ Child, Van Wagoner & Bradshaw, PLLC

Child, Van Wagoner & Bradshaw, PLLC

Salt Lake City, Utah

May 12, 2011, except for Notes 1, 2, 6 and 9, as to which the date is March 26, 2012

F-2

Viper Powersports, Inc.

(A Development Stage Company)

Consolidated Balance Sheets

	December 31, 2010			December 31, 2009
	(Restated-Note 9)			(Restated-Note 9)
ASSETS
Current assets
Cash	$	15,579		$	100,162
Accounts receivable		-			212,675
Inventory and supplies		190,930			35,040
Prepaid expenses and other assets		1,330			61,570
Total current assets		207,839			409,447

Fixed assets:
Office and computer equipment		124,100			119,835
Manufacturing and development equipment		272,254			273,759
Vehicles		101,799			101,799
Leasehold improvements		90,446			90,446
Subtotal		588,599			585,839
Accumulated depreciation		(507,989	)		(471,152	)
Total fixed assets		80,610			114,687

Other assets:
Rental deposit		4,010			4,010
Long term inventory		431,261			505,929
Total other assets		435,271			509,939

Total assets	$	723,720		$	1,034,073

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	132,512		$	258,068
Accrued liabilities		181,325			125,612
Notes payable		129,000			150,000
Notes payable – related party		304,513			439,353
Current portion of capital leases		-			4,052
Total current liabilities		747,350			977,085

Long-term liabilities
Note payable		-			29,921
Total long-term liabilities		-			29,921

Total liabilities		747,350			1,007,006

Stockholders' equity (deficit)
Preferred stock; $0.001 par value; 20,000,000 shares authorized, 0 issued and outstanding for both years		-			-
Common stock; $0.001 par value; 25,000,000 shares authorized, 17,719,280 and 13,408,962 issued and outstanding, respectively		17,719			13,409
Additional paid-in capital		36,549,869			32,185,691
Accumulated deficit		(36,591,218	)		(32,172,033	)

Total Stockholders' Equity (Deficit)		(23,630	)		27,067

Total liabilities and stockholders' equity (deficit)	$	723,720		$	1,034,073

See notes to consolidated financial statements.

F-3

Viper Powersports, Inc.

(A Development Stage Company)

Consolidated Statements of Operations

	Year Ended December 31, 2010			Year Ended December 31, 2009			Cumulative from November 18, 2002 (Date of Inception) through December 31, 2010
	(Restated-Note 9)						(Restated-Note 9)
Revenues (net of returns)	$	35,768		$	342,282		$	1,089,862
Cost of revenues		35,040			431,869			1,046,597
Gross profit		728			(89,587	)		43,265

Operating expenses
Research and development costs		758,107			353,449			6,030,799
Selling, general and administrative		1,710,174			1,904,686			20,356,288
Loss on impairment of assets and inventory		209,628			-			7,581,317
Total operating expenses		2,677,909			2,258,135			33,968,404

Loss from operations		(2,677,181	)		(2,347,722	)		(33,925,139	)

Other income (expense)
Interest expense		(268,775	)		(99,091	)		(1,518,906	)
Loss on sale of asset		-			-			(18,994	)
Accretion of debt and finder’s fees		(647,804	)		-			(647,804	)
Beneficial conversion features		(401,069	)		-			(401,069	)
Financing cost relating to debt discount		(426,102	)		-			(426,102	)
Other income		1,746			2,434			346,796

Total other income (expense)		(1,742,004	)		(96,657	)		(2,666,079	)

Net loss	$	(4,419,185	)	$	(2,444,379	)	$	(36,591,218	)

Loss per common share - basic	$	(0.31	)	$	(0.23	)

Weighted average common shares outstanding - basic		14,210,267			10,444,619

See notes to consolidated financial statements.

F-4

Viper Powersports, Inc.

(A Development Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficit)

