VIPER POWERSPORTS INC - FORM 10-K

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EX-31.1 - EXHIBIT 31.1 - VIPER POWERSPORTS INC	v362417_ex31-1.htm
EX-31.2 - EXHIBIT 31.2 - VIPER POWERSPORTS INC	v362417_ex31-2.htm
EX-32.1 - EXHIBIT 32.1 - VIPER POWERSPORTS INC	v362417_ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

Act of 1934 for the Year Ended December 31, 2012.

¨ TRANSITION REPORT 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	(IRS Employer ID Number)
Incorporation or organization)

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 ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act. Yes ¨ 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 x No ¨

Check if disclosure of delinquent filers in response to Item 405 of Regulation S-K 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 or any amendment to this Form 10-K. x

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant at June 30, 2012: $12,002,007

Number of shares outstanding of registrant’s common stock outstanding at December 6, 2013: 52,182,639 shares

VIPER POWERSPORTS INC.

Form 10-K

For the Year Ended December 31, 2012

TABLE OF CONTENTS

		Page

PART I

Item 1.	Description of Business	3

Item 1A.	Risk Factors	9

Item 2.	Description of Property	11

Item 3.	Legal Proceedings	11

Item 4.	Mine Safety Disclosures	11

PART II

Item 5.	Market for Common Equity and Related Stockholder Matters	12

Item 6.	Selected Financial Data	14

Item 7.	Management’s Discussion and Analysis and Plan of Operation	15

Item 8.	Financial Statements	17

Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	17

Item 9A.	Controls and Procedures	17

Item 9B.	Other Information	18

PART III

Item 10.	Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act	19

Item 11.	Executive Compensation	20

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	20

Item 13.	Certain Relationships and Related Transactions	21

Item 14.	Principal Accountant Fees and Services	22

Item 15.	Exhibits	22

	Signature Page	23

	Index to Financial Statements	F-1

	Index to Exhibits	24

PART I

Item 1. Description of Business

Business Development Overview

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

Viper Powersports Inc., formerly ECCO Capital Corporation (“ECCO”), was incorporated in Nevada in 1980. ECCO merged with Viper Motorcycle Company (“VMC”) in 2005 through a stock exchange acquisition, 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 VMC, a Minnesota corporation, resulting in VMC 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 VMC being regarded as the acquirer. The stock exchange for this reverse acquisition was affected on a one-for-one basis, resulting in the stockholders of VMC 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 VMC 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 engine development technology.

PMFR, Inc. was incorporated by us in April 2012 as a wholly-owned Minnesota corporation. It was organized for the acquisition of Precision Metal Fab Racing’s assets. The subsidiary was formed to produce high quality chassis and suspension and other components and parts, many of which are CAD designed and CNC machined from high-grade billet aluminum stock.

The Company is in the business of designing, developing and commencing commercial marketing and production of premium custom V-Twin motorcycles. Our motorcycles are 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 motorcycles 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, our proprietary V-Twin engines satisfactorily passed and complied with all noise and pollution emissions requirements of both the federal 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 prior to our move to Auburn, Alabama. The Company has started substantial stocking of inventory and commenced production of its 2013 motorcycles.

On June 18, 2013, the Company converted VMC and PMFR into LLCs. These LLCs were then transferred to Precious Capital in exchange for payment of our debt to Precious Capital. After the liquidation of these assets the Company will return to a development stage entity. VPWI’s management and key employees remain in place. The Company is exploring markets to utilize its industry contacts to develop high-performance aftermarket components.

Strategic Engine Development Joint Venture

In January 2010, the Company’s subsidiary, VMC, entered into a three-year Motorcycle Engine Manufacture and Supply Agreement with Ilmor Engineering Inc. (the “Ilmor/VMC 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/VMC Contract, since Ilmor is widely recognized as one of the most successful race-engine design and manufacturers.

Under a previous written contract entered into by Ilmor and VMC in 2009, Ilmor began assembling all V-Twin engines used by VMC 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 VMC engine. Ilmor’s evaluation of our V-Twin engine through the initial contract was favorable, and accordingly resulted in the current Ilmor/VMC Contract, which provides for the exclusive manufacture and supply by Ilmor of a VMC engine designed by Ilmor.

The Company has approved and is well satisfied with the most improved and upgraded Ilmor-designed VMC engine, and accordingly has ordered and obtained initial commercial shipments of these engines. Ilmor agrees to manufacture and supply all V-Twin requirements of VMC and in turn the Company 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 VMC engines until finished engines are invoiced and shipped to the Company. So long as VMC 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.

These Ilmor-designed VCM engines are 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 VMC 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.

On October 8, 2012, VMC and Ilmor entered in to an amended and updated agreement known as the Motorcycle Engine Manufacture and Supply Agreement (“the Ilmor/VMC Updated Contract”).

The Ilmor/VMC Updated Contract replaces and updates the earlier agreement made between the parties. The updated agreement has been expanded to a term of five (5) years. In addition, VMC has made a pre-payment to Ilmor of $1,000,000 for the purchase of future engine and components. Under the terms of the Ilmor/VMC Updated Contract, Ilmor will use “best efforts” to improve the costs of engine components in a shared savings cost reduction program, which, the Company believes, will result in a substantial cost benefit pass through unto VMC.

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. On November 11, 2011, the authorized common shares were increased to One hundred Million (100,000,000).

On April 24, 2012, Viper Motorcycle Company (“VMC”), as Borrower and being a wholly owned subsidiary of registrant Viper Powersports Inc., entered into a Loan and Security Agreement (the “Loan Agreement”) with Precious Capital LLC (“Precious”), of New York City, as Lender. On February 13, 2013, Precious Capital LLC issued a default notice related to Loan Agreement. On March 5, 2013, the Company and Precious Capital LLC agreed to liquidate the VMC and PMFR subsidiaries to Precious in lieu of foreclosure. In exchange, the Company has received a release from its loan guarantee.

After the liquidation of these assets the Company is a development stage entity. The Company, with its remaining subsidiary Viper Performance, Inc. is restructuring itself to develop and market high-performance after-market accessories. We are developing plans to launch a new market focus line of high-performance components. The Company has retained its key employees and their industry expertise. VPWI’s management and key employees remain in place.

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 have completed the development and extensive testing of proprietary V-Twin engines including actual performance testing of the engines on our various motorcycles models, and we have been very satisfied with their performance while powering our motorcycles 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.

The Company, with its remaining subsidiary Viper Performance, Inc. is restructuring itself to develop and market high-performance new after-market accessories.

Our Market

Motorcycles are generally characterized in their industry by weight, primarily based on engine displacement size. Our motorcycles 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 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;

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:	69 inches, 38 degrees
·	Weight:	660 pounds
·	Seat height::	24 inches, adjustable
·	Engine type:	45° V-Twin, air cooled
·	Engine displacement:	152 cubic inches
·	Frame:	1 ½” tubular steel
·	Transmission/drive train:	6-speed, right-side drive
·	Final drive:	Belt
·	Rear-end suspension:	Adjustable air-ride system
·	Front-end suspension:	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 are continuing the 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 late 2013. This model will be part of the transfer to Precious Capital.

Viper Proprietary Engines

Through 2012, we 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. This agreement will be transferred as part of the settlement with Precious Capital.

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 two (2) Viper dealers located both internationally, 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 worldwide 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 Auburn, AL 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 unlimited mileage 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 Motor Company, Inc. which dominates the market for V-Twin 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. These builders 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. This property will be transferred as part of the settlement with Precious Capital.

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.

As required, we submit 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 U.S. Environmental Protection Agency.

Employees

We currently employ 2 persons including our management, development, marketing and administrative personnel. We expect to continue to hire assembly and administrative personnel during 2013 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 belongs to a labor union, and we consider our relationship with our employees to be good.

Item 1A. 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 development 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 high-performance 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, 2012 raises doubts about our ability to continue as a going concern based on our 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, 2012, we have experienced cumulative losses of approximately $46.9 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 aftermarket products.

Our aftermarket products 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 aftermarket 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 are exposed to credit risk on our wholesale receivables.

Credit risk is the risk of loss arising from a failure by a dealer to meet the terms of their dealer contract. Credit losses are influenced by general business and economic conditions, including unemployment rates, bankruptcy filings and other factors that negatively affect household incomes, as well as contract terms, and credit profiles. Negative changes in general business, economic or market factors may have an additional adverse impact on the Company's credit losses and future earnings.

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 distribution network of independent motorcycle dealers.

We depend upon our dealers to sell our products. If our dealers are unable to sell and promote our products effectively, our business will be harmed seriously. 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.

We will face significant challenges in obtaining market acceptance any aftermarket products we develop.

Our success depends primarily on the acceptance of our products by motorcycle purchasers and enthusiasts Acceptance of our products by motorcyclists will depend on many factors including price, reliability, styling, , and our ability to overcome existing loyalties to competing products.

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 any key employees.

