10-Q/A 1 atc10qamended123108.txt CYCLE COUNTRY FORM 10-Q/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (Mark one) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2008 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 001-31715 Cycle Country Accessories Corp. --------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Nevada 42-1523809 --------------------------------- ------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1701 38th Ave W, Spencer, Iowa 51301 --------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (712) 262-4191 --------------------------------------------------------------------- (Registrant's telephone number, including Area Code) --------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer" and "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] The number of shares of the registrant's common stock, par value $0.0001 per share, outstanding as of December 31, 2008 was 6,022,307 and there were 349 stockholders of record. EXPLANATORY NOTE: This amended quarterly report is being filed in order to: (a) correct two line items that were mislabeled in the "Liabilities and Stockholders' Equity" section of our balance sheet, (b) report that maturity on the Company's Line of Credit has been extended to June 1, 2009 and (c) submit the quarterly report on Form 10-Q using the scaled disclosure requirements available for Smaller Reporting Companies. Other than as set forth above, the information contained in this Form 10-Q/A has not been updated to reflect events and circumstances occurring since its original filing. Such matters have been or will be addressed, as necessary, in reports filed with the Commission (other than this amended report) subsequent to the date of the original filing of our quarterly report. Cycle Country Accessories Corp. Index to Form 10-Q/A Part I Financial Information Page ---- Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheet - December 31, 2008.......2 Condensed Consolidated Statements of Income - Three Months Ended December 31, 2008 and 2007...............................3 Condensed Consolidated Statements of Cash Flows - three Months Ended December 31, 2008 and 2007..................5 Notes to Condensed Consolidated Financial Statements...........7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................13 Item 3. Quantitative and Qualitative Disclosures About Market Risk.....25 Item 4T. Controls and Procedures........................................25 Part II Other Information Item 1. Legal Proceedings..........................................26 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds............................................26 Item 3. Defaults Upon Senior Securities............................26 Item 4. Submission of Matters to a Vote of Security Holders........26 Item 5. Other Information..........................................26 Item 6. Exhibits ..................................................26 Signatures..........................................................27 Part I Financial Information Item 1. Financial Statements Cycle Country Accessories Corp. and Subsidiaries Condensed Consolidated Balance Sheet December 31, 2008 (Unaudited) Assets Current Assets: Cash and cash equivalents $ 206,510 Accounts receivable, net 2,524,378 Inventories 4,739,925 Income taxes receivable 20,741 Deferred income taxes 433,886 Prepaid expenses and other 106,679 -------------- Total current assets 8,032,119 -------------- Property, plant, and equipment, net 11,292,082 Intangible assets, net 201,999 Goodwill 4,890,146 Other assets 26,500 -------------- Total assets $ 24,442,846 ============== Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 180,030 Accrued interest payable 2,567 Accrued expenses 626,053 Notes payable - Line of Credit 750,000 Current portion of bank notes payable 823,437 Current portion of deferred gain 166,524 -------------- Total current liabilities 2,548,611 -------------- Long-Term Liabilities: Bank notes payable, less current portion 3,762,802 Deferred gain, less current portion 152,647 Deferred income taxes 2,558,002 -------------- Total liabilities 9,022,062 -------------- Stockholders' Equity: Preferred stock, $.0001 par value; 20,000,000 shares authorized; no shares issued or outstanding - Common stock, $.0001 par value; 100,000,000 shares authorized; 7,483,037 shares issued and outstanding 748 Additional paid-in capital 14,767,833 Retained earnings 3,803,839 -------------- 18,572,420 Treasury stock, at cost, 2,157,980 shares (3,151,636) -------------- Total stockholders' equity 15,420,784 -------------- Total liabilities and stockholders' equity $ 24,442,846 ============== See accompanying notes to the condensed consolidated financial statements. Page 2 Cycle Country Accessories Corp. and Subsidiaries Condensed Consolidated Statements of Income Three Months Ended December 31, 2008 2007 -------------- -------------- (Unaudited) (Unaudited) Revenues: Net sales $ 4,309,053 $ 4,978,194 Freight income 24,561 23,364 -------------- -------------- Total revenues 4,333,614 5,001,558 -------------- -------------- Cost of goods sold (2,917,578) (2,986,229) -------------- -------------- Gross profit 1,416,036 2,015,329 -------------- -------------- Selling, general, and administrative expenses (883,982) (1,025,251) -------------- -------------- Income from operations 532,054 990,078 -------------- -------------- Other Income (Expense): Interest expense (85,560) (89,283) Interest income 684 9,632 Gain on sale of assets 38,216 238,432 Miscellaneous (25) 1,791 -------------- -------------- Total other income (expense) (46,685) 160,572 -------------- -------------- Income before provision for income taxes 485,369 1,150,650 -------------- -------------- Provision for income taxes (103,263) (416,092) -------------- -------------- Net income 382,106 734,558 ============== ============== Weighted average shares of common stock outstanding: Basic 5,687,818 6,645,647 ============== ============== Diluted 5,687,818 6,645,647 ============== ============== Earnings per common share: Basic $ 0.07 $ 0.11 ============== ============== Diluted $ 0.07 $ 0.11 ============== ============== See accompanying notes to the condensed consolidated financial statements. Page 3 Cycle Country Accessories Corp. and Subsidiaries Condensed Consolidated Statements of Cash Flows Three Months Ended December 31, 2008 2007 -------------- -------------- (Unaudited) (Unaudited) Cash Flows from Operating Activities: Net income $ 382,106 $ 734,558 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 205,234 192,416 Amortization 1,475 1,431 Inventory reserve 9,000 9,000 Share-based Compensation 16,000 - Share-based Consulting 22,500 - Provision for doubtful accounts - 5,000 Gain on sale of equipment (23,236) (238,431) (Increase) decrease in assets: Accounts receivable, net 411,270 348,143 Inventories 348,763 (304,121) Taxes receivable (5,961) (29,533) Prepaid expenses and other 116,241 74,111 Increase (decrease) in liabilities: Accounts payable (397,249) 286,432 Deferred income taxes 109,224 - Accrued expenses (95,154) 30,388 Income taxes payable - 416,092 Accrued interest payable (1,304) (153) -------------- -------------- Net cash provided by operating activities 1,098,909 1,525,333 -------------- -------------- Cash Flows from Investing Activities: Purchase of equipment (59,343) (68,573) Purchase of intangible assets (4,295) - Proceeds from sale of equipment (7,000) 995 -------------- -------------- Net cash used in investing activities (70,638) (67,578) -------------- -------------- Cash Flows from Financing Activities: Payments on bank notes payable (196,338) (149,057) Bank Line of Credit (250,000) - Purchases of Treasury Stock (570,000) - -------------- -------------- Net cash used in financing activities (1,016,338) (149,057) -------------- -------------- Net increase in cash and cash equivalents 11,933 1,308,698 Cash and cash equivalents, beginning of period 194,577 454,848 -------------- -------------- Cash and cash equivalents, end of period $ 206,510 $ 1,763,546 ============== ============== See accompanying notes to the condensed consolidated financial statements. Page 4 Cycle Country Accessories Corp. and Subsidiaries Condensed Consolidated Statements of Cash Flows Three Months Ended December 31, 2008 2007 -------------- -------------- (Unaudited) (Unaudited) Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 86,864 $ 89,436 ============== ============== Income taxes $ - $ 29,533 ============== ============== Supplemental schedule of non-cash investing and financing activities: Acquisition of common stock from sale of property, plant, and equipment $ - $ 2,581,636 ============== ============== Issuance of common stock for payment of CEO bonus $ - $ 25,000 ============== ============== Issuance of stock and Options for payment of CEO $ 16,500 $ - ============== ============== Issuance of common stock for payment of consultant fees $ 22,500 $ 91,500 ============== ============== Issuance of common stock for payment of director fees $ - $ 11,000 ============== ============== See accompanying notes to the condensed consolidated financial statements. Page 5 Cycle Country Accessories Corp. and Subsidiaries Notes to Condensed Consolidated Financial Statements Three Months Ended December 31, 2008 and 2007 (Unaudited) 1. Basis of Presentation: The accompanying unaudited condensed consolidated financial statements for the three months ended December 31, 2008 and 2007 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-QSB. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for the periods presented. The results of operations for the interim periods ended December 31, 2008 and 2007 are not necessarily indicative of the results to be expected for the full year. These interim consolidated financial statements should be read in conjunction with the September 30, 2008 consolidated financial statements and related notes included in the Company's Annual Report on Form 10-KSB for the year ended September 30, 2008. 2. Inventories: Inventories are valued at the lower of cost or market. Cost is determined using the weighted average method. The major components of inventories at December 31, 2008 are summarized as follows: Raw materials $ 2,284,037 Work in progress 213,823 Finished goods 2,242,065 -------------- Total inventories $ 4,739,925 ============== 3. Goodwill: Goodwill represents the excess of the purchase price over the fair value of assets acquired. Goodwill arising from the Company's April 29, 2005 acquisition is not being amortized in accordance with Statement of Financial Accounting Standards No. 142 (SFAS No. 142), Goodwill and Other Intangible Assets. SFAS No. 142 requires the use of a non-amortization approach to account for purchased goodwill and certain intangibles. Under a non- amortization approach, goodwill and certain intangibles would not be amortized into results of operations, but instead would be reviewed for impairment at least annually and written down and charged to results of operations in the periods in which the recorded value of goodwill and certain intangibles are determined to be greater than their fair value. 4. Accrued Expenses: The major components of accrued expenses at December 31, 2008 are summarized as follows: Distributor rebate payable $ 41,449 Accrued salaries and related benefits 317,291 Accrued warranty expense 50,000 Accrued real estate tax 153,229 Royalties payable 9,061 Accrued director fees 7,500 Other 47,523 -------------- Total accrued expenses $ 626,053 ============== 5. Stock Redemption With Sale Of Property, Plant, and Equipment: On November 14, 2007, the company closed the transaction with its founder and his wife in which they purchased the company's manufacturing plant located in Milford, Iowa. In return, the company received all of the common equity owned by the founder and his wife, 1,410,730 shares. The acquired shares are being held as treasury stock. The value of the property was determined based upon an appraisal and discussions with two independent commercial realtors and the stock was valued using the stock's closing price on November 13, 2007. Additionally, on November 14, 2007, the company also entered into a lease agreement with its founder and his wife providing that the company will lease a majority of the Milford facility. The term of the lease is three years and the company has the option to renew the lease on the same terms and conditions for two additional terms of one year each. 6. Sale-Leaseback Transaction - Operating Lease: On November 14, 2007, the company entered into a sale-leaseback arrangement. Under the arrangement, the company sold its Milford facility land and buildings, along with certain other pieces of equipment, to its founder and his wife for 1,410,730 shares of the Company's common stock. The leaseback has been accounted for as an operating lease with a three year term. $485,695 of the total gain of $724,795 was initially deferred. As of December 31, 2008, $319,171 of the gain is left to be amortized to income in proportion to lease expense over the term of the lease. The required minimum lease payments are $185,104 per year for three years from the inception of the lease. 7. Stock Buyback Transaction: The company acquired 747,250 shares of its own stock at an average cost of $.72 per share price for a total cost of $570,000 in cash during the quarter ending December 31, 2008. 