For the Period from November 18, 2002 (Inception) to December 31, 2010

												Additional						Total
	Preferred Stock						Common Stock					Paid-in			Accumulated			Stockholders'
	Shares			Amount			Shares		Amount			Capital			Deficit			Equity (Deficit)
Balance at November 18, 2002 (Inception)		-		$	-			-	$	-		$	-		$	-		$	-
Common stock for services and accounts payable - $.40/share		-			-			106,250		170,000			-			-			170,000
Common stock for cash at $.40/share		-			-			73,620		117,791			-			-			117,791
Net loss from inception through December 31, 2002		-			-			-		-			-			(344,612	)		(344,612	)
Balances at December 31, 2002		-			-			179,870		287,791			-			(344,612	)		(56,821	)
Common stock for services at $.40 to $1.00 /share		-			-			304,813		1,095,500			-			-			1,095,500
Common stock for cash at $.40/share		-			-			213,881		342,209			-			-			342,209
Common stock for services and accounts payable - $2.00/share		-			-			10,625		85,000			-			-			85,000
Common stock for cash at $2.00/share net of issuance costs		-			-			114,350		884,549			-			-			884,549
Value of warrants issued with convertible debt		-			-			-		110,168			-			-			110,168
Net loss for the year ended December 31, 2003		-			-			-		-			-			(2,999,735	)		(2,999,735	)
Balances at December 31, 2003		-			-			823,539		2,805,217			-			(3,344,347	)		(539,130	)
Value of warrants issued with convertible debt		-			-			-		22,033			-			-			22,033
Common stock for cash at $2.50/share		-			-			24,500		245,000			-			-			245,000
Common stock for services and software at $2.50/share		-			-			15,250		152,500			-			-			152,500
Common stock for employment agreement services at $2.50/share		-			-			43,750		437,500			-			-			437,500
Common stock issued with May 2004 notes at $2.50/share		-			-			33,334		333,335			-			-			333,335
Common stock grants to employees at $2.50/share		-			-			47,425		474,250			-			-			474,250
Value of warrants and options issued for services		-			-			-		175,363			-			-			175,363
Net loss for the year ended December 31, 2004		-			-			-		-			-			(5,761,208	)		(5,761,208	)
Balances at December 31, 2004		-			-			987,798		4,645,198			-			(9,105,555	)		(4,460,357	)
Common stock for cash at $2.50/share		-			-			76,303		763,030			-			-			763,030
Common stock for payables and debt converted at $2.50/share		-			-			281,339		2,813,379			-			-			2,813,379
Preferred stock for outstanding debt converted at $2.50/share		195,750			1,957,500			-		-			-			-			1,957,500
Value of warrants and option issued for services		-			-			-		497,700			-			-			497,700
Common stock for engine development technology (Note 3)		-			-			749,144		7,491,437			-			-			7,491,437
Recapitalization from March 31, 2005 reverse merger (Note 4)		-			(1,957,304	)		153,268		(16,208,496	)		18,165,800			-			-
Common stock for cash at $3.90/share , net of offering costs of $513,124		-			-			250,010		250			3,386,774			-			3,387,024
Common stock issued for SEDA equity agreement		-			-			33,730		34			749,966			-			750,000
Net loss for the year ended December 31, 2005		-			-			-		-			-			(4,986,019	)		(4,986,019	)
Balances at December 31, 2005		195,750			196			2,531,592		2,532			22,302,540			(14,091,574	)		8,213,694
Preferred stock converted to common stock at $1.25/share		(195,750	)		(196	)		391,500		392			(196	)		-			-
Common stock for cash at $.75/share		-			-			43,333		43			129,957			-			130,000
Conversion of notes payable at $1.25/share		-			-			447,567		448			2,237,388			-			2,237,836
Conversion of notes payable at $.75/share		-			-			171,119		171			513,185			-			513,356
Dividends for preferred converted at $1.25/share		-			-			52,257		52			261,234			-			261,286
Net loss for the year ended December 31, 2006 (restated note 9)		-			-			-		-			-			(11,223,733	)		(11,223,733	)
Balances at December 31, 2006 (restated note 9)		-			-			3,637,368		3,638			25,444,108			(25,315,307	)		132,439
Common stock for cash at $.75/share		-			-			532,792		533			1,588,468			-			1,589,001
Common stock for services at $.75/share		-			-			276,501		276			734,724			-			735,000
Net loss for the year ended December 31, 2007		-			-			-		-			-			(2,400,853	)		(2,400,853	)
Balances at December 31, 2007 (restated note 9)		-			-			4,446,661		4,447			27,767,300			(27,716,160	)		55,587
Common stock for services		-			-			531,084		531			482,100			-			482,631
Common stock for cash		-			-			2,080,417		2,080			1,354,920			-			1,357,000
Common stock for conversion of debt		-			-			663,000		663			528,837			-			529,500
Net loss for the year ended December 31, 2008		-			-			-		-			-			(2,011,494	)		(2,011,494	)
Balances at December 31, 2008 (restated note 9)		-			-			7,721,162		7,721			30,133,157			(29,727,654	)		413,224
Reconciliation adjustment		-			-			236,171		236			52,264			-			52,500
Stock warrants issued for services		-			-			-		-			25,498			-			25,498
Common stock for services		-			-			2,231,449		2,231			881,349			-			883,580
Common stock for inventory		-			-			62,500		63			24,937			-			25,000
Common stock for cash		-			-			2,925,000		2,925			978,719			-			981,644
Common stock for conversion of debt		-			-			225,000		225			89,775			-			90,000
Common stock issued for rounding with 4-to-1 reverse stock split		-			-			7,690		8			(8	)		-			-
Net loss for the year ended December 31, 2009		-			-			-		-			-			(2,444,379	)		(2,444,379	)
Balances at December 31, 2009 (restated note 9)		-			-			13,408,972		13,409			32,185,691			(32,172,033	)		27,067
Common stock for cash								1,905,200		1,905			731,148			-			733,053
Common stock for services								80,000		80			90,420			-			90,500
Common stock for conversion of debt		-			-			2,133,333		2,133			1,347,866			-			1,349,999
Stock warrants issued with common shares													564,987			-			564,987
Stock warrants issued with debt													427,700						427,700
Common stock issued for retirement of debt and interest		-			-			191,775		192			123,622			-			123,814
Beneficial conversion features													401,069						401,069
Stock warrants issued with Finder’s fees													270,102						270,102
Warrants granted for inducement to convert loans													407,264						407,264
Net loss for the year ended December 31, 2010 (restated-Note 9)		-			-			-		-			-			(4,419,185	)		(4,419,185	)
Restated Balances at December 31, 2010		-		$	-			17,719,280	$	17,719		$	36,549,869		$	(36,591,218	)	$	(23,630	)

See notes to consolidated financial statements.