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

. We will face direct competition from many competitors offering aftermarket motorcycle products and concentrating on the same market niche where we are situated. 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 aftermarket products 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, or changing tastes of motorcyclists. Our future success will depend materially on our ability to anticipate and respond to these changes. If we cannot offer acceptable new products effectively, our ability to generate revenues or achieve profitability would be impaired substantially.

Purchase of aftermarket motorcycle products is discretionary for consumers, and market demand for them is influenced by factors beyond our control.

Motorcycles and their aftermarket products 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.

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 our aftermarket 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 conditions 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 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 100,000,000 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 2. Description of Property

The Company currently does not own any real estate. All development, production, marketing and administrative operations of the Company are conducted from its Auburn, AL leased facilities.

Auburn, Alabama Facility

The Company completed its relocation to its headquarters and manufacturing operations from Hopkins, Minnesota to Auburn, Alabama. The Company leases and occupies a modern facility in Auburn. The facility is 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.

Item 3. Legal Proceedings

In January 2011, Transactional 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. The Company has accrued for this contingency.

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. Mine Safety Disclosures

None.

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 under the symbol “VPWI.” The ranges of high and low bid prices of the Company’s common stock are as follows. These quotations reflect inter-dealer prices without retail mark-up, mark-down or commission and may not represent actual transactions.

Period	High Price (Bid)		Low Price (Bid)
April – June, 2011	$	.670	$	.350
July – September, 2011	$	.690	$	.210
October – December, 2011	$	.490	$	.155
January – March , 2012	$	.340	$	.190
April – June, 2012	$	.400	$	.200
July – September 2012	$	.300	$	.200
October – December, 2012	$	.300	$	.120
January – March, 2013	$	.270	$	.015
April – June, 2013	$	.080	$	.020

The closing sales price of our common stock on October 10, 2013 was $.040 per share.

Shareholders

As of August 20, 2013, there were 469 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, 2012.

Equity Securities Sold by the Company

Following are all equity security transactions during the year ended December 31, 2012, involving sales not registered under the Securities Act of 1933:

Loan Transactions

The Company entered into various 180-day loan agreements for $100,000 each from January 1, 2012 through March 31, 2012 totaling $200,000. These loans are convertible at a conversion price of $.15 per share and carry a 12.0% interest rate. Each agreement also required the Company to issue 650,000 warrants to purchase the applicable number of shares of common stock at $.15 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 a debt discount of $97,500, which is then accreted over the life of the loans. Any remaining unamortized debt discount at the time of conversion has been accreted as an expense. Interest expenses of $4,031was expensed and paid during 2012. The stock price on the date of issuance ranged between $.22 and $.25 per share and resulted in a beneficial conversion of approximately $161,000 which was fully expensed upon the conversion of the notes. These loans were converted in April 2012 in exchange for approximately 2,000,000 shares of common stock

The Company entered into three (3) short-term loan agreements for a total of $214,000 with related parties from January 1, 2012 through March 31, 2012. The instruments are non-interest bearing. $60,000 was repaid in the second quarter of 2012 and the remaining $164,000 was converted to shares on April 24, 2012.

On April 24, 2012, Viper Motorcycle Company (“VMC”), as Borrower and being a wholly owned subsidiary of registrant Viper Powersports Inc., entered into a Loan and Security Agreement (the “Loan Agreement”) with Precious Capital LLC, of New York City, as Lender. The Loan Agreement provided funding through advances to VMC under a line of credit not to exceed $6,000,000, with interest on outstanding principal payable at an annual rate of 15% per annum. All outstanding principal of this loan and any accrued interest are due to Lender in full, thirty-six (36) months from the date of the Loan Agreement. The outstanding principal of this loan may be prepaid by VMC, in whole or in part, at any time.

Upon closing this loan, VMC received an initial loan advance of $2,500,000. The Loan Agreement required the funds from this initial advance to be used by VMC as follows: payment of outstanding debt of $280,000 including $80,000 owed to a director of the Company; payment of $640,000 to acquire the assets of Precision Metal Fab Racing, a manufacturer and marketer of high performance motorcycle components based in suburban Minneapolis; prepaid payment of loan interest to the Lender of $375,000; payment of $330,000 to complete acquiring engine development IP technology from Ilmor; payment not to exceed $450,000 for manufacturing equipment and tooling; payment of $180,000 for loan brokerage commissions; payment not to exceed $128,000 for motorcycle components inventory and other immediate operational expenditures; and the balance for miscellaneous permitted expenditures including payment of professional and other expenses of VMC and the Lender related to this loan transaction and its closing.

Under the terms of the Loan Agreement, any further advances to VMC beyond the initial $2,500,000 shall be in the Lender’s sole and absolute discretion. The loan terms also require that at no time shall the outstanding balance of this loan exceed a “Balancing Formula” as defined in the Loan Agreement, which formula approximates 60% of the values of certain defined tangible and intangible assets of VMC and the Company.

To provide the required collateral for this loan, both VMC and the Company entered into various security, pledge and guaranty agreements to guarantee payment to the Lender and secure the Lender with all tangible and intangible assets of VMC and the Company as set forth in the Loan Agreement and its supporting documents, including the Company’s 100% ownership of VMC. In addition, the future payment to the Lender of all outstanding principal and accrued interest of this loan was guaranteed unconditionally by the Chief Executive Officer and Chief Financial Officer of the Company.

The Loan Agreement also contains numerous representations, warranties and covenants of VMC, detailed terms for the opening and operation of certain banking Special Deposit Accounts as required by the Lender, default provisions and other standard loan contract provisions.

As an inducement to the Lender to make this loan to VMC, the Company issued a total of 9,694,128 unregistered shares of its common stock to the Lender, which common shares were offered and sold by the Company in reliance upon the exemption from registration set forth in Section 4(2) of the Securities Act of 1933, as amended. The cost of this issuance was capitalized to deferred financing costs and will be amortized on a straight-line basis over the life of the loan as additional interest.

The Loan Agreement also provides that none of the common stock of the Company owned by the Lender or by the Chief Executive Officer and Chief Financial Officer of the Company can be sold or otherwise disposed of during the three-year term of this loan.

On February 13, 2013, Precious Capital LLC issued a default notice related to Loan Agreement. The notice stated that a Balancing Default to the Agreement exists and provided for 10 business days to cure the issue before an Event of Default will occur. Viper and Precious have been working to restructure the agreement to achieve an equitable capital structure for all of Viper’s stakeholders.

On March 5, 2013 the Company announced that since receiving this default notice, the Company and Precious Capital LLC have agreed on the following, which has been approved by the Board of Directors of Viper Powersports Inc.:

The Company shall convey to Precious Capital LLC, subject to a purchase and sale agreement now being prepared, all of its ownership interest in its Viper subsidiary;

Precious Capital LLC shall apply a discount to the face value of the loan instrument,

Precious Capital LLC shall indefeasibly release the Company from any and all of the Company’s liabilities and obligations under or in connection with the Loan, including release of the Company’s guarantee of the Loan;

Precious Capital LLC shall return to the Company all shares or other ownership interests in the Company conveyed to Precious Capital LLC in connection with the Loan;

Precious Capital LLC shall release any security interest it may have in any shares or other ownership interests in the Company that it may have in connection with the Loan;

Precious Capital LLC and Viper Powersports Inc. shall release each other from all obligations and liabilities in connection with the Loan;

Precious Capital LLC shall pay certain expenses for the Company to be agreed between Precious Capital LLC and Viper Powersports Inc.

The above transactions were completed on June 17, 2013

On February 21, 2013 The Industrial Development Board of the City of Auburn declared a default on the Promissory Note between Viper Motorcycle Company and the Board dated July 27, 2011. The Board then demanded the removal of the equipment collateral assigned to the Note. Incident to the liquidation sale of assets to Precious Capital LLC, the Note was due and callable by the Board on May 17, 2013.

Common Stock Transactions

During the three months ended March 31, 2012, the Company issued 500,000 shares of common stock to one accredited investor for $135,000 of services recorded as an expense in general and administrative. The market closing price on this date was used to value the stock issued for services.

During the three months ended June 30, 2012, the Company issued 532,000 shares of common stock to three accredited investors for $149,640 of services recorded as an expense in general and administration. The market closing price on this date was used to value the stock issued for services.

As an inducement to Precious Capital LLC to make the loan (see detail above) to Viper Motorcycle Company, the Company issued a total of 9,694,128 unregistered shares of its common stock to Precious Capital LLC, which common shares were offered and sold by the Company in reliance upon the exemption from registration set forth in Section 4(2) of the Securities Act of 1933, as amended.

As an inducement to three accredited investors to convert their notes, on April 24, 2012 the Company issued 1,255,000 shares of common stock for a value of $414,150. The conversion rates on these three loans were less than the actual stock price on the date of conversion. As a result, the Company recorded an additional $148,000 of expense for the beneficial conversion of these notes.