8. Earnings Per Share: Basic earnings per share ("EPS") is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted EPS is computed in a manner consistent with that of basic EPS while giving effect to the potential dilution that could occur if warrants to issue common stock were exercised. The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for the three months and nine months ended December31, 2008 and 2007: For the three months ended December 31, 2008 ----------------------------- Income Shares Per-share (numerator) (denominator) amount ------------------------------- Basic EPS Income available to common stockholders $ 382,106 5,687,818 $ 0.07 Effect of Dilutive Securities Warrants - - Diluted EPS Income available to common stockholders $ 382,106 5,687,818 $ 0.07 ========= ========= ======== For the three months ended Dec 31, 2007 ----------------------------- Income Shares Per-share (numerator) (denominator) amount ------------------------------- Basic EPS Income available to common stockholders $ 734,558 6,645,647 $ 0.11 Effect of Dilutive Securities Warrants - - Diluted EPS Income available to common stockholders $ 734,558 6,645,647 $ 0.11 ========= ========= ======== 9. Segment Information: Segment information has been presented on a basis consistent with how business activities are reported internally to management. Management solely evaluates operating profit by segment by direct costs of manufacturing its products without an allocation of indirect costs. In determining the total revenues by segment, freight income and sales discounts are not allocated to each of the segments for internal reporting purposes. The Company has four operating segments that assemble, manufacture, and sell a variety of products: ATV Accessories, Plastic Wheel Covers, Weekend Warrior, and Contract Manufacturing. ATV Accessories is engaged in the design, assembly, and sale of ATV accessories such as snowplow blades, lawnmowers, spreaders, sprayers, tillage equipment, winch mounts, utility boxes, and oil filters. Plastic Wheel Covers manufactures and sells injection-molded plastic wheel covers for vehicles such as golf cars, light-duty trailers, and lawn mowers. Weekend Warrior is engaged in the design, assembly, and sale of ATV and utility vehicle accessories that includes lawnmowers, spreaders, sprayers, tillage equipment, and a newly patented universal plow system. Contract Manufacturing is engaged in the design, manufacture and assembly of a wide array of parts, components, and other products for non-competing Original Equipment Manufacturers (OEM) and other businesses. The significant accounting policies of the operating segments are the same as those described in Note 1 to the Consolidated Financial Statements of the Company's Annual Report on Form 10-KSB for the year ended September 30, 2008. The following is a summary of certain financial information related to the four segments during the three months December 31, 2008 and 2007: ATV ACCESSORIES - Three Months Ended December 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec 31, Ended Dec 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Revenue $ 4,094,462 $ 4,224,679 $ (130,217) (3.08%) Cost of goods sold $ 1,925,186 $ 1,751,875 $ 173,311 9.89% Gross profit $ 2,169,276 $ 2,472,804 $ (303,527) (12.27%) Gross profit % 53.0% 58.5% (5.5%) PLASTIC WHEEL COVERS - Three Months Ended Dec 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec 31, Ended Dec 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Revenue $ 109,117 $ 420,687 $ (311,570) (74.0%) Cost of goods sold $ 39,649 $ 169,192 $ (129,543) (76.5%) Gross profit $ 69,468 $ 251,495 $ (182,027) (72.3%) Gross profit % 63.7% 59.8% 3.9% WEEKEND WARRIOR - Three Months Ended Dec 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec 31, Ended Dec 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Revenue $ 73,829 $ 80,068 $ (6,239) (7.79%) Cost of goods sold $ 60,388 $ 41,797 $ 18,591 44.5% Gross profit $ 13,441 $ 38,271 $ (24,830) (64.9%) Gross profit % 18.2% 47.8% (29.6%) CONTRACT MANUFACTURING - Three Months Ended Dec 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec 31, Ended Dec 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Revenue $ 296,599 $ 455,893 $(159,294) (34.9%) Cost of goods sold $ 192,613 $ 192,980 $ (367) (.2%) Gross profit $ 103,986 $ 262,913 $(158,927) (60.4%) Gross profit % 35.1% 57.7% (22.6%) The following is a summary of the Company's revenue in different geographic areas during the three months ended December 31, 2008 and 2007: GEOGRAPHIC REVENUE - Three Months Ended Dec 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec 31, Ended Dec 31, (Decrease) (Decrease) Country 2008 2007 $ % -------------------------------------------------------- United States $ 3,887,605 $ 4,540,560 $ (652,955) (14.3%) All Other Countries $ 446,009 $ 460,998 $ ( 14,989) ( 3.2%) As of December 31, 2008, all of the Company's long-lived assets are located in the United States of America. ATV Accessories sales to major customers which exceeded 10% of net revenues, accounted for approximately 30.4% and 15.0% of net revenue for three months ending December 31, 2008 and approximately 23.8% and 10.0% of revenue for three months ending December 31, 2007. Plastic Wheel Covers, Weekend Warrior, and Contract Manufacturing did not have sales to any individual customer greater than 10% of net revenues during the three months ended December 31, 2008 or 2007 10. Stock Based Compensation: During the quarter ended December 31, 2008, the Company adopted Statement on Financial Accounting Standards ("SFAS") No. 123(R), Share-Based Payment, which requires share-based payment transactions to be accounted for using a fair value based method and the recognition of the related expense in the results of operations. SFAS No. 123(R) allows companies to choose one of two transition methods: the modified prospective transition method or the modified retrospective transition method. The Company adopted SFAS No. 123(R) using the modified prospective method of transition which requires compensation expense related to share based payments to be recognized beginning on the adoption date over the requisite service period, generally the vesting period, and over the remaining service period for the unvested portion of awards granted prior. The June 2008 President's Executive Employment Agreement provides for the grant of 50,000 shares of stock in the Company, vesting over a three year period. At the end of the first and second full year of employment, the President shall become vested in and receive 16,666 shares of stock each year. At the completion of the President's third full year of employment, he shall become vested in and receive the final 16,668 shares of stock. Total compensation expense recognized during the three month period ended December 31, 2008 as $4,400 net