F-5

Viper Powersports, Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows

	Year Ended December 31, 2010			Year Ended December 31, 2009			Cumulative from November 18, 2002 (Date of Inception) through December 31, 2010
	(restated-Note 9)						(restated-Note 9)
Cash flows from operating activities:
Net loss	$	(4,419,185	)	$	(2,444,379	)	$	(36,591,218	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		36,837			40,444			577,501
Common stock and warrants issued for compensation and expenses		90,500			957,578			8,623,536
Beneficial conversion feature on convertible loan		401,069			-			401,069
Accretion of debt discount		427,700			-			427,700
Amortization of loan costs		426,102			-			426,102
Bad debt expense		105,707			-			105,707
Warrants issued for inducement to convert debt		407,264			-			407,264
Impairment loss-inventory		209,628			-			7,581,317
Common stock issued to convert accrued interest		123,814			-			123,814
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net of bad debts		106,968			(212,675	)		(106,974	)
Decrease (increase) in inventory and supplies, net of obsolescence		(290,850	)		251,360			(826,314	)
Decrease (increase) in prepaid and other		60,240			(53,652	)		(53,023	)
Decrease (increase) in accounts payable		(125,556	)		(148,853	)		438,787
Increase (decrease) in accrued liabilities		55,713			73,832			35,786
Net cash provided by (used in) operating activities		(2,384,049	)		(1,238,639	)		(18,428,946	)

Cash flows from investing activities:
Loss from sale of fixed assets		-			-			18,994
Funding from Thor Performance for engine development		-			-			150,000
Purchase of intellectual property		-			-			(35,251	)
Purchase of fixed assets		(2,760	)		-			(826,685	)
Net cash provided by (used in) investing activities		(2,760	)		-			(692,942	)

Cash flows from financing activities:
Net proceeds from sale of stock and warrants		1,298,040			985,644			11,917,788
Net proceeds from note payable		1,250,000			352,169			1,852,169
Payments on note payable		(50,921	)		(189,705	)		(240,626	)
Payments on capital leases		(4,052	)		(36,381	)		(642,069	)
Payments for loan costs		(156,000	)		-			(156,000	)
Payments on notes payable – related party		(34,841	)		226,706			6,406,205
Net cash provided by (used in) financing activities		2,302,226			1,338,433			19,137,467
Net change in cash and cash equivalents		(84,583	)		99,794			15,579
Cash, beginning of period		100,162			368			-
Cash, end of period	$	15,579		$	100,162		$	15,579

Supplemental Non-Cash Financing Activities and Cash Flow Information:
Common Stock issued for accounts payable (expenses)	$	-		$	-		$	1,323,698
Common stock issued for accrued liabilities (expenses)	$	-		$	-		$	553,521
Preferred stock issued for debt	$	-		$	-		$	1,957,500
Common stock issued for conversion of debt	$	1,350,000		$	90,000		$	4,406,440
Common stock issued for assets (software and inventory)	$	-		$	25,000		$	75,000
Common stock issued for engine development technology and engine development obligation of $150,000	$	-		$	-		$	7,341,437
Equipment acquired via capital lease	$	-		$	-		$	304,740
Stock warrants issued with convertible debt	$	-		$	-		$	132,201
Interest paid	$	144,961		$	75,944		$	708,416
Income taxes paid	$	-		$	-		$	-

See notes to consolidated financial statements.

F-6

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

1.	NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Viper Powersports, Inc. was incorporated in Nevada in 1980 under a different name, and was inactive for years. On March 31, 2005 the Company was recapitalized through a merger with Viper Motorcycle Company, a Minnesota corporation. The former shareholders of Viper Motorcycle Company acquired 93.5% of the capital stock of Viper Powersports, Inc. in exchange for all of the capital stock of Viper Motorcycle Company. This transaction was effected as a reverse merger for financial statement and operational purposes, and accordingly Viper Powersports, Inc. regards its inception as being the incorporation of Viper Motorcycle Company on November 18, 2002. (See Note 4 - Recapitalization). Upon completion of this reverse merger, Viper Motorcycle Company became a wholly-owned subsidiary of Viper Powersports, Inc.

The stock exchange in this reverse merger was effected on a one-for-one basis, resulting in each shareholder of Viper Motorcycle Company receiving the same number and type of capital stock of Viper Powersports, Inc. which they held in Viper Motorcycle Company prior to the merger.

Viper Performance Inc., also a wholly-owned subsidiary of Viper Powersports, Inc., was incorporated in Minnesota in March 2005 for the purpose of receiving and holding engine development technology and related assets acquired by Viper Powersports, Inc. These assets were acquired from Thor Performance Inc., a Minnesota corporation in March 2005 in exchange for 749,144 shares of common stock of Viper Powersports, Inc. (See Note 3 - Purchase of Engine Development Technology.)

As used herein, the term “the Company” refers to “Viper Powersports, Inc.”, and its wholly-owned subsidiaries, unless the context indicates otherwise.

The Company is a development stage company engaged in design and development of premium V-Twin cruiser motorcycles. The Company has sold its capital stock and debt securities in various private placements to fund its development, marketing and other operations. The Company also has issued substantial shares of its common stock to compensate officers and other employees, consultants, and vendors, and to satisfy outstanding debt and other obligations. The Company continues to rely upon loans and sales of its equity securities to fund current operations. The Company’s executive and administrative offices were relocated, in October 2008, from Big Lake, Minnesota to Hopkins, Minnesota, a suburb of Minneapolis. We lease our current Hopkins facility under a three year lease at a monthly lease amount of $7,910 not including utilities. The facility occupies 9,000 square feet in a modern one-story light industrial building. The Company is currently planning to relocate to a much larger facility in Auburn, Alabama during the summer of 2011 which will allow us to grow based on our forecasted production schedule.

F-7

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

1.	NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Going Concern – The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying consolidated financial statements, the Company has incurred a net loss of $36,762,224 since inception, and currently has limited sales. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the production of its motorcycles. Management has plans to seek additional capital through private placements of its capital stock. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Principles of Consolidation – The consolidated financial statements include the accounts of Viper Powersports, Inc. and its wholly-owned subsidiaries, Viper Motorcycle Company and Viper Performance Inc. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates that could change in the near term are inventory obsolescence and impairment.