During the three months ended September 30, 2012, the Company issued 383,333 shares of common stock to two accredited investors for $80,500 of services recorded as an expense in general and administration. The market closing price on this date was used to value the stock issued for services.

Warrants for Services

During the three months ended March 31, 2012, the Company issued 100,000 warrants for shares of common stock for $27,971 of services recorded as an expense in general and administration. The Company valued the warrants issued using the Black-Scholes model.

Based on the manner of offering and sale of all the foregoing common stock and warrant equity security transactions, they were 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 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, 2012 Compared to the Fiscal Year Ended December 31, 2011.

Revenues. There was $611,797 of motorcycle and parts revenue for 2012 as compared to $165,209 for the same period of 2011. There were twelve motorcycles sold in 2012 compared to nine motorcycles sales in 2011. Revenues were increased in 2012 primarily due to the addition of PMFR sales.

Gross Profit. Gross deficit of 2012 was $48,368 compared to the gross deficit for 2011 of $329. This increase in deficit is the result primarily of motorcycle discounting.

Research and Development. Research and development costs were $ 331,936 in 2012 compared to $69,585 in 2011. This increase was primarily due to increased development expense related to the Mamba.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year 2012 were $3,093,497 compared to $3,136,316 for the same period of 2011. Our 2012 selling and general administrative expenses included substantial expenses incurred in acquiring the new operating loan. The 2011 selling and general administration included substantial expenses related to the relocation to Auburn and increased personnel cost at the new facility

Loss from Operations. Operational losses were $3,473,801 in 2012 compared to $3,282,032 for 2011, which were similar and primarily included the foregoing selling, general and administrative expenses.

Interest Expense. Interest expense was $1,222,772 in 2012 compared to $59,444 in 2011. This increase during 2012 was due to the Precious Capital LLC new long-term debt.

Other expenses The Company recognized accretion and financing charges during 2012 of $474,977 and $747,886 compared to $83,304 and $183,566 during the same period of 2011. These charges were primarily the results of the conversion of loan instruments into equity.

Cash used by operations. Cash used in operating activities increased to $5,421,467 during 2012 compared to $1,983,581 during the same period in 2011. These changes were the result of increases in interest expense and other expenses related to relating to the new long-term debt. Also, the Company had a large prepaid charge during 2012.

Plan of Operation

Our current long-term business strategy or goal is to become a developer and supplier of premium after-market high performance products. In implementing this strategy, we intend to execute the following matters for the next twelve months:

Continue Design and Development - We will complete development and production sourcing of our initial aftermarket products to enter the commercial marketplace by 2014.

Develop a Distribution Network - We will seek qualified distributors for our aftermarket products which are experienced in distribution channels for sub products.

Commence Sales and Marketing Activities - Assuming working capital is available; we will commence marketing and promotion of any aftermarket products developed by us.

On February 13, 2013, Precious Capital LLC issued a default notice related to Loan Agreement. Subsequently, the Company announced an agreement had been met which resulted in the transfer of two of the Company’s subsidiaries to Precious Capital LLC as a release from the Company’s loan guarantee. The Company plans to utilizes the remaining subsidiary and its employees to continue to develop and produce aftermarket products.

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.

Future Liquidity

We will need to obtain substantial additional financing through loans and/or sales of our equity securities. Although we believe such additional financing will become available to us , there is no assurance we will raise any such additional funds on terms acceptable to us, or at all

If we are unable to raise additional funds as needed, we will be required to curtail significantly, or may even cease, our development of aftermarket products. 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 aftermarket 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 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 motorcycle enthusiasts, and certain assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different materially assumptions or conditions.

Our management believes the following accounting policies have affected 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 recognized revenue for sales to dealers when the following occurred:

the sales price is fixed or determinable

motorcycle products are delivered, which is upon shipment;

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

collection is reasonably assured.

We also accounted 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.

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.

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 material 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

During 2012, the Company had an agreement with a floor plan company to provide inventory financing to qualified dealers. Under this agreement, the Company is contingently liable to repurchase this inventory from the funder should a dealer experience a business failure. As of December 31, 2012, there is $0 financed under this program

Other than any contingency liability from the floor plan, the Company has no off-balance sheet arrangements.

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.

The Company completed a competitive process to review the appointment of the Company’s independent registered public accounting firm for the year ending December 31, 2012. As a result of this process on June 12, 2012, the Board of Directors engaged Hein & Associates LLP as the Company’s auditor to replace Child, Van Wagoner & Bradshaw, PLLC (“Child”)

Child’s reports on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2011 and December 31, 2010 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The audit reports of Child on the effectiveness of internal control over financial reporting as of December 31, 2011 and 2010 did not contain any adverse opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.

During the fiscal years ended December 31, 2011 and December 31, 2010, and the subsequent interim period through June 12, 2012, there were (i) no “disagreements” as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, between the Company and Child on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Child, would have caused Child to make reference to the subject matter of the disagreement in their reports on the financial statements for such years, and (ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

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 2012 Form 10-K, management was made aware of certain disclosures in 2012 that while made, were not made timely enough to be in compliance with the Exchange Act. In addition, during 2012 and 2011, management restated its 2010 10-K, in which management corrected various statements and policies within the 10-K. Also, the Company reevaluated the classification of its warrants based on ASC 815-40-25-7 through 815-40-25-35. The reevaluation resulted in a classification of the warrants as equity rather than a liability.

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 in accordance with 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, 2012, 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.

Due to no full-time accounting personnel on staff, there is a material weakness in the overall presentation and disclosure control for the annual report and the financial statements to be in accordance with Generally Acceptable Accounting Principles.

In March 2013, the Company’s Chief Financial Officer resigned and this created a further lack of segregation of duties which represents a material weakness. The Company has hired a private contractor to perform the accounting tasks until a replacement can be located. The prior Chief Financial Officer has also agreed to review all transactions and reports until a replacement is located. The Company will continue to review our disclosures controls and procedures and internal control over financial reporting and make modifications from time to time when 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 due to the small size of the Company.

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	49	Chief Executive Officer and Director
Robert O. Knutson	77	Director and Secretary
Robert Van Den Berg	78	Director
Grant Lynch	59	Director
Tim Wellborn	54	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.

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.

Grant Lynch is the Chairman of Talladega Superspeedway and Vice president of Strategic Projects for International Speedway Corporation (ISC). Grant came to Talladega in 1993 after 11 years with R.J. Reynolds Tobacco Co., where in his last post as senior manager of operations and public relations, he managed the Company's involvement in NASCAR Winston Cup.

Tim Wellborn is the past CEO and owner of Wellborn Forest Products, and is the owner of the Wellborn Muscle Car Museum which houses the world's largest Mopar classic car collection. Mr. Wellborn has served on the Talladega International Motorsports Hall of Fame Board of Directors since 1985. In 2008 Tim was presented with the prestigious Lee Iacocca Award.

On March 6, 2013, the Company announced the resignations of Jed Latkin and James Shields as Directors.

On March 20, 2013, the Company announced the resignation of Timothy C. Kling as its Chief Financial Officer.

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, 2012, 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, 2011 and 2012.

SUMMARY COMPENSATION TABLE

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

John Silseth Chief Executive Officer	2012	$	167,932		0
	2011	$	126,750		2,500,000
Terry Nesbitt, President, Viper Motorcycle Co. Resigned June 30, 2011	2012	$	0		0
	2011	$	86,000		25,000
Timothy Kling Chief Financial Officer Effective July 1, 2011	2011	$	150,879		0
	2012	$	64,674		200,000

Jerome Posey Chief Financial Officer	2011	$	64,694		0
Through June 30, 2011

Options/SAR Grants

The Company does not have any employee stock options or grants outstanding.

Compensation of Directors

No compensation was paid by the Company to its directors for their services as a director during 2012.

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, 2012 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 Unless otherwise indicated, the address of each listed shareholder is 2458 West Tech Lane, Auburn, AL 36832.

Shareholder	Shares Owned Beneficially		Percent of Class

Title of Class – Common Stock
Robert O. Knutson		162,356		.3	%
John R. Silseth II		2,500,000		4.8	%
Robert Van Den Berg		252,356		.5	%
Grant Lynch		700,000		1.3	%
Tim Wellborn		250,000		.5	%
James Shield		1,000,000		1.9	%
Jed Latkin		0		.0	%
Timothy C. Kling		200,000		.4	%

All directors and officers		5,064,712		9.7	%
as a group (8 persons)

Beneficial Owner of more than 5%
Precious Capital LLC⁽¹⁾		9,694,128		18.6	%

(1)

These shares were all returned to the Company incident to the 2013 sale of assets in lieu of foreclosures.

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:

On April 24, 2012, the Company repaid Mr. Van Den Berg an $80,000 loan.

