Industry: Misc. Capital Goods

Corporate Overview

Cycle Country Accessories Corp. (AMEX: ATC) is one of the world's largest manufacturers of accessories for all-terrain vehicles ("ATVs").

Since 1983, the Company has developed an extensive line of Cycle Country branded custom-fitting ATV accessories. As the outright leader in several product categories, the Company manufactures dozens of high quality ATV accessories.

These including snowplow blades, lawnmowers, sprayers, spreaders, tillage equipment, winches and winch mounts, utility boxes, tire chains, gun racks, plastic cargo boxes, steel mesh baskets, rear hitches, a unique 5th wheel trailer and a growing assortment of other ATV accessories as well.

Cycle Country’s products custom fit essentially all ATV makes and models from market leader Honda to Yamaha, Kawasaki, Suzuki, Polaris, Arctic Cat and Bombardier. Cycle Country designs, engineers and assembles all accessory products at their centrally located headquarters in Milford, Iowa and subcontract the manufacturer of many original equipment components. 

As of September 30, 2004, ATV Accessory product sales represented approximately 90% of Cycle Country’s $20,665,674 in revenues.

Domestic Distribution

Cycle Country has sold their products to 17 regional or national distributors in the United States for over two decades. These distributors specialize in motorcycle and ATV accessories and sell Cycle Country products to virtually every ATV dealer in North America.  

The Company has positioned their distribution channels so that every ATV dealer in the United States is served by at least two distributors. Cycle Country management has created this overlap to negate any sales decline should one of the distributors cease to cover the Company’s products. However, most of these distributors have been long-term customers of Cycle Country with many established since the Company first began selling ATV accessories in the 1980’s. 

For the year ended September 30, 2004, domestic accessory sales for Cycle Country represented approximately 91% of total ATV Accessory sales.   

International Distribution

Cycle Country has 19 international distributors selling ATV accessory products in 35 countries. The international division was established in 1995 and within two years received the highest recognition as the “Iowa Small Business Exporter of the Year.” Additionally, the Company has received the “Governor's Export Award.” 

With approximately 80% of new ATV vehicle sales coming from the North America, management has established the Company’s international division to capitalize on anticipated worldwide long-term ATV sales growth. 

International accessory sales represent approximately 9% of Cycle Country’s total ATV Accessory sales during the fiscal year of 2004.  

Original Equipment Manufacturing

In cooperation with John Deere and Land Pride, Cycle Country's OEM division has developed numerous products that are being sold as accessories for John Deere lawn and garden equipment and Land Pride utility vehicles. In further developments, the Company is also working to provide accessories for John Deere’s new line of Utility ATV vehicles.

John Deere designs accessory add-ons including bags, plow kits, helmets and gloves that Cycle Country manufactures and distributes to authorized John Deere dealers as officially licensed products. Corporate management intends to expand Cycle Country’s associations with John Deere and Land Pride along with harnessing new opportunities with other substantial OEM's. 

Cycle Country’s OEM sales during fiscal 2004 represented approximately 16% of the Company’s total ATV Accessory sales. 

Wheel Covers

Cycle Country is the largest manufacturer of golf car wheel covers in the world with current estimates showing the Company with approximately 70% of the original equipment manufacturer ("OEM") market.

The leading golf car industry OEM’s are E-Z-Go, Club Car and Yamaha.

Cycle Country also sells directly to golf courses and golf cart dealers through a network of equipment distributors that serve the aftermarket throughout the United States, Europe and Asia. This allows the Company to achieve in excess of 70% of the wheel cover sales aftermarket worldwide as well.

Over the last several years, the Company has expanded as a leading producer of injection-molded plastic wheel covers for other speciality vehicles such as light duty trailers and riding lawn mowers.

The wheel cover segment represents approximately 8% of Cycle Country’s total sales and delivers a dependable income stream from a well-established industry. 

During the year ended September 30, 2004, Cycle Country purchased approximately $8,140,000 of goods from Simonsen Iron Works, Inc., the Company’s largest supplier. This represented approximately 61% of Cycle Country’s raw goods purchases during the year.  

Cycle Country’s 25-year relationship with Simonsen Iron Works has been such an important part of their success, one might wonder if the Company’s reliance on this significant vendor is too much. Well, not any more. As announced in the Spring of 2005, Cycle Country Accessories Corp. has acquired Simonsen -- lock, stock and barrel. 

Review the following details of this extraordinary merger/acquisition.

Milford, Iowa - April 12, 2005 –- Cycle Country Accessories (AMEX: ATC), signed a definitive agreement to purchase the assets of Simonsen Iron Works.

The final consideration that was agreed upon consists of $7 million in cash and $8 million in shares of the company’s restricted common stock with a strike price of $6.50.