Loss Per Share – Basic and diluted net loss per common share is computed using the net loss applicable to common shareholders and the weighted average number of shares of common stock outstanding. Diluted net loss per common share does not differ from basic net loss per common share since potential shares of common stock from conversion of debt and the exercise of warrants and options are anti-dilutive for all periods presented. The fully diluted shares would be 21,893,253.

Inventories – Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method (FIFO). Demonstration motorcycles are stated at manufacturing cost and reserves are recorded to state the demonstration motorcycles at net realizable value.

As of December 31, 2010, the Company determined that a portion of its inventory would not be consumed during the next twelve months. The Company reclassified $431,261 of its functional inventory as long term. As the Company’s production numbers increase, this inventory will be allocated back into normal production inventory.

The Company reviews inventory for obsolescence and excess quantities to determine that items deemed obsolete or excess are appropriately reserved. Components of inventory at December 31, 2010 are as follows;

Raw materials	$	479,179
Work-in-process		0
Finished Goods		143,012
	$	622,191

Current Portion		190,930
Long term Portion		431,261

Long-term inventory written off due to obsolescence included in impairment loss for 2010 was $209,628.

F-8

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

1.	NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Property and Equipment – Property and equipment are stated at cost. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, which are 3 to 7 years. Leasehold improvements are amortized straight line over the shorter of the lease term or estimated useful life of the asset.

Impairment of Long Lived Assets – The Company reviews long-lived assets for impairment annually or more frequently if the occurrence of events or changes in circumstances indicates that the carrying amount of the assets may not be fully recoverable or the useful lives of the assets are no longer appropriate. Each impairment test is based on a comparison of the carrying amount of an asset to future net undiscounted cash flows. If impairment is indicated, the asset is written down to its estimated fair value on a discounted cash flow basis.

Revenue Recognition – The Company conducts its sales through a network of independent dealers, and the Company recognizes revenue for sales to dealers after the following has taken place:

•

Motorcycles are delivered, which is at the time they are shipped;

•

Title of the motorcycle passes to the dealer, generally at the time of shipment;

•

Collection of the relevant receivable is probable;

•

Persuasive evidence of an arrangement exists; and

•

The sales price is fixed or determinable.

The Company’s dealer agreement provides that the dealer has no right of return unless the Company authorizes the return.

F-9

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

1.	NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Warranty – The Company provides warranty coverage for its motorcycles with unlimited miles within a one year period from date of purchase, including parts and labor necessary to repair the motorcycle during the warranty period.

A provision for the costs related to warranty expense will be recorded as a charge to cost of goods sold when revenue is recognized. The estimated warranty cost will be based on industry averages and the stage of production life cycle of the Company’s motorcycles. The warranty reserve will be evaluated on an ongoing basis to ensure its adequacy. At the same time the Company calculates a fair market value of the risk associated with the dealer financing liability and records the entry. The liability exposure is generally based on using an industry average of ten percent (10%) for the motorcycle sales for the reporting period.

Warranty information is detailed in the following table:

	December 31, 2010			December 31, 2009		December 31, 2008
Beginning balance	$	36,531		$	7,016	$	21,631
Addition to Reserve		0			29,515		0
Warranty payments		(7,832	)		0		(14,615	)
Ending balance	$	28,699		$	36,531	$	7,016

Research and Development – Research and development costs are expensed as incurred. Assets that are required for research and development activities, and have alternative future uses, in addition to its current use, are included in equipment and depreciated over their estimated useful lives. Research and development costs consist primarily of salaries and other compensation for development and engineering personnel, contract engineering and development costs for outsourced projects, equipment and material costs for development activities, and expenses for regulatory compliance and certifications.

Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred income taxes, if any, are recognized for the difference between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Deferred income taxes, if any, will be recorded at the tax rates expected to be in effect when amounts are to be included in future taxable income. A valuation allowance is recorded to reduce the deferred tax assets to the amounts believed to be realizable. Due to the uncertainty regarding the Company’s future profitability, the future tax benefits of its net operating losses (NOL) have been fully reserved and no net tax benefit has been recorded in these financial statements. Cumulative NOL’s at December 31, 2010 of approximately $28,000,000 begin to expire in 2022. Deferred tax assets of approximately $12,700,000 have been offset completely by a valuation allowance. There are no other significant components of deferred tax assets or liabilities.

A reconciliation of the income tax benefit using federal statutory rates applied to pre-tax losses is as follows;

	2010			2009

Income tax benefit at effective federal statutory rate of 35%:	$	(1,546,715	)	$	(855,533	)
State income taxes (benefit):		(397,727	)		(239,549	)
Non-deductible impairment losses, accretion and financing expenses paid for with stock and warrants:		377,100			0
Change in valuation allowance:		1,567,342			1,095,082
Income tax benefit:	$	0		$	0

The Company has no tax position for which the ultimate deductibility is certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the year ended December 31, 2010, the Company recognized no interest or penalties. The Company had no accruals for interest and penalties at December 31, 2010 or 2009. Open years subject to investigation of the Company’s federal income tax returns extend from 2007 to 2010.

F-10

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

1.	NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Fair Value of Financial Instruments – The carrying values of balance sheet financial instruments approximates their fair values as the debt and assets were incurred and acquired recently. These financial instruments include cash, accounts receivable, accounts payable, accrued liabilities, notes payables and indebtedness to related parties. Management is of the opinion that the Company is not exposed to significant interest, credit or currency risks arising from these financial instruments.