On April 24, 2012, Viper Motorcycle Company (“VMC”), as Borrower and being a wholly owned subsidiary of registrant Viper Powersports Inc., entered into a Loan and Security Agreement (the “Loan Agreement”) with Precious Capital LLC, of New York City, as Lender. The Loan Agreement provides funding through advances to VMC under a line of credit not to exceed $6,000,000, with interest on outstanding principal payable at an annual rate of 15% per annum. All outstanding principal of this loan and any accrued interest are due to Lender in full, thirty-six (36) months from the date of the Loan Agreement. The outstanding principal of this loan may be prepaid by VMC, in whole or in part, at any time.

Under the terms of the Loan Agreement, any further advances to VMC beyond the initial $2,500,000 shall be in the Lender’s sole and absolute discretion, and no advance may be requested by VMC after April 24, 2014. The loan terms also require that at no time shall the outstanding balance of this loan exceed a “Balancing Formula” as defined in the Loan Agreement, which formula approximates 60% of the values of certain defined tangible and intangible assets of VMC and the Company.

On March 5, 2013, the Company announced that since receiving this default notice, the Company and Precious Capital LLC have agreed on the following, which has been approved by the Board of Directors of Viper Powersports Inc.:

The Company shall convey to Precious Capital LLC, subject to a purchase and sale agreement now being prepared, all of its ownership interest in its Viper subsidiary;

Precious Capital LLC shall apply a discount of $2,900,000 to the face value of the loan instrument prior to the transfer,

Precious Capital LLC shall return to the Company all shares or other ownership interests in the Company conveyed to Precious Capital LLC in connection with the Loan;

Precious Capital LLC shall release any security interest it may have in any shares or other ownership interests in the Company that it may have in connection with the Loan;

Precious Capital LLC and Viper Powersports Inc. shall release each other from all obligations and liabilities in connection with the Loan;

Precious Capital LLC shall pay certain expenses for the Company to be agreed between Precious Capital LLC and Viper Powersports Inc.

The above transactions were completed on June 17, 2013

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 year ended December 31, 2011. The Company completed a competitive process to review the appointment of the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2012. As a result of this process on June 12, 2012, the Directors engaged Hein & Associates LLP for that role. The aggregate fees billed by Child, Van Wagoner & Bradshaw, PLLC and Hein & Associates LLP for such services are as follows:

	Fiscal 2012		Fiscal 2011
Audit and review fees	$	121,703	$	34,103
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 R. Silseth
		John R. Silseth - Chief Executive Officer

	Date:	December 6,, 2013

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:	December 6, 2013

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

	Date:	December 6, 2013

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

	Date:	December 6,, 2013

	By:	/s/ Grant Lynch
		Grant Lynch – Director

	Date:	December 6, 2013

	By:	/s/ Tim Wellborn
		Tim Wellborn – Director

	Date:	December 6, 2013

Viper Powersports Inc.

Consolidated Financial Statements

For the Years Ended

December 31, 2012 and 2011

Viper Powersports Inc.

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 and Stockholders

Viper Powersports, Inc.

We have audited the accompanying consolidated balance sheet of Viper Powersports, Inc. and subsidiaries (the “Company”) as of December 31, 2012, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 audit 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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, 2012, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

As discussed in Note 13 to the financial statements, subsequent to December 31, 2012, the Company has transferred two of its subsidiaries to a lender in settlement of the debt due to this lender. Substantially all of the Company’s operations are conducted by the subsidiaries that were transferred, and the transferred subsidiaries owned substantially all of the Company’s assets. This transaction has a significant effect on the Company’s statement of financial position and its ongoing operations. After the transfer, the Company has limited assets and operations and has re-entered the development stage.

The accompanying 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 losses from operations, its total liabilities exceed its total assets, and will have limited assets and operations after the change in the Company’s structure subsequent to year end (Note 13). This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Hein and Associates LLP

Hein & Associates LLP

Denver, Colorado

December 6, 2013

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors

Viper Powersports Inc.

Auburn, Alabama

We have audited the accompanying consolidated balance sheet of Viper Powersports Inc. (the Company) and subsidiaries as of December 31, 2011, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the year then ended. 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 audit.

We conducted our audit 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 audit 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 audit 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 audit provides 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, 2011 and the results of its operations and its cash flows for the year then ended, 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 consolidated financial statements, the Company has incurred losses from operations, has a liquidity problem, and requires additional funds for its operational activities. These factors raise substantial doubt that the Company will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Child, Van Wagoner & Bradshaw, PLLC

Child, Van Wagoner & Bradshaw, PLLC

Salt Lake City, Utah

April 16, 2012

F-2a

Viper Powersports Inc.

Consolidated Balance Sheets

	December 31, 2012			December 31, 2011
ASSETS
Current assets
Cash	$	94,686		$	27,896
Accounts receivable		29,493			8,803
Inventory and supplies		1,010,141			523,174
Prepaid expenses and other assets		1,324,824			101,602
Total current assets		2,459,144			661,475

Fixed assets:
Office and computer equipment		96,733			96,733
Manufacturing and development equipment		545,235			242,835
Vehicles		278,507			248,937
Leasehold improvements		63,363			63,363
Subtotal		983,838			651,868
Accumulated depreciation		(311,682	)		(140,715	)
Total fixed assets		672,156			511,153

Other assets:
Rental deposit and other		14,200			13,400
Deferred financing cost		2,035,767			0
Intangibles		362,904			0
Total other assets		2,412,871			13,400

Total assets	$	5,544,171		$	1,186,028

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	174,144		$	222,319
Accrued liabilities		158,208			205,091
Notes payable, less discount of $114,611		5,735,141			233,621
Notes payable – related party		212,000			175,111
Current portion of long-term liabilities		0			100,000
Total current liabilities		6,279,493			936,142

Long-term liabilities
Note payable		0			170,000
Total long-term liabilities		0			170,000

Total liabilities		6,279,493			1,106,142

Stockholders' equity (deficit)
Preferred stock; $0.001 par value; 20,000,000 shares authorized, 0 and 1,386,469 issued and outstanding, respectively		0			1,386
Common stock; $0.001 par value; 100,000,000 shares authorized, 52,182,637 and 28,692,252 issued and outstanding, respectively		52,183			28,692
Additional paid-in capital		46,084,232			40,812,394
Accumulated deficit		(46,871,737	)		(40,762,586	)

Total stockholders' equity (deficit)		(735,322	)		79,886

Total liabilities and stockholders' equity (deficit)	$	5,544,171		$	1,186,028

See notes to consolidated financial statements.

F-3

Viper Powersports Inc.

Consolidated Statements of Operations

	Year Ended December 31, 2012			Year Ended December 31, 2011

Revenues (net of returns)	$	611,797		$	165,209
Cost of revenues		660,165			165,538
Gross profit		(48,368	)		(329	)

Operating expenses
Research and development costs		331,936			69,585
Selling, general and administrative		3,093,497			3,136,316

Total operating expenses		3,425,433			3,281,703

Loss from operations		(3,473,801	)		(3,282,032	)

Other income (expense)
Interest expense		(1,222,772	)		(59,444	)
Accretion of debt discount		(474,977	)		(83,304	)
Beneficial conversion features		0			(227,419	)
Financing cost relating to debt discount		(747,886	)		(183,566	)
Inventory impairment		(189,724	)		0
Other income		9			2,905

Total other income (expense)		(2,635,350	)		(550,828	)

Deemed dividend of preferred stock		0			(338,508	)
Net loss attributed to common shareholders	$	(6,109,151	)	$	(4,171,368	)

Loss per common share – basic and diluted	$	(0.12	)	$	(0.19	)

Weighted average common shares outstanding – - basic and diluted		51,799,305			20,493,779

See notes to consolidated financial statements.

F-4

Viper Powersports Inc.

Consolidated Statements of Stockholders’ Equity (Deficit)

For the Period from January 1, 2011 to December 31, 2012

	Preferred Stock						Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares			Amount			Shares		Amount		Capital			Deficit			Equity (Deficit)
Balances at January 1, 2011		0			0			17,719,280		17,719		36,549,869			(36,591,218	)		(23,630	)
Common stock for cash and conversion of debt								5,978,000		5,978		730,415						736,393
Common stock for services								4,994,972		4,995		1,196,347						1,201,342
Preferred stock for cash and conversion of debt		1,386,469			1,386							1,038,465						1,039,851
Beneficial conversion features												258,799						258,799
Stock warrants issued with common shares												280,094						280,094
Stock warrants for services												179,443						179,443
Stock warrants issued with debt												240,454						240,454
Deemed preferred dividend												338,508			(338,508	)		0
Net loss for the year ended December 31, 2011															(3,832,860	)		(3,832,860	)
Balances at December 31, 2011		1,386,469		$	1,386			28,692,252	$	28,692	$	40,812,394		$	(40,762,586	)	$	79,886
Common stock for cash and conversion of debt								15,620,796		15,622		3,309,386						3,325,008
Common stock for services								2,670,333		2,670		1,028,078						1,030,748
Preferred stock converted to common stock		(1,386,469	)		(1,386	)		5,199,256		5,199		(3,813	)					0
Stock warrants for services												282,099						282,099
Stock warrants issued with debt												97,500						97,500
Stock warrants issued with debt conversion												97,500						97,500
Accretion of debt discount												461,088						461,088
Net loss for the year ended December 31, 2012															(6,109,151	)		(6,109,151	)
Balances at December 31, 2012		0		$	0			52,182,637	$	52,183	$	46,084,232		$	(46,871,737	)	$	(735,322	)

See notes consolidated financial statements.