of income tax benefit in the amount of $2,200. As of December 31, 2008, there was $61,875 of total unrecognized compensation cost related to the non-vested share-based compensation arrangement under the plan. The cost is expected to be recognized over a three year period. The President is further offered stock options to acquire an additional 500,000 shares of stock in the Corporation at the closing price on the date employment comenced, $1.68 per share, which option shall run for a period of 3 years. This option may be exercised by the President paying to the Corporation the exercise price multiplied by the number of shares he wishes to exercise at that time. At any time during the first 3 years of employment, this option may be exercised in full or in part. Any portion of this option which has not been exercised on the third anniversary of the commencement date of the Executive Employment Agreement will lapse and no longer be an obligation of the Corporation. Stock shall be restricted and contain the appropriate legend noting its restriction. Under the provisions of SFAS No. 123(R), stock-based compensation cost is estimated at the grant date based on the fair value of the award and compensation cost is recognized as an expense over the requisite service period of the award. The fair value of non-vested stock awards was determined by reference to the fair market value of the Company's common stock on the date of the grant. Consistent with the valuation method the Company used for disclosure-only purposes under the provisions of SFAS No. 123(R), Accounting for Stock-Based Compensation, the Company uses the lattice valuation model to estimate the fair value of option awards. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, forfeiture rates and expected terms. The following assumptions were utilized to estimate the fair value of the Company's stock option awards during the three-month periods ended December 31, 2008 and 2007: Three months ended December 31, 2008 2007 --------------- -------------- Expected stock price volatility 40% - Risk-free interest rate 3% - Expected life of options 3 yrs - Expected annual dividends 0% - The expected volatility rate was based on the historical volatility, for the last 3 years, of the Company's common stock. The expected life represents the average time options that vest are expected to be outstanding based on the vesting provisions and the Company's historical exercise, cancellation and expiration patterns. The risk-free rate was based on U.S. Treasury zero-coupon issues with a maturity approximating the expected life as of the week of the grant date. There was no annual dividend rate assumed as a cash dividend is not expected to be declared and paid in the foreseeable future. The Company updates these assumptions at least on an annual basis and on an interim basis if significant changes to the assumptions are warranted. With the adoption of SFAS No. 123(R), the Company recorded stock-based employee compensation expense related to stock options of approximately $6,200, net of a tax benefit in the amount of $2,900, and net of estimated forfeitures, for the three-month period ended December 31, 2008. The Company recognized the full amount of the stock- based employee compensation expense of its equity incentive plans in the consolidated statements of operations for the three-month period ended December 31, 2008 and did not capitalize any such costs in the condensed consolidated balance sheets other than in the general overhead pool for inventory costs. The weighted-average grant-date fair value per share of options granted during the three-month period ended December 31, 2008 was $0.219 per share. No options were granted for the three month period ended December 31, 2007. The following table lists stock option activity for the three-month period ended December 31, 2008: Outstanding at September 30, 2008 - $ - $ - Granted 500,000 $ 1.68 $ 840,000 $ - Exercised $ - $ - - Canceled - $ - $ - - Outstanding at December 31, 2008 500,000 $ 1.68 $ 840,000 $ - Options vested and exercisable at Dec. 31, 2008 500,000 $ 1.68 $ 840,000 $ - As of December 31, 2008, there was $47,125 of total compensation cost related to this stock option arrangement granted under the plan. The cost is expected to be recognized over a three year period. Prior to the adoption of SFAS No. 123(R), the company maintained an employment agreement with their former CEO which provides for $100,000 in restricted Company common stock with 25% issued upon the first day of employment and 25% issued each anniversary date for the next three years as an employment bonus. The value of the entire restricted stock award was determined by the closing price, $2 per share, on the Presidents first day of employment. As of December 31, 2008, there were no remaining compensation costs to be recognized under the plan due to his leaving the company. There is however 12,500 shares to be issued on September 18, 2009. Stock-based compensation expense related to stock options and restricted shares recorded in the Company's condensed consolidated statements of operations was allocated as follows: Three months ended December 31, 2008 2007 ---------------------------- Cost of Sales $ - $ - Selling, General and Administrative Expense $ 16,000 $ - Research and Development Expense $ - $ - ----------- ----------- ---------- ------ Stock-Based Compensation Expense before Income Tax $ 16,000 $ - Less: Income Tax Benefit $ 5,760 $ - ----------- ------------ Net Stock-Based Compensation Expense after Income Tax $ 10,240 $ - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This discussion relates to Cycle Country Accessories Corp. and its consolidated subsidiaries (the "Company") and should be read in conjunction with our consolidated financial statements as of September 30, 2008, and the year then ended, and Management's Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-KSB for the year ended September 30, 2008. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. The discussion also provides information about the financial results of the various segments of our business to provide a better understanding of how those segments and their results affect the financial condition and results of operations of the Company as a whole. To the extent that our analysis contains statements that are not of a historical nature, these statements are forward-looking statements, which involve risks and uncertainties. See "Special Note Regarding Forward-Looking Statements" included elsewhere in this filing. Critical Accounting Policies and Estimates The Company's discussion and analysis of its financial condition and results of operations are based upon its Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates the estimates including those related to bad debts and inventories. The Company bases its estimates on historical experiences and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The Company believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Consolidated Financial Statements: Accounts Receivable - Trade credit is generally extended to customers on a short-term basis. These receivables do not bear interest, although a finance charge may be applied to balances more than 30 days past due. Trade accounts receivable are carried on the books at their estimated collectible value. Individual trade accounts receivable are periodically evaluated for collectability based on past credit history and their current financial condition. Trade accounts receivable are charged against the allowance for doubtful accounts when such receivables are deemed to be uncollectible. Allowance for Doubtful Accounts - The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowance may be required. Inventories - The Company values its inventory at the lower of cost or market. Cost is determined using the weighted average cost method. Reserve for Inventory - The Company records valuation reserves on its inventory for estimated excess and obsolete inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future product demand and market conditions. If future product demand or market conditions are less favorable than those projected by management, additional inventory reserves may be required. Depreciation of Long-Lived Assets - The Company assigns useful lives for long-lived assets based on periodic studies of actual asset lives and the intended use for those assets. Any change in those assets lives would be reported in the statement of operations as soon as any change in estimate is determined. Goodwill and Other Intangibles - Goodwill represents the excess of the purchase price over the fair value of the assets acquired. The Company accounts for goodwill in accordance with Statement of Financial Accounting Standard (SFAS) no. 142, "Goodwill and Other Intangible Assets". SFAS No. 142 requires the use of a non- amortization approach to account for purchased goodwill and certain intangibles. Under the non-amortization approach, goodwill and certain intangibles are not amortized into results of operations, but instead are reviewed for impairment at least annually and written down and charged to results of operations in the periods in which the recorded value is determined to be greater than the fair value. The Company has reviewed the goodwill recorded at September 30, 2008 and found no impairment. Accrued Warranty Costs - The Company records a liability for the expected cost of warranty-related claims as its products are sold. The Company provides a one-year warranty on all of its products except the snowplow blade, which has a limited lifetime warranty. The amount of the warranty liability accrued reflects the Company's estimate of the expected future costs of honoring its obligations under the warranty plan. The estimate is based on historical experiences and known current events. If future estimates of expected costs were to be less favorable, an increase in the amount of the warranty liability accrued may be required. Accounting for Income Taxes - The Company is required to estimate income taxes in each of the jurisdictions in which it operates. This process involves estimating actual current tax exposure for the Company together with assessing temporary differences resulting from differing treatment of items, such as property, plant and equipment depreciation, for tax and accounting purposes. Actual income taxes could vary from these estimates due to future changes in income tax law or results from final tax exam reviews. At December 31, 2008, the Company assessed the need for a valuation allowance on its deferred tax assets. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based upon the historical operating profits and the near certainty regarding sufficient near term taxable income, management believes that there is no need to establish a valuation allowance. Should the Company determine that it would not be able to realize all or part of its net deferred tax assets in the future, a valuation allowance may be required. In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." FIN 48 prescribes a comprehensive model for how companies should recognize, measure, present and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under FIN 48, tax positions are recognized in the Company's financial statements as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with tax authorities assuming full knowledge of the position and all relevant facts. These amounts are subsequently reevaluated and changes are recognized as adjustments to current period tax expense. FIN 48 also revised disclosure requirements to include an annual tabular roll forward of unrecognized tax benefits. The Company adopted the provisions of FIN 48 on October 1, 2007. At December 31, 2008, no uncertain positions were identified. To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income taxes, such amounts would be accrued and classified as a component of income tax expense on the condensed consolidated statement of income. OVERALL RESULTS OF OPERATIONS - Three Months Ended December 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec. 31, Ended Dec. 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Revenue $ 4,333,614 $ 5,001,559 $ -667,945 (13.4%) Cost of goods sold $ 2,917,578 $ 2,986,229 $ 68,651 2.3% Gross profit $ 1,416,036 $ 2,015329 $ 599,293 (29.7%) Gross profit % 32.7% 40.3% (7.6%) The decrease in revenues for the three months ended December 31, 2008 was mainly attributable to our ATV accessories business segment, which had a decrease in sales of approximately 13% this quarter compared to the same quarter last year, as well as a decline in our Plastic Wheel Cover segment. The decrease in gross profit as a percentage of revenue was mainly attributable to an increase in raw material costs. The company experienced significant increases in the costs of raw steel and metal purchased parts. While the company implemented a significant price increase of its own, the full increase was not able to be realized within our two business segments that utilize steel as a raw material, ATV accessories and Contract Manufacturing. To remain competitive and maintain, or grow market share, the company was not able to pass on the full price increase to its distributors and customers. As the company continues to implement its business plan, Cycle Country is starting to become known for more than just snowplow blades. Our business plan places major emphasis on aggressively developing new products, new markets, and product innovations to vigorously grow revenues and reduce our seasonality. Three Months Three Months Increase Increase Ended Dec. 31, Ended Dec. 