Stock Options and Stock Based Compensation - The Company accounts for equity instruments issued to non-employees for services and goods under ASC Topic 505-50; EITF 96-18 (Accounting for Equity Instruments Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods and Services); and EITF 00-18 (Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to other than Employees.) Generally, the equity instruments issued for services or goods are for common shares or common stock purchase warrants. These shares or warrants are fully vested, non-forfeitable and fully paid or exercisable at the date of grant and require no future performance commitment by the recipient. The Company expenses the fair market value of these securities over the period in which the Company receives the related services.

Recently Issued Accounting Pronouncements - In June 2009, the Financial Accounting Standards Board (“FASB”) issued The FASB Accounting Standards Codification (“ASC’) which became effective for interim and annual reporting periods ending after September 15, 2009. The Codification is the source of authoritative U.S. GAAP recognized by the FASB. The adoption of this Codification did not have any material impact on the Company’s financial position, results of operations or cash flows.

Accounting Standards Update (ASU) No. 2009-05 (ASC Topic 820), which amends Fair Value Measurement and Disclosures-Overall, ASU No. 2009-13 (ASC Topic 605), Multiple Deliverable Revenue Arrangements, and various other ASU’s No. 2009-2 through ASU No. 2011-04 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities have been recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

Reclassification: - Certain items for 2009 have been reclassified to conform to the 2010 presentation.

F-11

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

2.	EQUITY FINANCING AGREEMENTS

Following are all equity security transactions during the year ended December 31, 2010 involving sales not registered under the Securities Act of 1933:

Loan Transactions

						Exercise					Call
Date	Term	Proceeds		Warrants		Price		Interest			Value
1/21/2010	90 days	$	100,000		50,000	$	0.50		12.00	%	$	1.30
1/27/2010	90 days	$	25,000		12,500	$	0.50		12.00	%	$	1.15
1/28/2010	90 days	$	25,000		12,500	$	0.50		12.00	%	$	1.15
1/31/2010	90 days	$	100,000		50,000	$	0.50		12.00	%	$	1.10
2/4/2010	90 days	$	100,000		50,000	$	0.50		12.00	%	$	1.10
6/16/2010	90 days	$	100,000		50,000	$	1.00		12.00	%	$	0.85
6/16/2010	90 days	$	100,000		50,000	$	1.00		12.00	%	$	0.85
		$	550,000		275,000

Date	Term	Proceeds		Warrants		Exercise Price		Interest			Call Value
3/23/2010	365 days	$	500,000		250,000	$	1.00		12.00	%	$	1.14
7/2/2010	90 days	$	200,000		100,000	$	1.00		12.00	%	$	0.83
		$	700,000		350,000

F-12

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

Common Stock Transactions

									Call
Date	Shares		Proceeds		Warrants		Exercise Price		Value
1/12/2010		100,000	$	100,000		50,000	$	0.50	$	1.39
1/14/2010		200	$	200
2/23/2010		100,000	$	100,000		50,000	$	0.50	$	1.09
2/23/2010		25,000	$	25,000		12,500	$	0.50	$	1.09
5/5/2010		50,000	$	50,000		50,000	$	2.00	$	1.05
7/1/2010		30,000	$	30,000		15,000	$	1.00	$	0.84
7/9/2010		250,000	$	250,000		125,000	$	1.00	$	0.99
7/20/2010		100,000	$	100,000		50,000	$	1.00	$	1.03
8/25/2010		25,000	$	25,000		12,500	$	1.00	$	1.00
9/2/2010		50,000	$	50,000		25,000	$	1.00	$	0.89
9/23/2010		25,000	$	25,000		12,500	$	1.00	$	0.94
9/29/2010		100,000	$	100,000		50,000	$	1.00	$	0.89
10/1/2010		25,000	$	25,000		12,500	$	1.00	$	0.93
10/1/2010		25,000	$	25,000		12,500	$	1.00	$	0.93
10/13/2010		30,000	$	30,000		15,000	$	1.00	$	0.96
10/13/2010		40,000	$	40,000		20,000	$	1.00	$	0.96
10/18/2010		100,000	$	100,000		50,000	$	1.00	$	0.96
11/24/2010		50,000	$	25,000		50,000	$	1.00	$	0.69
12/2/2010		100,000	$	50,000		100,000	$	1.00	$	0.74
12/3/2010		10,000	$	10,000		10,000	$	1.00	$	0.74
12/6/2010		50,000	$	25,000		50,000	$	1.00	$	0.74
12/7/2010		25,000	$	12,500		25,000	$	1.00	$	0.74
12/7/2010		25,000	$	12,500		25,000	$	1.00	$	0.74
12/7/2010		10,000	$	5,000		10,000	$	1.00	$	0.74
12/14/2010		98,000	$	49,000		98,000	$	1.00	$	0.68
12/14/2010		200,000	$	100,000		200,000	$	1.00	$	0.68
12/20/2010		2,000	$	1,000		2,000	$	1.00	$	0.71
12/20/2010		30,000	$	15,000		30,000	$	1.00	$	0.71
12/20/2010		200,000	$	100,000		200,000	$	1.00	$	0.71
12/27/2010		30,000	$	15,000		30,000	$	1.00	$	0.64

		1,905,200	$	1,495,200		1,392,500

Also during the year ended December 31, 2010, the Company issued 80,000 shares of common stock for services totaling $90,500.