F-5

Viper Powersports Inc.

Consolidated Statements of Cash Flows

	Year Ended December 31, 2012			Year Ended December 31, 2011
Cash flows from operating activities:
Net loss	$	(6,109,151	)	$	(3,832,860	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		223,063			46,158
Common stock and warrants issued for compensation and expenses		1,030,748			1,380,785
Amortization of debt discount and beneficial conversion feature		1,222,863			494,289
Impairment loss-inventory and fixed assets		174,000			75,802
Common stock issued to convert debt		0			75,000
Changes in operating assets and liabilities:
Increase in accounts receivable, net of bad debts		(20,690	)		(7,473	)
Increase in inventory and supplies, net of obsolescence		(660,967	)		(144,893	)
Increase in prepaids and other		(1,244,022	)		(110,992	)
Decrease (increase) in accounts payable		(10,514	)		89,807
Decrease in accrued liabilities		(26,797	)		(4,204	)
Net cash used in operating activities		(5,421,467	)		(1,938,581	)

Cash flows from investing activities:
Purchase of intellectual property		(415,000	)		0
Purchase of fixed assets		(331,968	)		(308,592	)
Net cash provided used in investing activities		(746,968	)		(308,592	)

Cash flows from financing activities:
Proceeds from sale of preferred stock		0			613,465
Proceeds from sale of common stock		525,000			892,871
Proceeds from note payable		5,477,641			690,000
Proceeds from note payable – related parties		556,000			202,000
Payments on note payable		(15,000	)		(59,000	)
Debt Discounts		(114,611	)		0
Payments for loan costs		86,194			(55,333	)
Payment on notes payable – related party		(280,000	)		(24,513	)
Net cash provided by (used in) financing activities		6,235,224			2,259,490

Net change in cash and cash equivalents		66,789			12,317
Cash, beginning of period		27,896			15,579
Cash, end of period	$	94,685		$	27,896

Supplemental Non-Cash Financing Activities and Cash Flow Information:
Common stock issued for debt and expenses	$	1,030,748		$	325,000
Preferred stock issued for debt	$	0		$	425,000
Stock warrants issued with short-term loans	$	0		$	75,000
Stock warrants as prepaid finder’s fee	$	0		$	100,000
Common Stock issued for conversion	$	3,066,586		$	0
Inventory transferred to fixed assets	$	0		$	168,108

See notes to consolidated financial statements.

F-6

Viper Powersports Inc.

Notes to Consolidated Financial Statements

1.	NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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.)

PMFR, Inc. was incorporated by us in April 2012 as a wholly-owned Minnesota corporation. It was organized for the acquisition of Precision Metal Fab Racing’s assets (Note 12). The subsidiary was formed to produce high quality chassis and suspension and other components and parts, many of which are CAD designed and CNC machined from high-grade billet aluminum stock.

The Company has started commercial marketing with production and commercial shipments of our motorcycles. The Company facility is located in Auburn, Alabama in a 63,000 sq ft plant which will allow us to grow based on our forecasted production schedule.

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 an accumulated deficit of $46,871,737 since inception, and currently has limited sales which raises substantial doubt about is ability to continue as a going concern. 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.

On April 24, 2012, Viper Motorcycle Company (“VMC”), as Borrower and being a wholly owned subsidiary of registrant Viper Powersports Inc., entered into a Loan and Security Agreement (the “Loan Agreement”) with Precious Capital LLC, of New York City, as Lender. On February 13, 2013, Precious Capital LLC issued a default notice related to Loan Agreement. On March 5, 2013, the Company and Precious Capital LLC have agreed to liquidate in lieu of foreclosure its VMC and PMFR subsidiaries. (Note 13) The above transactions were completed on June 17, 2013

The Company, with its remaining subsidiary Viper Performance, Inc. is restructuring itself to develop and market high-performance after-market accessories.

Principles of Consolidation – The consolidated financial statements include the accounts of Viper Powersports Inc. and its wholly-owned subsidiaries, Viper Motorcycle Company, PMFR Inc. 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 warrants, 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 51,799,305.

F-7

Viper Powersports Inc.

Notes to Consolidated Financial Statements

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

Cash and Cash Equivalents - Cash and cash equivalents consist of highly liquid investments, with original maturities of three months or less. From time to time, these cash accounts may exceed federally insured limits.

Accounts Receivable - Accounts Receivable are due in 90 days and no interest is charged on account balances. The Company reviews all receivable balances for risk of loss, and as of Dec 31, 2012 and Dec 31, 2011, there was no allowance for doubtful accounts.

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. For the year ended December 31, 2012, the Company has recorded an inventory impairment of approximately $174,000.

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, 2012 are as follows;

	VMC		PMFR		Total
Build components		374,498		0		374,498
Finished goods		362,854		262,789		625,643
		737,352		262,789		1,000,141
Less inventory reserve		10,000		0		10,000
		747,352		262,789		1,010,141

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. For the year ended December 31, 2012 the Company recorded depreciation expense of $223,063.

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. No impairment was recognized as of December 31, 2012 and 2011.

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:

The sales price is fixed or determinable;

Motorcycle products are delivered, which is upon shipment;

Title to products passes to the dealer, also upon shipment; and

Collection is reasonably assured.

Return Policy - The Company has an establish dealer network throughout the United States. All states have specific laws relating to motor vehicles sales to dealers and returns. These return laws vary from state to state and have to be reviewed on a state by state basis. The Company has not established a return allowance, as all vehicle sold to dealers have been sold at retail. In the event that any returns may happen, the Company must approval all returns when applicable within applicable state laws and as of December 31, 2012, there is no return allowance recorded

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. 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 31,2012			December 31, 2011
Beginning balance	$	31,832		$	28,996
Addition to Reserve		1,025			3,362
Warranty payments		(1,025	)		(496	)
Ending balance	$	31,832		$	31,832

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.

F-8

Viper Powersports Inc.

Notes to Consolidated Financial Statements

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

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, 2012 of approximately $36,000,000 begin to expire in 2022. Deferred tax assets of approximately $15,300,000 have been offset completely by a valuation allowance. There are no other significant components of deferred tax assets or liabilities.

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 Accounting Standard Codification Topic 505.50; Emerging Issues Task Force (“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 December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 will be applied retrospectively and is effective for annual and interim reporting periods beginning on or after January 1, 2013. The adoption of this ASU is not expected to have a material impact on the Company’s disclosures to the consolidated financial statements.

In October 1012, FASB issued ASU No. 2012-02, “Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.” This ASU simplifies the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill. ASU No. 2012-02 will be effective for annual and interim impairment tests performed after September 15, 2012. The adoption of this ASU is not expected to have a material impact on the Company’s disclosures to the consolidated financial statements.

No other recently issued pronouncements are expected to have a material impact on the Company’s financial reporting.

Reclassification:

Certain items for 2011 have been reclassified to conform to the 2012 presentation.

F-9

Viper Powersports Inc.

Notes to Consolidated Financial Statements

2.	EQUITY FINANCING AGREEMENTS

Following are all equity security transactions during the year ended December 31, 2012 involving sales not registered under the Securities Act of 1933:

Loan Transactions

2011

The Company entered into nine (9) 60-day loan agreements from January through December 31, 2011. The total of the loans amounted to $425,000. The loans carry interest rates ranging from 10% to 12%. Each agreement also required the Company to issue 650,000 warrants to purchase shares of common stock at $.50 per share. The relative fair value method was used to allocate the proceeds between the warrants and the loans. The resulting debt discounts were then accreted over the life of the loans. All of these loans were subsequently converted into Convertible Preferred Stock at which time the unamortized discount was expensed. There was no interest paid on the loans as they were immediately converted to the Convertible Preferred Stock upon receipt of payment. See Preferred Stock Transaction listed below.

On July 27, 2011, the Company entered into a two-year loan agreement with the Industrial Development Board of the City of Auburn, Alabama. The $200,000 loan was used to purchase new equipment. As of December 31, 2012 and 2011 the total outstanding balance was $200,000. The new equipment will be used as collateral for the loan agreement. The loan carries a 3.25% interest rate payable in quarterly payments. On July 27, 2012, the Industrial Development Board gave a six month extension on first payment. The Industrial Development Board issue a default notice in January 27, 2013 for lack of payment due. A payment of $100,000 was paid on March 7, 2013 to clear the default and the final payment was made on June 24, 2013 Interest paid during 2011 was $2,738 and $6,560 during 2012.