“We are buying nearly $10 million dollars in hard assets along with Simonsen’s proven earnings power,” said Ron Hickman, President and CEO of Cycle Country. “We invite our shareholders to view their impressive facilities at www.simonsenironworks.com.”

Simonsen Iron Works (based in Spenser, Iowa), is a 4th generation family-run business dedicated to developing high quality solutions for custom manufacturing needs since 1906. The services they provide include laser and plasma cutting, turret punching, tube bending, CNC machining and power coating with the capabilities for other high demand services.

“We have worked with Cycle Country’s management since their inception in 1981 and because of that relationship, we have the utmost confidence in their ability to execute a seamless transition and provide strong leadership after the companies come together,” stated Simonsen President, Alan Bailey. “We look forward to remaining shareholders in   this combined entity.” 

Cycle Country announced the closing of the Simonsen Iron Works acquisition in May 2005.

Motorcycle/ATV Products Acquisition

In March 2002, Cycle Country acquired Perf-form Products, Inc., a designer and manufacturer of high performance, premium quality oil filters and oil coolers for motorcycles and ATVs. For two decades this profitable company’s largest product line has been chrome replacement filters for Harley-Davidson motorcycles. They also manufacture products for other popular makes including Honda, Kawasaki, Suzuki and Yamaha along with many others.

The acquisition of Perf-Form has provided a respected brand name entrance into the motorcycle industry and a perfect match for Cycle Country’s distribution channels since most ATV dealers nationwide also sell motorcycles. Although Perf-Form products have performed well over the past two years, Company management believes there is still is a tremendous amount of growth potential to be realized.

Perf-form’s products generated approximate 3% of total accessory sales for Cycle Country for fiscal 2004.

In a partnership established with Challenger Aviation, Cycle Country announced on       June 21, 2005 that Perf-Form, a wholly owned subsidiary of Cycle Country Accessories Corp. (AMEX: ATC), will soon receive the first of many new orders from              Challenger Aviation for oil filters and coolers. 

The products are designed specifically for use in the aviation industry. The coolers have gone through rigorous testing by an independent lab verifying their strength, and to ensure they exceed FAA standards. Both systems significantly passed all tests qualifying them for use in the aviation industry. 

Since this relationship opens up a whole new industry for the Company, management expects a significant rise in filter and cooler sales throughout the remainder of 2005 and beyond. The new products from Perf-Form were recently released at the Oshkosh Air Show in Wisconsin.

Lawn & Garden Products Acquisition

Cycle Country’s acquisition of Weekend Warrior in 2002 and their garden utility attachment line has provided greater visibility and quickly established the Company’s successful entrance into the lawn and garden industry.

The Company’s Weekend Warrior pull-behind products, 3-point implements, and other branded and private label accessories can be used with lawn and garden tractors and utility vehicles. Cycle Country sells to several equipment manufacturers, dealers and retail outlets within these market vehicle categories.

Products include a 64" tandem disc, 60" cultivator, brush cut mower, 15 and 25 gallon sprayers, spotlight, gun and tool rack, and a full line of three-point tillage equipment.    

Cycle Country’s expansion into the lawn and garden industry three years ago continues to gain momentum; as product demand clearly shows that manufacturers of garden tractors and utility vehicles need accessories similar to those available to the ATV industry. According to The Outdoor Power Equipment Institute over 1 million new lawn and garden tractors are sold in the U.S. annually. 

As Cycle Country’s lawn and garden sales revenues continue to grow this will help off-set seasonality aspects tied to some of the Company’s ATV accessory products (such as their #1 selling snowplow blades), by providing sales in quarters that are traditionally slower. 

The Company will continue to work with John Deere and Land Pride along with several other lawn and garden manufacturers to introduce key accessories into their particular product lines. Cycle Country also continues to design new brand name accessory products to market within the Lawn and Garden industry directly. 

This segment represents approximately 2% of Cycle Country’s total sales.

PRODUCT DEVELOPMENT

Cycle Country maintains the highest quality accessories and the strongest product guarantees in the industry with several products warranting a lifetime guarantee.  The Company employs an experienced staff of four product design professionals that work with CAD/CAM technology in the design of new products. This R&D group serves two primary functions: product retrofitting and new product design. 

Although product development costs have averaged approximately 1% of net sales over the last two years, management considers the engineering group a critical factor to the company's past and future success. 

New products introduced over the last 24-months include a patented Electric Blade Angle Kit, a 54" straight blade, a tool, gun and gear carrier for compact utility vehicles, and a variety of Weekend Warrior and private label blades, gun and tool carriers, winch mounts, bed lifts, and a variety of private licensed products for lawn and garden and utility vehicle original equipment manufacturers (OEM's), such as John Deere, Club Car and Compact Power Equipment. Additional new products include a redesigned 5th wheel trailer, an all-metalized turbine wheel cover, and a variety of private label blades, racks, brush guards, winch mounts, and bed lifts for lawn and garden and utility vehicle original equipment manufacturers.