F-13

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

3.	PURCHASE OF ENGINE DEVELOPMENT TECHNOLOGY

Effective March 31, 2005, Viper Powersports, Inc., acquired substantial motorcycle engine technology and related assets from Thor Performance Inc., a Minnesota corporation. These assets were acquired in exchange for 749,144 shares of common stock of Viper Powersports, Inc. issued to Thor Performance, Inc. The Company valued the engine development technology at $10.00 per share and capitalized $7,341,437 for the value of the motorcycle engine development.

Motorcycle development technology acquired from Thor Performance Inc. includes designs and prototypes for various V-Twins and other motorcycle engines and other components, and a $150,000 commitment by Thor Performance Inc. to fund the completion of certain development in progress being conducted by MCD, which commitment has been fulfilled. The Company had an independent appraisal of the engine development technology conducted which, under the income methodology approach, valued the engine development technology at $19,616,400.

In accordance with SFAS 2, Accounting for Research and Development Costs, and SFAS 142, Goodwill and Other Intangible Assets, the Company’s policy is to capitalize costs incurred in connection with the purchase, from outside parties, of new engine development technology. Any internally developed technology would be classified as research and development, and would be immediately expensed. During 2005, the Company capitalized $7,341,437 of motorcycle engine development cost. The Company’s policy is to amortize the cost capitalized in connection with developing engine technology on a straight line basis over 10 years. No amortization was taken during 2005 as the Company was still in the development stage. The Company did not produce any motorcycles during the 2006 year and so it was determined that impairment of the engine development cost should be taken. This amount is $7,371,689 and has been fully impaired in the fiscal year 2006.

F-14

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

4.	RECAPITALIZATION

In 2005 Viper Powersports, Inc. was merged with Viper Motorcycle Company pursuant to a merger agreement dated March 11, 2005. Upon consummation of this merger, Viper Motorcycle Company became a wholly-owned subsidiary of Viper Powersports, Inc.

This transaction constituted a reverse merger which is regarded as if Viper Motorcycle Company had acquired Viper Powersports, Inc. These financial statements present operations of Viper Motorcycle Company from its inception on November 18, 2002, and do not include any prior operations of Viper Powersports, Inc.

F-15

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

5.	RELATED PARTY TRANSACTIONS

F-16

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

6.	COMMON STOCK WARRANTS AND OPTIONS

Warrants

The Company has issued warrants to purchase a total of 4,142,723 shares of its common stock.

Warrants to Purchase		Common Share Strike Price		Term	Expiration Date
	6,500	$	4.00	3 year	March 2011
	25,000	$	2.00	2 year	April 2011
	31,250	$	1.60	5 year	March 2012
	830,000	$	1.00	3 year	November 2013 to December 2013
	37,500	$	4.00	5 year	January 2013 to March 2013
	62,500	$	0.50	5 year	November 2014 to December 2014
	10,000	$	2.00	5 year	November 2014
	550,000	$	0.50	5 year	January 2015 to December 2015
	1,373,980	$	1.00	5 year	January 2015 to December 2015
	50,000	$	2.00	5 year	May 2015
	400,625	$	0.40	10 year	December 2020
	90,000	$	0.50	10 year	December 2020
	232,734	$	0.75	10 year	December 2020
	203,467	$	1.00	10 year	December 2020
	223,000	$	1.25	10 year	December 2020
	16,167	$	3.00	10 year	December 2020

The following is a summary of the Company’s stock warrants outstanding as of December 30, 2010, only one class of warrants outstanding – related to the October 2009 financing stock warrants, adjusted for any changes in the exercise price of the stock warrants:

Warrants Outstanding

Warrants Exercisable

Range of
exercise price

Number
Outstanding

Weighted Average
Remaining Contractual
Life (in years)

Weighted Average
Exercise Price

Number
Exercisable

Weighted Average
Exercise Price

$ 0.40 to $ 4.00

4,142,723

5.70 years

0.92

4,142,723

0.92

Related parties hold warrants to purchase 10,000 of these warrant shares, with the other warrants being held by persons who have provided financial or consulting services to the Company. No warrants issued by the Company have been exercised so far.

Finder’s fees paid with warrants during 2010 with a value of $647,804 were paid on December 29, 2010. The fees were paid separate from and substantially later than the receipt of proceeds of private placements made during the year, and accordingly, were expensed.

The assumptions used in valuing warrants under the Black-Scholes option pricing model are as follows;

Exercise price	$.50 to $4.00
Term	Two to ten years
Volatility	213.8% to 250.04%
Dividends	0.00%
Discount Rate	0.72% to 2.43%

Stock Options – There is one outstanding option for 31,250 shares. This option has an exercise price of $2.50, with a four-year term that expiries on April 7, 2011.

F-17

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

VIPER POWERSPORTS, INC. COMMON STOCK WARRANTS & OPTIONS

	Options					Warrants
	12/31/2010			12/31/2009		12/31/2010			12/31/2009

Beg Bal		114,500			114,500		314,417			922,669

Issued		—			—		3,969,973			128,750

Adjust for 1 for 4 split										(692,002	)

Exercised		—			—		—			—

Cancelled		(83,250	)		0		(141,667	)		(45,000	)

End Bal		31,250			114,500		4,142,723			314,417

Exercisable		31,250			114,500		4,142,273			314,417

F-18

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

7.	LEASING ACTIVITIES

On October 17, 2005, the Company entered into a capital lease with Citizen Automobile Finance for the acquisition of a 2004 delivery van for a term of 60 months and an interest rate of 7.99%. This lease was completely satisfied in November 2010.

On September 18, 2008, the Company entered into an operating lease for manufacturing and office space at its current Hopkins facility. The term of the lease is thirty nine (39) months beginning October 1, 2008. Future minimum lease payments under this agreement have been included in the schedule of minimum operating lease payments.