On September 19, 2011, the Company entered into a Convertible Promissory Note with Asher Enterprises, Inc. an independent third party, with a principal amount of $65,000. The term of the Note is nine months and the Note carries an 8% interest rate per annum, compounded annually. If the Note remains unpaid after one hundred and eighty (180) days from the Issue date, the holder has the option to convert the principal and accrued interest into shares of our Company stock at a conversion price equal to 58% of the “trading price” as described in the Note. In accordance with ASC 470-20-30, the calculated beneficial conversion feature is in excess of the value of the debt, therefore the beneficial conversion feature is equal to the debt and would be amortized over the life of the note These proceeds from this loan were used for both the purchase of inventory as well as Company operations. The Company accrued interest in the amount of $1,516 in 2011 and $1,084 in 2012. On March 15, 2012, the Company repaid the Convertible Promissory the principal amount of $65,000, accrued interest of $46,889 and prepayment option fees. Since the loan was paid-off before it reached it maturity, the remaining unamortized discount of $33,622 was fully expensed on the date of repayment

On October 2, 2011, the Company renegotiated a $200,000 short-term loan agreement with Venture Banks. The loan carries a 5.5% interest rate, calculated and payable monthly, with a balloon payment due October 2, 2012. The loan is collateralized by CD’s owned by David Palmund, an unrelated party, who has also filed a UCC lien on the Company’s assets. The loan was paid off on April 24, 2012. Interest paid in 2011 was $9,367 and $4,067 in 2012.

On November 21, 2011, the Viper Performance Company entered into a secured inventory financing agreement for $152,000 with two (2) shareholders. The loan carries a 12.0% annual interest rate, calculated and payable quarterly, with a balloon payment due June 2012. 500,000 warrants were issued to purchase common stock for $0.15 per share with the loan agreement as finance fees and resulted in a discount to the loan of $56,889. The loan is collateralized by inventory. The net loan value on 12/31/2011 was $95,111 and $152,000 on 12/31/2012 No interest was accrued in 2011 and $18,423 was expensed in 2012.

The Company entered into a non-interest bearing note with Mr Van Den Berg, a Director with the Company in April 2004 for $80,000. The total amounts due as of December 31, 2011 was $80,000. The note was paid in full on April 24, 2012.

In January 2011, Transactional Finance, LLC, as plaintiff, commenced a legal action against the Company, claiming that the Company owes the plaintiff $70,000 in principal relating to a Promissory Note executed by the Company in 2007. This note is non-interest bearing and no settlement has occurred in the action to date. The total balance outstanding as of December 31, 2012 and 2011 is $70,000

F-10

Viper Powersports Inc.

Notes to Consolidated Financial Statements

2.	EQUITY FINANCING AGREEMENTS (cont.)

2012

The Company entered into various 180-day loan agreements for $100,000 each from January 1, 2012 through March 31, 2012 totaling $200,000. These loans are convertible at a conversion price of $.15 per share and carry a 12.0% interest rate. Each agreement also required the Company to issue 650,000 warrants to purchase the applicable number of shares of common stock at $.15 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 a debt discount of $97,500, which is then accreted over the life of the loans. Any remaining unamortized debt discount at the time of conversion has been accreted as an expense. Interest expenses of $4,031was expensed and paid during 2012. The stock price on the date of issuance ranged between $.22 and $.25 per share and resulted in a beneficial conversion of approximately $161,000 which fully expensed upon the conversion of the notes. These loans were converted in April 2012 in exchange for approximately 2,000,000 shares of common stock

On April 24, 2012, Viper Motorcycle Company (“VMC”), as Borrower and being a wholly owned subsidiary of registrant Viper Powersports Inc., entered into a Loan and Security Agreement (the “Loan Agreement”) with Precious Capital LLC, of New York City, as Lender. The Loan Agreement provides funding through advances to VMC under a line of credit not to exceed $6,000,000, with interest on outstanding principal payable at an annual rate of 15% per annum. All outstanding principal of this loan and any accrued interest are due to Lender in full, thirty-six (36) months from the date of the Loan Agreement. The outstanding principal of this loan may be prepaid by VMC, in whole or in part, at any time.

Upon closing this loan, VMC received an initial loan advance of $2,500,000. The Loan Agreement required the funds from this initial advance to be used by VMC as follows: payment of outstanding debt of $280,000 including $80,000 owed to a director of the Company; payment of $640,000 to acquire the assets of Precision Metal Fab Racing (Note 12), a manufacturer and marketer of high performance motorcycle components based in suburban Minneapolis; prepaid payment of loan interest to the Lender of $375,000; payment of $330,000 to complete acquiring engine development IP technology from Ilmor; payment not to exceed $450,000 for manufacturing equipment and tooling; payment of $180,000 for loan brokerage commissions; payment not to exceed $128,000 for motorcycle components inventory and other immediate operational expenditures; and the balance for miscellaneous permitted expenditures including payment of professional and other expenses of VMC and the Lender related to this loan transaction and its closing.

As an inducement to the Lender to make this loan to VMC, the Company issued a total of 9,694,128 unregistered shares of its common stock to the Lender, which common shares were offered and sold by the Company in reliance upon the exemption from registration set forth in Section 4(2) of the Securities Act of 1933, as amended. The value of these shares on date of issuance was $.27 per share resulting in a total cost of $2,617,415, whic was capitalized to deferred financing costs and will be amortized on a straight-line basis over the life of the loan as additional interest.

As of December 31, 2012, the outstanding balance on the loan was $5,203,053 with $248,199 in accrued interest.

F-11

Viper Powersports Inc.

Notes to Consolidated Financial Statements

2.	EQUITY FINANCING AGREEMENTS (cont.)

The Company shall convey to Precious Capital LLC, subject to a purchase and sale agreement now being prepared, all of its ownership interest in its Viper subsidiary;

Precious Capital LLC shall apply a discount of $2,900,000 to the face value of the loan instrument prior to the transfer,

Precious Capital LLC shall return to the Company all shares or other ownership interests in the Company conveyed to Precious Capital LLC in connection with the Loan;

Precious Capital LLC shall release any security interest it may have in any shares or other ownership interests in the Company that it may have in connection with the Loan;

Precious Capital LLC and Viper Powersports Inc. shall release each other from all obligations and liabilities in connection with the Loan;

Precious Capital LLC shall pay certain expenses for the Company to be agreed between Precious Capital LLC and Viper Powersports Inc.

(See note 13)

On December 1, 2012, the Company entered into a Convertible Promissory Note with Asher Enterprises, Inc. with a principal amount of $128,500. The term of the Note is nine months and the Note carries an 8% interest rate per annum, compounded annually. If the Note remains unpaid after one hundred and eighty (180) days from the Issue date, the holder has the option to convert the principal and accrued interest into shares of our Company stock at a conversion price equal to 58% of the “trading price” as described in the Note. These proceeds from this loan were used for both the purchase of inventory as well as Company operations. In accordance with ASC 470-20-30, the calculated beneficial conversion feature is in excess of the value of the debt, therefore the beneficial conversion feature is equal to the debt and would be amortized over the life of the note. As of December 31, 2012, the Company accrued $856 in interest related to this loan and the net loan value as of December 31, 2012 is $13,889.

Total interest for all debt instruments paid as of December 31, 2012 and 2011 were $59,444 and $952,555

Total Maturity for Debt Outstanding as of December 31, 2012:

	Total
December 31, 2013	$	5.947.141
Total Debt	$	5.947.141

F-12

Viper Powersports Inc.

Notes to Consolidated Financial Statements

2.	EQUITY FINANCING AGREEMENTS (cont.)

Common Stock Transactions

2011

During the period of January through March, 2011, the Company issued to nine (9) shareholders, 908,000 shares of common stock under $.50 private placements and 688,000 warrants to purchase common stock at prices ranging from $1.00 to $0.50 per share for $454,000 in cash. The Company performed Black-Scholes valuations for each transaction, with an allocation 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. See Note 4 for valuation of warrants issued.

During the period of January through March, 2011, the Company issued to three (3) shareholders, 4,134 shares of common stock. The stock prices were used to value the stock issued for services on each relevant date.

On March 31, 2011, the Company issued to eight (8) warrant holders, 337,500 warrants to purchase common stock at prices ranging from $2.00 to $0.50 per share for services performed. The Company performed a Black-Scholes valuation for each transaction, a warrant allocation of the proceeds applied to the warrants. (Note 4)

During the period of April through June, 2011, the Company issued to three (3) shareholders, 170,000 shares of common stock under $.50 private placements and 170,000 warrants issued to purchase common stock for $0.50 per share for $85,170 in cash. The Company performed Black-Scholes valuations for each transaction, with an allocation 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. (Note 4)

During the period of April through June, 2011, the Company issued to four (4) shareholders, 280,000 shares of common stock. The stock prices were used to value the stock issued for services, on each relevant date.