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Selling, general and administrative expenses $ 883,982 $ 1,025,251 $ (141,269) (13.8%) As a percentage of revenue, selling, general, and administrative expenses were 20.4% for the three months ended December 31, 2008 compared to 20.5% for the three months ended December 31, 2007. The significant changes in operating expenses for the first quarter of fiscal 2009 as compared to the first quarter of fiscal 2008 were; Increase Increase (Decrease) (Decrease) $ % Salaries $ (11,264) (4%) Advertising $ (84,480) (84.2%) Commissions $ (27,249) (66.2%) Warranty $ (3,874) (17.9%) Other professional fees $ 22,308 265.9% Lease expense $ 21,239 88% Salaries decreased for the three months ended December 31, 2008, as compared to the three months ended December 31, 2007. The decrease in commission expense was a result of the decrease in revenues during the first quarter of fiscal 2009 in the ATV Accessories business segment. Warranty expense increased for the three months ended December 31, 2008, as compared to the three months ended December 31, 2007. Other professional fees increased for the three months ended December 31, 2008, as compared to the three months ended December 31, 2007, due to additional consulting work related to the Company's Sarbanes-Oxley Act compliance initiatives. The increase in lease expense was due to the sale and subsequent leasing back of the Company's Milford facility, as described elsewhere in this filing. Three Months Three Months Increase Increase Ended Dec. 31, Ended Dec. 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Interest and miscellaneous income $ 684 $ 11,423 $ (10,793) (94.0%) Gain on sale of assets $ 38,216 $ 238,432 $ (200,216) (83.9%) Interest expense $ 85,560 $ 89,283 $ (3,723) (4.2%) The decrease in interest and miscellaneous income was primarily due to a decrease in interest income of approximately $8,900. The gain on sale of assets decrease of approximately $200,000 for the three months ended December 31, 2008 as compared to the three months ended December 31, 2007 was due to the Company having sold its Milford facility and certain other assets in the prior year. Interest expense decreased as the principal balance on the bank notes continues to decrease. Interest expense will decrease in the second quarter of fiscal 2009 as the principal balances continue to decrease under fixed rate notes going forward. Looking ahead to the second quarter of fiscal 2009, we project growth in revenues as new products, new markets, and effective marketing initiatives continue to be the focus of management and the entire Company. The company anticipates gross profits will be within the range of 25% to 30% of revenue as profitability will continue to be impacted by raw steel and other metal parts. Management has, and will, continue to seek out and implement production efficiencies and cost reduction initiatives wherever possible and will pass as much of the net input costs increases on to its customers as possible. Remaining competitive in the markets we are in and maintaining our strong market shares within those markets may hinder management's ability to pass on the full amount of our net input costs increases. We project selling, general and administrative expenses during the remainder of fiscal 2009 to be 20-25% of total revenue as we continue our focus on cost reduction initiatives, launching new products and maximizing the efficiencies the recently implemented new accounting and manufacturing software provides us, all while maintaining a consistent level of administrative support. BUSINESS SEGMENTS As more fully described in Note 9 to the Condensed Consolidated Financial Statements included elsewhere in this filing, the Company operates four reportable business segments: ATV Accessories, Plastic Wheel Covers, Weekend Warrior, and Contract Manufacturing. ATV accessories is vertically integrated and utilizes a two-step distribution method, we are vertically integrated in our Plastic Wheel Cover segment and utilize both direct and two-step distribution methods, Weekend Warrior utilizes a single-step distribution method, and our Contract Manufacturing segment deals directly with other OE manufacturers and businesses in various industries. ATV ACCESSORIES - Three Months Ended December 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec 31, Ended Dec 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Revenue $ 4,094,462 $ 4,224,679 $ (130,217) (3.08%) Cost of goods sold $ 1,925,186 $ 1,751,875 $ 173,311 9.89% Gross profit $ 2,169,276 $ 2,472,804 $ (303,527) (12.27%) Gross profit % 53.0% 58.5% (5.5%) The decrease in ATV Accessories revenue for the first quarter of fiscal 2009 reflects the continued growth of our blade sales but with some decline in sales of our parts categories compared to the prior year. There was a minor decrease in gross profit as a percentage of revenue, which was mainly attributable to an increase in raw material costs. The company experienced significant increases in the costs of raw steel and metal purchased parts. While the company implemented a significant price increase of its own, the full increase was not able to be realized within this business segment due to existing market conditions. To remain competitive and to maintain, or grow market share, the company was not able to pass on the full price increase to its distributors. Management has, and will, continue to seek out and implement production efficiencies and cost reduction initiatives wherever possible and will pass as much of the net input costs increases on to its customers as possible going forward. Remaining competitive in the ATV Accessory market and maintaining our strong market share within this market may hinder management's ability to pass on the full amount of our net input costs increases. PLASTIC WHEEL COVERS - Three Months Ended Dec 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec 31, Ended Dec 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Revenue $ 109,117 $ 420,687 $ (311,570) (74.0%) Cost of goods sold $ 39,649 $ 169,192 $ (129,543) (76.5%) Gross profit $ 69,468 $ 251,495 $ (182,027) (72.3%) Gross profit % 63.7% 59.8% 3.9% The decrease in Wheel Cover revenues can be attributed to a decrease in sales to OEMs. Management is also pursuing and evaluating new markets that our plastics division can produce parts for to further broaden and grow this business segments revenue. WEEKEND WARRIOR - Three Months Ended Dec 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec 31, Ended Dec 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Revenue $ 73,829 $ 80,068 $ (6,239) (7.79%) Cost of goods sold $ 60,388 $ 41,797 $ 18,591 44.5% Gross profit $ 13,441 $ 38,271 $ (24,830) (64.9%) Gross profit % 18.2% 47.8% (29.6%) The decrease in revenues was attributable to a decrease in sales to national retail customers. The decrease in gross profit is due to manufacturing variances generated by increased input costs and inventory adjustments. Management, under the direction of the new President, has totally revamped and revised the Weekend Warrior business model. Looking forward, management anticipates revenue to once again grow quarter over quarter as the revised business model is implemented during the next few fiscal quarters. CONTRACT MANUFACTURING - Three Months Ended Dec 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec 31, Ended Dec 31, (Decrease) (Decrease) 2008 2007 $ % -------------------------------------------------------- Revenue $ 296,599 $ 455,893 $(159,294) (34.9%) Cost of goods sold $ 192,613 $ 192,980 $ (367) (.2%) Gross profit $ 103,986 $ 262,913 $(158,927) (60.4%) Gross profit % 35.1% 57.7% (22.6%) The decrease in revenue was due to a decrease in business with current customers. With ample production capacity and unique fabrication and painting capabilities, management believes that increasing the fabrication of parts and the manufacture of products to other OE manufacturers and businesses will provide the company with a significant source of revenue in quarters traditionally slow for our main ATV Accessories business segment. Gross margin decreased as a percentage of revenue as significant increases in the costs of raw steel impacted the cost of materials for the quarter ended December 31, 2008. Management chose to honor the prices quoted to its customers in the early part of the fiscal quarter and then moved to repricing parts as raw steel costs failed to plateau or fall. Adjusting pricing to pass on the steel cost increases will take time as management's long standing procedures provide for repricing parts to customers on 90 day cycles. During the second quarter, much of the repricing should occur to allow the company to improve the gross margins for this business segment. However, just as is the case for the ATV Accessories business segment, market conditions for the Contract Manufacturing segment may not allow the company to pass on the full input costs increases to its customers as maintaining market share and remaining competitive within the geographic region the company competes for work in is key to the long term success of this business segment. GEOGRAPHIC REVENUE - Three Months Ended Dec 31, 2008 and 2007 Three Months Three Months Increase Increase Ended Dec 31, Ended Dec 31, (Decrease) (Decrease) Country 2008 2007 $ % -------------------------------------------------------- United States $ 3,887,605 $ 4,540,560 $ (652,955) (14.3%) All Other Countries $ 446,009 $ 460,998 $ ( 14,989) ( 3.2%) For the three months ended December 31, 2008, the Company experienced decreased revenue in both the U.S. markets, as well as internationally. The decrease in revenue in the U.S. was discussed above, and the decrease in other countries was due to a decrease of sales in Europe. Liquidity and Capital Resources Overview Cash flows provided by operating activities of continuing operations, built-up cash balances, and borrowings under our bank line of credit provided us with a significant source of liquidity during the first three months of Fiscal 2009. Cash and cash equivalents were $206,510 as of December 31, 2008, compared to $194,577 as of September 30, 2008. Until required for operations, our policy is to invest any excess cash reserves in bank deposits, money market funds, and certificates of deposit after first repaying any built up balance on our bank line of credit. In the three months ended December 31, 2008, we made approximately $59,343 in capital expenditures, received approximately $7,000 from the sale of capital equipment, and paid approximately $196,000 of long-term debt principal. By the end of fiscal 2009 management expects total capital expenditures to approximate $200,000. Working Capital Net working capital was $5,483,508 at December 31, 2008, compared to $5,531,103 at September 30, 2008. The decrease in working capital was primarily due to the net change in sales and gross margins. Liquidity and Capital Resources Balance Balance Increase/ Percent Dec 31, 2008 Sep. 30, 2008 (Decrease) Change ----------------------------------------------------------------------------- Cash and cash equivalents $ 206,510 $ 194,576 $ 11,934 6.1% Accounts receivable $ 2,524,378 $ 2,935,647 $ (411,269) (14.0%) Inventories $ 4,739,925 $ 5,110,499 $ (370,574) (7.3%) Prepaid expenses $ 106,679 $ 209,617 $ (102,938) (19.1%) Deferred income tax $ 433,886 $ 345,920 $ 87,966 25.4% Accounts payable $ 180,030 $ 577,278 $ (397,249) (68.8%) Accrued expenses $ 626,053 $ 725,082 $ (99,029) (13.7%) Bank line of credit $ 750,000 $ 1,000,000 $ (250,000) (25.0%) Current portion of Bank notes payable $ 823,437 $ 811,053 $ 12,384 1.5% Current portion of deferred gain $ 166,524 $ 166,524 $ - 0.0% Long-Term Debt On May 13, 2008, the Company and its commercial lender modified the original secured credit agreement dated August 21, 2001. Under the terms of the modification agreement to the secured credit agreement, Note One and Note Two were modified to change their fixed interest rates from 7.375% per annum to 6.125% per annum. Under the terms of the new amendment to the secured credit agreement, Note One and Note Two were amended. The Notes, going forward, are payable in monthly installments from August 2008 until April 2017, for Note One and until April 2011, for Note Two, which include principal and interest (6.125% as of December 31, 2008, and 7.375% as of December 31, 2007) for Note One and principal and interest (6.125% as of December 31, 2008, and 7.375% as of December 31, 2007) for Note Two, with a final payment upon maturity on April 25, 2017, for Note One and April 25, 2011 for Note Two. The interest rate is fixed for Note Two and is fixed for Note One until April 2011, after which the interest rate will be reset to prime + 0.50% every 60 months. However, the interest rate for Note One can never exceed 10.5% or be lower than 5.5%. The monthly payment is $33,449 and $42,049 for Note One and Note Two, respectively. At December 31, 2008 and 2007, $2,833,679 and $3,050,952, respectively, were outstanding for Note One and $1,089,800 and $1,517,447, respectively, were outstanding for Note Two. Additionally, any proceeds from the sale of stock received from the exercise of warrants are to be applied to any outstanding balance on the Notes or the Line of Credit described below. On May 13, 2008, the Company and its