On October 14, 2010, the Company entered into an operating lease for manufacturing and office space at its future Auburn, Alabama facility. The term of the lease is one hundred and twenty (120) months beginning January 1, 2011 but which has been delayed until July 1, 2011 based on the move in condition of the facility. Future minimum lease payments under this agreement have been included in the schedule of minimum operating lease payments.

Minimum lease payments are as follows:

For the years ending December 31,	Capital Lease		Operating Lease
2011		-	$	107,985
2012		-		180,000
Total		-	$	287,985
Amount for interest		-
Net		-

Less: Current portion		-
Long term portion	$	-

The operating lease for 2011 is made up of the Hopkins lease location amount of $50,985 and the Auburn lease location amount of $57,000 for July through December 2011. The Hopkins lease will be completed as of December 31, 2011. The lease for the Auburn location will not begin until the Company moves into the completed facility which should be approximately July 1, 2011. The rent at the Auburn location, for 2013 and beyond, has yet to be established according to the lease document but will be determined by several factors and shall not be less than $10,000 per month. Total rent expense consisting of the Hopkins lease in 2010 was $93,000.

F-19

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

8.	PREFERRED STOCK

The Company has authorized 20,000,000 shares of preferred stock with par value of $.001 per share and of these there are none outstanding.

F-20

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

RESTATEMENT

Subsequent to issuance, Management has subsequently determined to correct the accounting procedures and has amended the December 31, 2010 financial statements.

The Company corrected the classification of warrants as equity with no derivative liability.

Accordingly, the accompanying balance sheet, statement of operations, and statement of cash flows for the period amended at December 31, 2010 have been retroactively adjusted as summarized below:

Effect of Corrections	As Previously Reported			As Restated			Adjustment			Reference
BALANCE SHEET
At December 31, 2010
LIABILITIES
-Accounts payable	$	303,518		$	132,512		$	(171,006	)		5,6
-Current derivative liability	$	586,992		$	-		$	(586,992	)		1
-Total current liabilities	$	1,505,348		$	747,350		$	(757,998	)		1,5,6
-Total liabilities	$	1,505,348		$	747,350		$	(757,998	)		1,5,6

STOCKHOLDERS’ DEFICIT
-Additional paid-in capital	$	36,237,465		$	36,549,869		$	312,404			2
-Accumulated deficit	$	(37,036,812	)	$	(36,591,218	)	$	445,594			1,5,6
-Total stockholders’ deficit	$	(781,628	)	$	(23,630	)	$	757,998			1,2,5,6

STATEMENT OF OPERATIONS
Year ended December 31, 2010
-Selling, general and administrative	$	1,781,081		$	1,710,174		$	70,907			5
-Total operating expenses	$	2,748,816		$	2,677,909		$	70,907			5
-Loss from operations	$	(2,748,088	)	$	(2,677,181	)	$	70,907			5

- Financing cost relating to debt discount, beneficial conversion features and finder’s fees	$	(1,749,563	)	$	-		$	1,749,563			4
-Accretion of debt and finder’s fees	$	-		$	(647,804	)	$	(647,804	)		4
-Beneficial conversion features	$	-		$	(401,069	)	$	(401,069	)		4
-Financing cost relating to debt discount	$	-		$	(426,102	)	$	(426,102	)		4
-Total other income/(expense)	$	(2,016,592	)	$	(1,742,004	)	$	274,588			1,2
-Net loss	$	(4,764,680	)	$	(4,419,185	)	$	345,495			1,2,5

STATEMENT OF STOCKHOLDERS’ EQUITY
At December 31, 2010
-Common stock for Cash	$	1,072,325		$	731,148		$	(341,177	)		2
-Common stock for conversion of debt	$	1,413,359		$	1,347,866		$	(65,493	)		2
-Stock warrants issued with common stock	$	410,970		$	564,987		$	154,017			2
-Stock warrants issued with debt	$	713,583		$	427,700		$	(285,883	)		2
-Common stock issued for retirement of debt and interest	$	58,130		$	123,622		$	65,492			2
-Beneficial conversion features	$	-		$	401,069		$	401,069			2,4
-Stock warrants issued for Finder’s fees	$	-		$	270,120		$	270,120			2,4
-Stock warrants granted for inducement of debt and interest	$	292,987		$	407,264		$	114,277			2
-Net loss at December 31, 2010	$	(4,764,680	)	$	(4,419,185	)	$	345,495			1,2,5
-Balance of additional paid-in capital at December 31, 2010	$	36,237,465		$	36,549,869		$	312,404			2
-Balance of accumulated deficit at December 31, 2010	$	(37,036,812	)	$	(36,591,218	)	$	445,594			1,2,5,6
-Total Equity Balances	$	(781,628	)	$	(23,630	)	$	757,998			1,2,5,6

F-21

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

Effect of Corrections	As Previously Reported			As Restated			Adjustment			Reference
STATEMENT OF CASH FLOWS
Year ended December 31, 2010
-Net loss at December 31, 2010	$	(4,764,680	)	$	(4,419,185	)	$	345,495			1,2,5
-Derivative liability	$	586,992		$	-		$	(586,992	)		1
-Warrants issued for inducement to convert debt	$	292,987		$	407,264		$	114,277			2
-Beneficial conversion feature on convertible loan	$	416,333		$	401,069		$	(15,264	)		2
-Amortization of loan costs	$	-		$	426,102		$	426,102			2
-Accretion of debt discount	$	297,250		$	427,700		$	130,450			2
-Decrease (increase) in accounts payable	$	(54,649	)	$	(125,556	)	$	(70,907	)		5,6
-Net cash provided by (used in) operating activities	$	(2,727,209	)	$	(2,384,049	)	$	343,160			1,2