During the period of July through September, 2011, the Company issued to two (2) shareholders, 300,000 shares of common stock under $.25 private placements for $75,000 in cash.

During the period of July through September, 2011, the Company issued to nine (9) shareholders, 3,855,000 shares of common stock for services. The value used was the market closing price on each applicable date.

During the period of October through December, 2011, the Company issued to twelve shareholders, 855,858 shares of common stock for services. The value used was the market closing price on each applicable date.

During the period of October through December, 2011, the Company issued to ten (10) shareholders, 3,500,000 shares of common stock under $.15 private placements along with 168,840 warrants to purchase common stock at prices ranging from $1.25 to $0.40 per share for $525,000 in cash.

2012

F-13

Viper Powersports Inc.

Notes to Consolidated Financial Statements

2.	EQUITY FINANCING AGREEMENTS (cont.)

Preferred Stock Transactions

2011

During the period of April through June, 2011, the Company issued to 22 shareholders, 1,353,135 shares of preferred stock under $.75 private placements and 750,000 warrants issued to purchase common stock for $0.50 per share for $589,852 in cash and $425,000 of converted loans. The Company performed Black-Scholes valuations for each transaction, with an allocation of the proceeds applied to the warrants. The difference between the warrant allocation and the proceeds was allocated to the shares of preferred stock issued.

During the period of July through September, 2011, the Company issued one (1) shareholder, 33,334 shares of preferred stock under $.75 private placements and 50,000 issued warrants to purchase common stock for $0.50 per share for $50,000 in cash. The Company performed Black-Scholes valuations for the transaction, with an allocation of the proceeds applied to the warrants. The difference between the warrant allocation and the proceeds was allocated to the shares of preferred stock issued.

Warrants for Services

2011

There were no warrant transactions for services in 2011.

2012

During the three months ended March 31, 2012, the Company issued 100,000 warrants for shares of common stock for $27,971 of services recorded as an expense in general and administration. The warrants held terms of 10 years with an exercise price are $0.50. The Company valued the warrants issued using the Black-Scholes model.

During the three months period ended June 30, 2012, the Company issued 1,359,550 warrants for shares of common stock for $313,133 of services recorded as an expense in general and administration. 650,000 of the warrants held terms of three years with an exercise price are $0.15. 70,000 of the warrants held terms of ten years with an exercise price are $0.50. 639,550 of the warrants held terms of ten years with an exercise price are $0.30. The Company valued the warrants issued using the Black-Scholes model.

3.	RELATED PARTY TRANSACTIONS

On April 24, 2012, the Company repaid Mr. Van Den Berg, a current Director, an $80,000 loan. The loan is an non-interest bearing note, dated April 2004 and was carried on the Company’s 12/31/2011 Balance Sheet at $80,000.

On April 24, 2012, Viper Motorcycle Company (“VMC”), as Borrower and being a wholly owned subsidiary of registrant Viper Powersports Inc., entered into a Loan and Security Agreement (the “Loan Agreement”) with Precious Capital LLC, of New York City, as Lender. The Loan Agreement provides funding through advances to VMC under a line of credit not to exceed $6,000,000, with interest on outstanding principal payable at an annual rate of 15% per annum. All outstanding principal of this loan and any accrued interest are due to Lender in full, thirty-six (36) months from the date of the Loan Agreement. The outstanding principal of this loan may be prepaid by VMC, in whole or in part, at any time. (Note 2)

F-14

Viper Powersports Inc.

Notes to Consolidated Financial Statements

4.	COMMON STOCK WARRANTS AND OPTIONS

Warrants – The Company has warrants outstanding for the purchase of a total of 8,883,863 shares of our common stock, all of which are exercisable anytime until their respective expiration dates. The Company performed Black-Scholes valuations for the transaction when issued, with an allocation of the proceeds applied to the warrants.

Warrants to Purchase		Common Share Strike Price		Term		Expiration Date
	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
	100,000	$	0.50		3 year	March 2014
	10,000	$	2.00		5 year	November 2014
	500,000	$	0.15		3 year	December 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
	1,330,000	$	0.15		3 year	January 2015 to April 2015
	1,538,000	$	0.50		5 year	January 2016 to December 2016
	320,000	$	1.00		5 year	January 2016 to December 2016
	37,500	$	2.00		5 year	January 2016 to December 2016
	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
	42,000	$	0.40		10 year	December 2021
	18,000	$	0.50		10 year	December 2021
	26,240	$	0.75		10 year	December 2021
	36,000	$	1.00		10 year	December 2021
	46,600	$	1.25		10 year	December 2021
	170,000	$	0.50		10 year	January 2022 to April 2022
	639,550	$	0.30		10 year	May 2022

The following is a summary of the Company’s stock warrants outstanding as of December 30, 2012.

Warrants outstanding	2012		2011
Range of exercise price		$0.15 to $4.00		$0.15 to $4.00
Number warrants outstanding		8,883,863		6,775,563
Weighted average remaining contractual life (in years)		4.25 years		4.59 years
Weighted average exercise price, warrants outstanding		$0.63		$0.76
Term		Three to ten years		Three to ten years
Volatility		213% to 250%		213% to 250%
Dividend		0.00%		0.00%

Warrants exercisable
Number warrants exercisable		8,883,863		6,775,563
Weighted average exercise price, warrants exercisable		$0.63		$0.76

Stock Options – There are no outstanding options.

COMMON STOCK WARRANTS AND OPTIONS
	Options					Warrants
	12/31/2012		12/31/2011			12/31/2012			12/31/2011
Beg Bal		0		31,250			6,775,563			4,142,733

Issued		0		0			2,139,550			2,632,830
Exercised		0		0			0			0
Cancelled		0		(31,250	)		(31,250	)		0

End Bal		0		0			8,883,863			6,775,563

Exercisable		0		0			8,883,863			6,775,563

F-15

Viper Powersports Inc.

Notes to Consolidated Financial Statements

5.	LEASING ACTIVITIES

On July 27, 2011, the Company and Industrial Development Board of the City of Auburn, Alabama renegotiated its operating lease for the Auburn, Alabama facility. The term of the lease is for one hundred and twenty (120) months with a starting date of November 1, 2011. Total operating lease payments for 2012 was $130,143. Lease payments for 2013 are $200,784. The lease payment, starting in November 2013 will be recalculated based on the City of Auburn’s cost of debt service.

Minimum lease payments are as follows:

For the years ending December 31,	Operating Lease
2013	$	200,784
2014		200,784
2015		200,784
2016		200,784
2017		200,784

Total	$	1,003,920

6.	SHAREHOLDERS’ EQUITY

Preferred Stock

The Company has authorized 20,000,000 shares of preferred stock with par value of $.001 per share.

2011

During 2011, the Company issued to 23 shareholders, 1,386,468 shares of preferred stock under $.75 private placements and 800,000 warrants issued to purchase common stock for $0.50 per share for $589,852 in cash and $475,000 of converted loans. The Company performed Black-Scholes valuations for each transaction, with an allocation of the proceeds applied to the warrants. The difference between the warrant allocation and the proceeds was allocated to the shares of preferred stock issued. There was 1,386,468 Preferred Shares outstanding on December 31, 2011.

2012

During the year 2012, all 1,386,468 Preferred Shares were converted in to Common Shares at a rate of $3.75 per share which resulted in the issuance of 5,199,256 common shares upon this conversion. There were no Preferred Shares outstanding on December 31, 2012.

Common Stock

2011

The Company had stock sales to accredited investors during fiscal 2011 of 3,500,000 common shares for total proceeds of $525,000 in cash, 1,378,000 common shares for debt conversion value of $614,170 and 4,914,662 common shares exchange for services valued at $2,136,583.

2012

The Company had stock sales to accredited investors during fiscal 2012 of 3,842,001 common shares for total proceeds of $790,140 in cash, 3,681,688 common shares for debt conversion value of $778,550 and 9,694,128 common shares as an inducement to the resulting in a total deferred financing cost of $2,617,415.

7.	Fair Value of Financial Instruments

The Company's financial instruments consist primarily of cash and cash equivalents, trade receivables, trade payables, debt. Under U.S. GAAP certain of these items are required to be recorded in the financial statements at fair value, while others are required to be recorded at historical cost.

Cash and Cash Equivalents, Cash, Accounts Receivable, Accounts Payable – With the exception of certain money-market investments, these items are recorded in the financial statements at historical cost. The historical cost basis for these amounts is estimated to approximate their respective fair values due to the short maturity of these instruments.

Debt – Debt is generally recorded in the financial statements at historical cost. The carrying values of debt are estimated based upon rates currently available for debt with similar terms and maturities.

F-16

Viper Powersports Inc.

Notes to Consolidated Financial Statements

8.	Fair Value Measurements

Certain assets and liabilities are recorded at fair value in the financial statements; some of these are measured on a recurring basis while others are measured on a non-recurring basis. Assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. In determining fair value of assets and liabilities, the Company uses various valuation techniques. The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.