commercial lender entered into a note payable agreement. Under the terms of the Note, the Note is payable in monthly installments from May 2008 until April 2013, which includes principal and interest (6.125% as of December 31, 2008), with a final payment upon maturity on April 25, 2013. The interest rate is fixed for the term of the Note. The monthly payment is $14,567. At December 31, 2008, $662,761 was outstanding. The Note is collateralized by the company's new 4000 watt laser cutting system asset. Line of Credit On April 28, 2006, the Company and its commercial lender amended the original secured credit agreement dated August 21, 2001. Under the terms of the amended secured credit agreement, the Company has a Line of Credit for the lesser of $1,000,000 or 80% of eligible accounts receivable and 35% of eligible inventory. The Line of Credit bears interest at prime plus 0.50% (5.5% at December 31, 2008) and is collateralized by all of the Company's assets. The variable interest rate can never exceed 10.5% or be lower than 5.5%. The Line of Credit matured on December 31, 2008. At December 31, 2008, $750,000 was outstanding on the Line of Credit and there was no balance outstanding on the Line of Credit as of December 31, 2007. The line was extended by agreement between the Company and the bank for a period of 60 days, which was subsequently extended to June 1, 2009. The secured credit agreement contains conditions and covenants that prevent or restrict the Company from engaging in certain transactions without the consent of the commercial lender and require the Company to maintain certain financial ratios, including term debt coverage and maximum leverage. In addition, the Company is required to maintain a minimum working capital and shall not declare or pay any dividends or any other distributions. Warrants The Company has 40,000 previously issued warrants outstanding to purchase one share of the Company's common stock per warrant at $4.00 per share which do not expire until June 9, 2010. For the three months ended December 31, 2008, none of the 40,000 warrants were exercised. The proceeds, if exercised, are to be applied to the outstanding balance on the Notes. Capital Resources Consistent with normal practice, management believes that the Company's operations are not expected to require significant capital expenditures during fiscal year 2009. Management believes that existing cash balances, cash flow to be generated from operating activities and available borrowing capacity under its line of credit agreement will be sufficient to fund normal operations and capital expenditure requirements, non-inclusive of any major capital investment that may be considered, for at least the next six months. At this time management is not aware of any factors that would have a materially adverse impact on cash flow during this period. Special Note Regarding Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides a safe harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in the Company's filings with the Securities and Exchange Commission and in its reports to stockholders. Generally, the inclusion of the words "believe", "expect", "intend", "estimate", "anticipate", "will", and similar expressions identify statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. All statements addressing operating performance, events, or developments that the Company expects or anticipates will occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results (in particular, statements under Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations), contain forward-looking statements within the meaning of the Reform Act. The forward-looking statements are and will be based upon management's then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. In addition, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, all forward-looking statements involve risk and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons, including but not limited: competitive prices pressures at both the wholesale and retail levels, changes in market demand, changing interest rates, adverse weather conditions that reduce sales at distributors, the risk of assembly and manufacturing plant shutdowns due to storms or other factors, the impact of marketing and cost-management programs, and general economic, financial and business conditions. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not Applicable. Item 4T. Controls and Procedures The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. During the 90 day period prior to the date of this report, an evaluation was performed under the supervision and with the participation of our Company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. Changes in Internal Control over Financial Reporting There have been no significant changes in the Company's internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) within the fiscal quarter to which this report relates or in other factors that could materially affect or are reasonably likely to materially affect our internal control over financial reporting, and no corrective actions taken with regard to significant deficiencies or material weaknesses in such controls. Part II - Other Information Item 1. Legal Proceedings None. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits (18) Letter on Change in Accounting Principle (Incorporated by reference to the original document filed with the Form 10-QSB for the three and six months ended March 31, 2008, filed on May 15, 2008.) (31.1) Certification of Principal Executive Officer pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002. (31.2) Certification of Chief Financial Officer pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002. (32.1) Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (32.2) Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Page 26 Signatures In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 18, 2009. CYCLE COUNTRY ACCESSORIES CORP. By: /s/ Jeffrey M. Tetzlaff --------------------------------- Jeffrey M. Tetzlaff Principal Executive Officer, President, and Director In accordance with the requirements of the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated on March 18, 2009. By: /s/ Jeffrey M Tetzlaff Principal Executive Officer, President ---------------------------- Jeffrey M. Tetzlaff and Director By: /s/ Robert Davis Principal Financial Officer and ---------------------------- Robert Davis Principal Accounting Officer By: /s/ F.L. Miller Director ---------------------------- F.L. Miller By: /s/ L.G. Hancher Jr. Director ---------------------------- L.G. Hancher Jr. By: /s/ Rod Simonson Director ---------------------------- Rod Simonson By: /s/ Alan Bailey Director ---------------------------- Alan Bailey Page 27