-Net proceeds from sale of stock	$	1,485,200		$	1,298,040		$	(187,160	)		2
-Net proceeds from note payable	$	1,299,079		$	1,250,000		$	(49,079	)		2
-Payments on notes payable – related party	$	134,841		$	34,841		$	100,000			3
-Payments on note payable	$	-		$	(50,921	)	$	(50,921	)		3
-Payments for loan costs	$	-		$	(156,000	)	$	(156,000	)		2
-Net cash provided by (used in) financing activities	$	2,645,386		$	2,302,226		$	(343,160	)		1,2,3

REFERENCE

1 Correct a classification of warrants as equity with no derivative liability

2 Use of relative fair value of the warrants as a result of change from debt to equity of warrant classification

3 Recorded payments/proceeds gross instead of net

4 Separate expenses for change in presentation

5 2010 Posting errors relating to accounts payable

6 Prior period posting errors relating to accounts payable

Subsequent to issuance, Management has subsequently determined to correct the accounting procedures and has amended the December 31, 2009 financial statements.

Accordingly, the accompanying balance sheet, statement of operations, and statement of cash flows for the period amended at December 31, 2009 have been retroactively adjusted as summarized below:

Effect of Corrections	As Previously Reported			As Restated			Adjustment			Reference
BALANCE SHEET
At December 31, 2009
LIABILITIES
-Accounts payable	$	358,167		$	258,068		$	(100,099	)		7
-Total current liabilities	$	1,077,184		$	977,085		$	(100,099	)		7
-Total liabilities	$	1,107,105		$	1,007,006		$	(100,099	)		7

STOCKHOLDERS’ DEFICIT
-Accumulated deficit	$	(32,272,132	)	$	(32,172,033	)	$	100,099			7
-Total stockholders’ deficit	$	(73,032	)	$	27,067		$	100,099			7

7 Prior period posting errors relating to accounts payable

F-22

Viper Powersports, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

10.	SUBSEQUENT EVENTS

Payoff of bank loan

Subsequent to the year end the Company paid off a $250,000 credit facility that was guaranteed by a director of the Company that was used for parts and components for commercial production. This line has been paid off in early January of 2011.

Legal Proceedings

Common Stock Transactions

During the period January 1 through May 20, 2011, the Company issued 858,000 shares of common stock and 479,000 warrants for $479,000 in cash, and the Company performed Black-Scholes valuation for each transaction. The call value was the cost per share per this model. The warrant allocation is the amount of the proceeds applied to the warrants. The difference between the warrant allocation and the proceeds was allocated to the shares of common stock issued.

Option
term	Date	Shares		Proceeds		Warrants		Exercise Price
3 yr	1/6/2011		100,000	$	50,000		50,000	$	1.00
3 yr	1/14/2011		60,000	$	30,000		30,000	$	1.00
3 yr	1/25/2011		30,000	$	15,000		15,000	$	1.00
3 yr	1/27/2011		100,000	$	100,000		100,000	$	1.00
3 yr	2/9/2011		10,000	$	5,000		5,000	$	1.00
3 yr	2/14/2011		134,000	$	67,000		67,000	$	1.00
3 yr	2/14/2011		134,000	$	67,000		67,000	$	1.00
3 yr	2/22/2011		140,000	$	70,000		70,000	$	1.00
3 yr	3/29/2011		100,000	$	50,000		50,000	$	1.00
3 yr	4/1/2011		50,000	$	25,000		25,000	$	1.00

	Total:		858,000	$	479,000		479,000

Loan Transactions

The Company entered into two 60-day loan agreements totaling $100,000 during the period January 1 through April 15, 2011. These loans are convertible and carry a 10.0% interest rate. Each agreement also required the Company to issue warrants to purchase the applicable number of shares of common stock at $.50 per share as shown in the following table.

Date	Term	Proceeds		Warrants		Exercise Price		Interest
4/9/2011	60 days	$	50,000		50,000	$	0.50		10.00	%
4/9/2011	60 days	$	50,000		50,000	$	0.50		10.00	%

		$	100,000		100,000

F-23

INDEX TO EXHIBITS

Form 10-K/A for Viper Powersports, Inc.

Fiscal Year Ended December 31, 2010

Exhibit Number		Description

2 +		Agreement and Plan of Business Combination

3.1+		Articles of Incorporation

3.2+		Bylaws

4 +		Rights of Series A Preferred Shareholders

10.1 +		Asset Purchase Agreement

10.2 +		Dealer Agreement

10.7 #		Palmlund Secured Inventory Financing Agreement

10.9 #		V-Twin Engine Component Purchase Order With MCD

10.10 #		Placement Agent Agreement With Bathgate Capital Partners LLC

10.13 ^		Amendment to Secured Inventory Financing Agreement

21 +		Subsidiaries of Registrant

31.1 *		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 *		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 *		Certification of Principal Executive Officer and Principal Financial Officer Under Section 906 of the Sarbanes-Oxley

+ Filed previously with Form 10-SB which was filed on November 22, 2005.

# Filed previously with Amendment #1 to Form 10-SB which was filed on January 19, 2006.

^ Filed previously with Form 10KSB which was filed on March 31, 2006

* Filed with this Annual Report for fiscal year ended December 31, 2010

VIPER POWERSPORTS INC - FORM 10-K/A - March 30, 2012

Attached files

VIPER POWERSPORTS INC Reports