PATENTS AND TRADEMARKS

Cycle Country maintains trademarks for all product names. In addition, they maintain patents for wheel covers, 3-point hitches, rack utility boxes, work power lift system, rub block on work power lift, grablight, the 5th wheel trailer, Perf-Form oil filter/cooler and the Weekend Warrior universal tow frame.

The Company has also been granted a patent on their new Electric Blade Angle Kit which allows a rider to conveniently swivel any of their straight blades by a handlebar mounted switch while remaining seated on the ATV, making plowing a much quicker and more efficient process.

DIRECTORS & OFFICERS

Founder and Director

Jim Danbom was the founder of Cycle Country and served as president from 1981 to 2001. Mr. Danbom leads the Operations and Planning committees of the board. He has successfully created numerous businesses in his 26 year career. Having successfully created all core products for Cycle Country over two decades, Mr. Danbom now focuses on acquisitions and new product development while serving on the Operations and Planning committees. Mr. Danbom is currently serving a three-year term, which will end in 2006.   

Director

F.L. "Skip" Miller was President of Armstrong Wheels from 1970 until 1998. Then in 1999 from his Chief Executive Officer position, Mr. Miller consummated the company's highly lucrative buy-out from the international conglomerate GKN Wheels. The selling of Armstrong Wheels for an impressive premium price was largely based on his ability to build the company with consistent double-digit annual growth. Mr. Miller participates on the Audit and Operations committees ofthe board. Mr. Miller is currently serving a three-year term, which will end in 2006.  

Director

L.G. "Bob" Hancher Jr. has served as Chief Financial Officer of Commerce Street Venture Group since 2000. Mr. Hancher graduated from Iowa University in 1974. He served as Field Auditor and Territory Manager of Shell Oil Co from 1974 to 1978 and the Director of Marketing of Raynor Garage from 1978 to 1988. In 1993, Mr. Hancher co-founded, and is now a past President of International Sports Management, leaving in 2000 to co-found Commerce Street Venture Group. Mr. Hancher participates on the Planning and Audit committees of the board. Mr.Hancher is currently serving a three-year term, which will end in 2006.                                       

Director

Rod Simonson became a franchisee for Piccadilly Circus Pizza, Inc. in 1980 by owning and operating 1 of the 5 restaurants under the company's umbrella. Shortly thereafter, Mr. Simonson purchased the parent company and became President of Piccadilly. By 1987, the company became Land Mark Products, Inc., the licensing company for Piccadilly Circus Pizza. Under his leadership, the company evolved from several sit-down pizzerias to a complete turnkey operational partner in convenience stores, malls, hotels, amusement parks and video stores. Today, there are over 800 locations primarily in convenience stores throughout 42 states in the Continental U.S. Mr. Simonson is serving on the Planning and Audit committees of the board. Mr. Simonson is currently serving a three-year term, which will end in 2006.  

CEO, President and Director

Ron Hickman, who became the President of Cycle Country on August 1, 2001, has been a CPA for 29 years, and was the accountant from the Company’s inception until he took a position as General Manager in 1995. Mr. Hickman is on the Operations and Planning committees of the company. Mr. Hickman is currently serving a three-year term, which will end in 2006.  

Chief Financial Officer

David Davis, who became the Chief Financial Officer on October 1, 2001, has been a CPA for 13 years. Prior to joining Cycle Country, Mr. Davis served as Controller for a Midwest lawn and garden power equipment distributor from 1997-2001 and worked for several years prior to that as a CPA at a Midwest regional public accounting firm.  

Vice President of Manufacturing

Marie Matthiesen has been with the Company since 1989. Starting in theaccounting department, Ms. Matthiesen has worked her way up and since 2001 serves as the Vice President of Manufacturing.  

Vice President of Sales and Marketing

Bradley Danbom has been a member of the sales department since 1997. Mr. Danbom was appointed Vice President of Sales and Marketing in 2004. Bradley Danbom is the son of Jim Danbom, the founder of Cycle Country and one of the Directors.  

Audit Committee 

The audit committee of the board of directors is comprised of three directors, L.G. Hancher, Jr., F.L. Miller, and Rod Simonson. Each member of the committee is an independent director as defined by the American Stock Exchange rules. In addition, the board of directors has determined that L.G. Hancher, Jr., as defined by the SEC rules, is both independent and an audit committee financial expert. Mr. Hancher is co-founder and Chief Financial Officer of Commerce Street Venture Group, as discussed above.

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