The Company assesses the inputs used to measure fair value using a three-tier hierarchy. The hierarchy indicates the extent to which inputs used in measuring fair value are observable in the market.

Level 1 inputs include quoted prices for identical instruments and are the most observable.

Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves.

Level 3 inputs are not observable in the market and include management's judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the following tables.

The company had no assets or liabilities recorded at fair value as of December 31, 2012

9.	BUSINESS SEGMENTS

The Company has reviewed ASC Topic 280 and determined that it meets the aggregation criteria outlined since the Company’s segments have similar (1) economic characteristics, (2) product and services, (3) production processes, (4) customers, (5) distribution channels, and (6) regulatory environments. Therefore, the Company reports as a single reportable business segment.

10. LEGAL

F-17

Viper Powersports Inc.

Notes to Consolidated Financial Statements

11. 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, 2012 of approximately $36,000,000 begin to expire in 2022. Deferred tax assets of approximately $15,300,000 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;

	2012			2011
Income Tax Benefit at effective federal statutory rate of 35%	$	(2,023,233	)	$	(1,341,501	)
State income taxes (benefit)		(462,453	)		(375,620	)
Non-deductible impairment losses, accretion and financing expenses paid for with stock and warrants		1,066,686			239,636
Change in valuation allowance		1,419,000			1,477,485
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, 2012, the Company recognized no interest or penalties. The Company had no accruals for interest and penalties at December 31, 2012 or 2011. Open years subject to investigation of the Company’s federal income tax returns extend from 2008 to 2012.

12 SUBSIDIARY PURCHASE

On April 24, 2012, the Company established a subsidiary, PMFR, Inc. (“PMFR”). The subsidiary then purchased assets from Precision Metal Fab Racing, a sole proprietor for $640,000 in cash. The Company made the acquisition to expand into other high performance and custom equipment within the motorcycle industry. The acquisition met the definition of the purchase of a business and as such the purchase allocation of the acquisition was recorded as follows

Fixed assets (estimated life of 5 years)	$	300,000
Intangible (customer list) (estimated useful life of 5 years)		85,000
Inventory		215,000
Total purchases	$	600,000

Finder’s fee		40,000
Total purchase price	$	640,000

As part of the purchase price allocation, separately identifiable assets acquired consisted of customer lists. The Company utilized ASC 350-30-35, Generally Intangibles Other than Goodwill, to determine the expected useful life of these assets, which was estimated at 5 years. The values of the purchase allocation were the estimated fair value of the assets as the time of the purchase.

F-18

Viper Powersports Inc.

Notes to Consolidated Financial Statements

12 SUBSIDIARY PURCHASE (cont.)

VIPER POWERSPORTS INC

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2011

	Viper Powersports Inc			Precision Metal Fab Racing			Pro Forma Adjustments				Viper Powersports Inc. Pro forma
	(Historical)			(Historical)

Revenue	$	165,209		$	667,098		$	0			$	832,307
Cost of Revenue		165,538			569,580			0				735,118
Gross Profit		(329	)		97,518			0				97,189
Operating Expense:		(3,281,703	)		(72,030	)		(40,000	)			(3,393,733	)
Income (Loss) from Operations		(3,282,032	)		25,488			(40,000	)			(3,296,544	)

Other Income (Expense):
Total other income (expense)		(550,828	)		0			0				(550,828	)

Net Income (Loss)		(3,832,860	)		25,488			(40,000	)	B		(3,847,372	)
Deemed dividend of preferred stock		(338,508	)		0			0				(338,508	)
Net Income (Loss) attributed to common sharesholders	$	(4,171,368	)	$	25,488		$	(40,000	)		$	(4,185,880	)

F-19

Viper Powersports Inc.

Notes to Consolidated Financial Statements

12 SUBSIDIARY PURCHASE (cont.)

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE TWELVE MONTHS ENDED December 31, 2012

	Viper Powersports Inc			Precision Metal Fab Racing			Pro Forma Adjustments			Viper Powersports Inc. Pro forma
	(Historical)			(Historical)

Revenue	$	611,797		$	195,978		$	0		$	807,775
Cost of Revenue		660,165			138,650			0			798,815
Gross Profit		(48,368	)		57,328			0			8,960
Operating Expense:		(3,424,433	)		(14,613	)		(40,000	)		(3,479,046	)
Income (Loss) from Operations		(3,472,801	)		42,715			(40,000	)		(3,470,086	)
Other Income (Expense):		(2,635,352	)		0			0			(2,635,352	)
Total other income (expense)		(2,635,352	)		0			0			(2,635,352	)
Net Income (Loss) attributed to common sharesholders	$	(6,108,153	)	$	42,715		$	(40,000	)	$	(6,105,438	)

F-20

Viper Powersports Inc.

Notes to Consolidated Financial Statements

13. SUBSEQUENT EVENTS

The Company shall convey to Precious Capital LLC, subject to a purchase and sale agreement now being prepared, all of its ownership interest in its Viper subsidiary;

Precious Capital LLC shall apply a discount of $2,900,000 to the face value of the loan instrument prior to the transfer,

Precious Capital LLC shall return to the Company all shares or other ownership interests in the Company conveyed to Precious Capital LLC in connection with the Loan;

Precious Capital LLC shall release any security interest it may have in any shares or other ownership interests in the Company that it may have in connection with the Loan;

Precious Capital LLC and Viper Powersports Inc. shall release each other from all obligations and liabilities in connection with the Loan;

Precious Capital LLC shall pay certain expenses for the Company to be agreed between Precious Capital LLC and Viper Powersports Inc.

As a result, the Company has become a development stage, at the date of these agreements. The carrying amounts of the assets and liabilities transferred may not fully represent realizable or settlement values.

F-21

Viper Powersports Inc.

Notes to Consolidated Financial Statements

13. SUBSEQUENT EVENTS (cont.)

The assets, liabilities and stockholder equity (deficit) as on December 31, 2012 were as follows (Unaudited):

Pro-Forma Combined Statement of Assets, Liabilities and Stockholders’ Deficit December 31, 2013
	Consolidated			Transferred Assets			Remaining Assets
ASSETS
Current assets
Cash		94,686			94,067			619
Accounts receivable		29,493			29,493			0
Inventory and supplies		1,010,141			910,141			100,000
Prepaid expenses and other assets		1,324,824			1,324,824			0
Total current assets		2,459,144			2,358,525			100,619

Fixed assets:
Office and computer equipment		96,733			96,733			0
Manufacturing and development equipment		545,235			545,235			0
Vehicles		278,507			278,507			0
Leasehold improvements		63,363			63,363			0
Subtotal		983,838			983,838			0
Accumulated depreciation		(311,682	)		(311,682	)		0
Total fixed assets		672,156			672,156			0

Other assets:
Rental deposit and other		14,200			14,200			0
Deferred financing cost *		2,035,767			2,035,767			0
Intangibles		362,904			362,904			0
Total other assets		2,412,871			2,412,871			0

Total assets		5,544,171			5,443,552			100,619

LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
Current liabilities
Accounts payable		174,144			129,719			44,425
Accrued liabilities		158,208			154,312			3,896
Notes payable, less discount of $114,611		5,735,141			5,721,252			13,889
Notes payable – related party		212,000			60,000			152,000
Total current liabilities		6,279,493			6,065,283			214,210

Long-term liabilities
Note payable		0			0			0
Total long-term liabilities		0			0			0

Total liabilities		6,279,493			6,065,283			214,210

Stockholders' deficit
Common stock		52,183			0			52,183
Additional paid in capital		46,084,232			0			46,084,232
Accumulated deficit*		(46,871,737	)		(621,731	)		(46,250,006	)

Total stockholders' deficit		(735,322	)		(621,731	)		(113,591	)

Total liabilities and stockholders' deficit		5,544,171			5,443,552			100,619

The pro forma is intended to reflect the Company going forward. Debt issuance costs have been adjusted to zero to reflect the result of the settlement.

On February 21, 2013 The Industrial Development Board of the City of Auburn declared a default on the Promissory Note between Viper Motorcycle Company and the Board dated July 27, 2011. The Board has demanded the removal of the equipment collateral assigned to the Note. The Note became due and payable on May 17, 2013 and was paid off on June 24, 2013.

F-22

INDEX TO EXHIBITS

Form 10-K for Viper Powersports Inc.

Fiscal Year Ended December 31, 2012

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
10.1		Loan and Security Agreement dated April 24, 2012
10.3 +		Financing Floor Plan Vendor 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
101.INS		XBRL Instance Document
101.SCH		XBRL Schema Document
101.CAL		XBRL Calculation Linkbase Document
101.DEF		Definition Linkbase Document
101.LAB		Label Linkbase Document
101.PRE		Presentation Linkbase Document

+ 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, 2012

Attached files

VIPER POWERSPORTS INC Reports

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